All politics is local

l  Taiwan President Ma Ying-jeou concluded a largely successful diplomatic trip to Africa in mid-April. Upon his return, however, Ma found himself under increasing pressure over his handling of the recent fuel price hike and a planned electricity rate increase by mid-May.

l  Consequently Ma’s job-approval rating has been steadily declining in recent weeks, with rising public concerns over his abilities to lead and govern effectively.

l  Many in the Democratic Progressive Party (DPP) and the Taiwan Solidarity Union (TSU) claimed these decisions and their likely impacted on people’s livelihood reflected Ma's “detachment and aloofness" from ordinary people. Some also criticized the administration for failing to offer complementary measures to reduce the expected adverse effects and accused the government for being irresponsible.

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Outlook of Taiwan’s exports remains unclear

l  Taiwan’s exports in March rose 12.6 percent from a month earlier to US$26.34 billion. However, Taiwan's exports totaled just US$70.83 billion in the first quarter, down 4 percent from the same period last year, and March’s total exports were also down 3.2 percent year-on-year, reflecting the anticipated slowdown in Taiwan’s external trade brought on by global economic uncertainty.

l While the economic outlook for the US and Europe remains unclear, Taiwan's March exports to Southeast Asia, including Vietnam, Indonesia, Malaysia, Philippines, Singapore and Thailand, grew by an impressive 11 percent year-on-year.

l  Short of a dramatic turnaround in the European and US economies, faltering global demand and waning consumer confidence will continue to hamper Taiwan’s export performance in the second quarter. Taiwan government also does not expect strong growth for the island's exports in the foreseeable future.

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DPP’s upcoming leadership transition

l  Two major issues have—and will continue to—dominated Taiwan’s domestic politics in recent weeks, both related to the opposition Democratic Progressive Party (DPP).

 l  The first concerns the DPP’s election for the next chairperson on May 27. At the moment, former Premier Su Tseng Chang remains the frontrunner, and the race is essentially Su’s to lose.

l  The second issue relates to the ongoing signature drive—in the Legislative Yuan (LY) and around the island—to petition for a presidential pardon of former President Chen Shui-bian (CSB).

l  Since early this year, CSB has been experiencing acute coronary syndrome that led to a cardiac catheterization procedure last month. A number of pro-independence groups have since publicly called for a full presidential pardon on the former president to ease inter-party tensions, and a petition drive followed that will likely gather momentum and increase pressure on the government.

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Continue with the “economics first, politics later” approach

l  The Boao Forum, particularly the meeting between China’s Vice Premier Li Keqiang and Taiwan’s Vice President-elect Wu Den-yih, headlined cross-Strait developments in early April. This was the second time since 2008 that Taiwan’s vice president-elect was invited to attend the Boao Forum.

l  In the hour-long meeting with Li, Wu pronounced another 16-word phrase that conveyed two important messages from Taipei: (1) maintaining cross-Strait peace and stability remains the top priority, and (2) “economics first, politics later” will continue to be the preferred approach in managing cross-Strait ties.

l  Though Wu’s 16-word phrase did not offer anything new, it clearly signaled to Beijing that cross-Strait political talks are not a priority and Taipei has no plans to initiate such a dialogue anytime soon.

l  We do not expect that Beijing and Taipei will formally launch political negotiations for a peace agreement, but certain politically sensitive issues, particularly Taiwan’s international space, will invariably come up in future cross-Strait negotiations.

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Beyond the “one country, two areas” controversy

l  Expectedly, the “one country, two areas” formula, proposed by Kuomintang (KMT) Honorary Chairman Wu Poh-hsiung late last month in Beijing, has stirred up heated debates within Taiwan.

l  Since Wu’s proposal came amidst the US beef controversy, many believed it was a government attempt to divert attention away from possibly the most divisive issue in US-Taiwan relations in over a decade.

l  Moreover, since President Ma Ying-jeou has reiterated that he will adhere to the “no unification, no independence, and no use of force” position and not to initiate political talks with Beijing, it seemed odd that Wu, whose proposal was supposedly pre-approved and sanctioned by government, would make such a proposal that obviously contradicted the president’s longstanding position on cross-Strait political dialogue.

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