Written by Nikhil Nalam
On the 13th of January, Taiwan’s 8th presidential election concluded with Lai Ching-te of the Democratic Progressive Party (DPP) coming out on top with 40 per cent of the vote following a three-way race. The victory represents the DPP’s third term in office – extraordinary for any party – with the ex-president, Tsai Ing-wen, having exhausted her maximum of two terms in power. The election received worldwide coverage, attracting significant attention mainly because of its precarious implications for Taiwan’s relationship with its neighbour across the Strait – China. While most headlines focused on the mainland’s response, they missed something equally crucial to the island’s sovereignty: the future of the various domestic issues Taiwan suffers from.
One of Taiwan’s primary problems is sluggish economic growth. It was one of the few countries in the world whose economy actually flourished throughout the pandemic due to robust exports, but this success was short-lived. An epidemic accompanied the island’s abandonment of its ‘zero-COVID’ policy in spring 2022, leading to a drop in retail sales. Other events compounding with this, like Russia’s invasion of Ukraine and worsened cross-strait tensions, debilitated the economy so severely that Taiwan entered 2023 in a technical recession. While they are no longer experiencing contraction, the island still struggles due to a downturn in the semiconductor market they are so heavily dependent on.
Another issue plaguing Taiwan is economic inequality and low wages. As of 2021, the pre-tax income share of the richest 1% (a measure used to determine how much of a country’s income is held by the wealthiest 1% of its citizens) is a staggering 19.3% – the 16th highest in the world. Though, as a country, Taiwan did experience GDP growth during the pandemic, it was the salaries of the ultra-wealthy bringing up the average. Real wages, a measure of income that considers inflation, have been shrinking since 2021. This disastrous inequality has a crushing effect on the island’s working class – as of 2023, over 50% of employees in Taiwan receive a monthly wage of less than NT$42,000 (1,339 USD). The average household could easily be defined as impoverished, especially with how expensive Taipei is.
So what does the new president-elect plan to do about these troubles? Apparently, not much. According to Goohoon Kwon, a senior Asia economist at Goldman Sachs, no significant economic and cross-strait policy changes are expected under the Lai administration. The DPP will likely maintain its previous approach of “innovative economic models, a shift from the traditional original equipment manufacturing model to developing cutting-edge industries and an ambitious transition to fully replace nuclear power with renewable energy by 2026”.
While this could be a short-term solution to bolstering economic growth, it doesn’t really change the fact that the country is much too reliant on a singular export, leaving it vulnerable to the volatility of world prices, and it definitely doesn’t address the glaring inequalities afflicting the nation. A reassessment of government investments is necessary, and policymaking focused on wealth redistribution is required to bring prosperity to more than just the one per cent. Without reform, Taiwan may put up stellar growth rates, but its people will still face hardship. Change is imperative.
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