Taiwan has a general election on Saturday. The international media has highlighted the election as an important geopolitical pivot – namely, if the current incumbent government party, the Democratic Progressive Party (DPP), wins the presidency and legislature and continues its call for formal (not just de facto) independence from mainland China, that will mean intensified attacks on Taiwan by Beijing, perhaps leading to military conflict.
But this obsession with the US-China geopolitical conflict that so concerns the imperialist powers is not the main issue for Taiwanese voters in this election: standards of living and the state of the Taiwanese economy are more to their point.
Mainland China under Xi continues to claim that Taiwan is part of China and unification must take place at some point. The US and its allies in the region continue with the formal paper agreement with China that China and Taiwan are one country but with two states. But in reality, the US is buttressing Taiwan’s military and financial resources to ensure continued separation in order to weaken Beijing and sustain Taiwan’s pivotal role in providing semi-conductors and hi-tech components for the West.
The DPP currently has a majority in the legislature with 63 seats. Some 19.5 million Taiwan citizens are eligible to vote out of a population of more than 23 million. Voters must be aged 20 or older. The latest polls suggest that the DPP will win again from the Kuomintang or KMT, the nationalist Chinese party composed of those that fled the mainland after the 1949 revolution and took over control of the island from the indigenous population. The KMT is supposedly more inclined to work with Beijing and not disturb the status quo, although its presidential candidate said this week that the US was Taiwan’s ally and he would aim to strengthen even more the country’s defences against the supposed threat from across the straits.
It’s true that the island’s population increasingly sees its identity as Taiwanese rather than with mainland China, but that does not mean that the majority are in favour of outright provocation to Beijing. Most want things to stay as they are politically.
What mostly concerns the bulk of Taiwan households is the state of the economy. Tiny Taiwan is one of what used to be called the Asian tigers (Hong Kong, Singapore, Korea, Taiwan), which industrialised fast in the late 1980s onwards at the same time as China began its economic march upwards. Taiwan’s growth was based on huge inward investment from the US, using very cheap labour at home, policed by a military regime under the KMT for many decades (martial law was not ended until 1987 and there were no elections until 1996); while the US built up Taiwan’s military power as part of the strategy of surrounding China.
Starting off as a poverty-stricken, resource-poor, technologically backward nation in 1949, Taiwan has now become the hub of a global production network in many high-tech industries with increasing significance in the world economy. Per-capita GDP at about $33,000 is more than double that in the Chinese mainland. Semiconductor and other electronic products account for over 70% of Taiwan’s total exports or 40% of its GDP.
But here is the problem. Taiwan has become a ‘one trick pony’ based on tech components, like Russia depends on energy and mineral resources exports. And Taiwan’s position as the semi-conductor king is now under threat. Despite a highly competitive tech sector, Taiwan’s ascendance on the value-added production ladder is stalling. And low value-added products, such as textiles, base metals, and chemical products still account for half of Taiwan’s industrial production, largely unchanged in the past two decades.
Huge investment in machinery and tech components over labour has led to a long-term fall in the profitability of capital (a la Marx).
The irony is that US domination now means not more investment domestically, but instead a demand that Taiwan’s key companies relocate to the US or elsewhere so that China cannot get them. Taiwan Semiconductor Manufacturing Corp (TSMC) is the world’s largest supplier of computer chips, providing more than 90% of leading-edge chips. It still operates two plants in China, in Nanjing and Songjiang, making less advanced computer chips. But it has been complying with demands from the United States and other trading partners to restrict exports of equipment and technology for leading edge semiconductors. And it is being forced to shift production to Japan, Germany and Arizona.
This ‘friend-shoring’ threatens to weaken the domestic economy significantly. At the same time, trade and investment between mainland China and Taiwan, so important in the past to Taiwan, is being decimated.
Moreover, the success of Taiwan’s technology sector is not reflected in the rest of the economy or for its non-tech labour force. Outside of the tech sector, productivity growth has been sluggish and growth in the ‘Asian tiger’ has been steadily on a downward trend.
Annual real GDP growth
And real wages of non-tech manufacturing and service jobs have barely increased since the early 2000s.
TSMC median annual wages are $56,264, but in other sectors the average annual salary for workers in those sectors averaged less than $12,000. And wages in these sectors have stagnated, while youth unemployment is near all-time highs.
Youth unemployment rate %
Inequality of incomes and personal wealth remains high, as it does in most capitalist economies. The highest-earning 20% get over six times the income of lowest earning 20%. The top 1% of wealth holders have 25% of all wealth and the top 1% of income holders get 20% of all income.
Huge property speculation has led to home prices jumping 50% in the last five years and accelerating, making it impossible for young Taiwanese to find decent accommodation.
House price index
Since the end of the pandemic, which hit Taiwan hard as in many other countries, economic recovery has been weak. Indeed, in 2023, the economy went into recession for several quarters, the poorest performance since the end of the Great Recession in 2009 – revealing that dependence on China’s economy remains high. And real incomes fell by the largest amount since 2016. The DPP government may stand for ‘independence’, but it has not presided over better living standards for its electors.
Mainstream forecasters are talking optimistically about “meaningful growth” for this year after the election (around 3% real GDP growth from 1% last year). But that assumes that world trade growth will pick up – pretty unlikely given the expected slowdown in many major economies and the US attempts to weaken China’s trading capability. The threat of an ‘invasion by China’ is probably the least of the worries of Taiwanese voters, despite the media barrage from the West and from Taiwan’s politicians.
Michael Roberts Blog 
There’s a lot of bile going on in this cold conflict between China and Taiwan/USA, but the facts are very clear and the diagnosis is definitive: Taiwan has already lost.
Conquering Taiwan would have a very obvious benefit to the USA: it would finish the “arc of freedom” (Japanese terminology, which designates the same thing) of islands of the western Pacific, entirely closing China off the sea.
That sounds great, except for one issue: this “arc of freedom” is entirely dependent on ingredient X, which is the US Navy. If the USN doesn’t completely dominates the seas, holding this arc of islands will not be decisive — they will only delay the inevitable and impose greater losses to the enemy.
If the USN is so all-mighty, why didn’t it stop the PLAN (Chinese Navy) in 2016, when it was conquering the South China Sea? I assume the USN was stronger in 2016 than in 2024, and I equally assume the PLAN was weaker in 2016 than in 2024. The SCS is much easier to protect and engage with the enemy than the island of Taiwan because it is a water body, which has looser definitions of territorial sovereignty than firm land; and, either way, the USA did not sign UNCLOS, which gives it much more legal base to take over the SCS.
Taiwan not only is firm land, but it is legally not a country: it is not recognized by the UN as a country, and the USA itself doesn’t recognize it as a country at a legal level. Well, one can claim the “de factos”, but another “de facto” is that the Western Democracies invade and sanction other countries under the ideological argument of protecting the “Rule of Law”. You live by the sword, you die by the sword.
And then there is the fact that 1) Taiwan already is completely dependent on China economically and 2) China already has the de facto (now this is a real de facto) control over the Taiwanese waters (not just the Strait: it completely circumvents the island with its vessels) and air space (which it crosses around and over as they please, with whatever thing that can fly – from balloons to jets).
Errors:
“the Kuomintang or KMT, the nationalist Chinese party composed of those that fled the mainland after the 1949 revolution and took over control of the island from the indigenous population.”
It WAS composed of those fascists. They have aged, and it is much more a party of natives born and raised in Taiwan. Between the two major parties, it is, however, more the home of those who have business interests in the PRC – which is now a double-edged sword.
“the Democratic Progressive Party (DPP)… call for formal (not just de facto) independence from mainland China.”
Actually, the Democratic Progressive Party has turned away from its history of flirting with outright independence. It does not call for formal independence.
“Taiwan’s growth was based on…”
The list that follows omits a key factor: the land reform.
“The US is buttressing Taiwan’s military and financial resources to ensure continued separation…”
Is one side of the coin a guide to truth? The PRC has grown its military, especially naval, forces at a rapid rate – faster than GDP growth since 2015. U.S. military spending as a percent of GDP has been stable or falling since 2010.
Replacing imaginary errors with real errors is not helpful.
Calling the GMD a “fascist” party may serve an agenda but it’s not an accepted categorization. Skipping over any would-be Marxist definitions, those parties generally accepted to be fascist were accepted (with some degree of reluctance by a few) by the bourgeoisie as necessary to pursue imperialist/colonialist wars. It is also the preference by orthodox historians to limit “fascist” almost to Italy and Germany, omitting even Franco and Salazar, much less Horthy, Pavelic and Antonescu. Somehow I find it hard to think a discriminating intelligence would find the *Chinese* to be more fascist than the Japanese in the forties and fifties.
DPP? Nobody can get them all wrong. But even here it is entirely unclear how meaningful this is.
Land reform? This is absurd, fascists don’t do land reform. The land reform was largely the redistribution of Japanese land, financed by expropriation of Japanese businesses and a massive aid program from the US. It’s hard to grasp how “left” the US was back in those days. The US bourgeoisie has relentlessly driven further and further to the right as world economy and capitalist modernity decays. The relatively small size of Taiwan makes such reforms more feasible as a strategic move, even as capitalism as a whole simply could not do the same on a truly large scale. If the GMD could have done land reform on a capitalist basis on the mainland, they wouldn’t have lost to the CPC.
PRC more militaristic than the US? This is one of those instances where comparing percentages of GDP is lying with statistics. US military spending is titanic and finding an ominous threat in the much smaller PRC military budget would be insane, were the claim not so useful.
“PRC more militaristic than the US? This is one of those instances where comparing percentages of GDP is lying with statistics.” Some people cannot look at how things are changing. U.S. military dominance is static, while the PRC with its naval assets has already undermined the security, fishing grounds, and subsea resources of the Philippines, Vietnam, and Indonesia. Meanwhile, we see how the U.S. can no longer keep up its unchallenged dominance when two or three global hot spots ignite at once.
Playing tricks with percentages while ignoring gross totals is still lying with statistics. The alleged “changing” is nonexistent, a fact not changed by boldface. US military dominance includes a massive nuclear arsenal with the explicit policy of using it if threatened with defeat in any of its adventures, a willingness to bomb proven by the fact the US has used nuclear weapons (the only country to do so.) The objection that not even the US can manage to successfully fight multiple wars simultaneously is not an argument US military power is static, it is the admission the US is the militaristic threat, not the PRC! The notion that it is the PRC that undermines the security of the Philippines rather than the US, supporters of the Marcos dynasty—who are back in power—would be demented were it not for the commitment to US imperialism. Supporting the US navy in its efforts to threaten oil transports through the South China Sea under guise of FON (freedom of navigation) naval campaigns is preposterous. Fishing rights and subsea resources sound more like a tender regard for the capitalists claiming to own the world, but the determination to ally with the US in a military alliance against the PRC over legally complex property issues is driven I think by anti-Communism.
PS The notion the GMD is a stooge for the CPC, rather than a threat to the working class of the mainland is truly remarkable, not in a good way. I think the GMD also hopes for reunification in a capitalist China, aspiring to be owners of the mainland as well as a little island.
The fact that the fascist KMT now supports the CCP is hilarious, but then again, today’s China is the complete opposite of Mao’s China and much closer to Imperial Japan, which Chiang Kai Shek was fond of. The CCP and the old KMT are essentially the same party: a nationalist bourgeois party.
As for Taiwan, the people have the right to decide their fate, self-determination people! some ‘marxists’ forget this and instead blindly cheer for their favorite imperialist power that have communist aesthetics.
In addition to the nonsense about fascism and the GMD supporting the CPC* fresh nonsense about the right of self-determination is added. First of all, nations have this right, not municipalities nor even industrial parks with suburbs. I suppose one could try to pretend that Hokkien is not Han and therefore Taiwan is not “China.” But this is to assume that every language as opposed to nation should have its own army and currency. This is backwards and reactionary.
Second, not even all the Taiwanese speak Hokkien anyhow. And ethnically, there is a distinctioni between those who came with the GMD after the defeat in the revolution and others who came while the Japanese still ruled. And beyond that I gather there was and still is a smallish group of people who don’t speak any sinitic dialect or language at all, being more closely related to other pacific peoples like Malays and Filipinos. If languages have the right of self-determination, they should have the right to be independent of all those Chinese of any stripe!
Third, calls for the right of self-determination can be profoundly reactionary, as in this case. Speaking as a US citizen, this is a fact powerfully confirmed by the revolutionary history of the US. It was the right of self-determination that was proffered as the justification for slavers to divide a country. This was not an exercise in freedom. Then, as now, the liberals of the time accepted it at face value. (One prominent exception in the UK was John Stuart Mill. But the great Gladstone was far more important and powerful, and he was a promoter of the Confederacy.) The right of self-determination in any case always includes the right to national unity.
Fourth, Dic Lo’s link below is pretty sound I think.
The gibberish about imperialism is like the gibberish about fascism, it is merely a meaningless epithet displaying hostility under a pretense of principle.
*It might be accurate to say that the capitalist roaders in the CPC and the emerging mainland bourgeoisie support the GMD. But that’s close to the opposite of what is claimed above. The DPP and the TPP so far as I can tell, might be equally for reunion (democratic possibly though they may prefer an insider trading type of deal, i.e., non-democratic) if they were convinced the PRC was capitalist. I for one think they are better judges of that than Charles 1848 and Boi98 Dtempo. And I most especially do not think the GMD, the DPP or the TPP have any objections to imperialism.
“I suppose one could try to pretend that Hokkien is not Han and therefore Taiwan is not ‘China.’ But this is to assume that every language as opposed to nation should have its own army and currency.” Come on, no one bases the demand that Taiwan not be forced into PRC solely on language.
The 23 million people of Taiwan have never been under PRC rule. Since 1949 their political system and their culture have evolved a lot, along a line very different from how the PRC has evolved. The overwhelming sentiment of the people is that they do not want to be part of the PRC.
In short, there is no justification for the PRC taking Taiwan by force, which is the only way they could take it at this point. The main PRC claim is that all Chinese-populated lands should be part of the PRC because “Chinese civilization” trumps everything else, and the PRC is the realm of Chinese civilization – not quite a Das Volk theory but reactionary for sure.
The argument of self-determination of the peoples is not valid in the specific case of Taiwan because Taiwan’s constitution claims Taiwan as the only one and true China. In other words, they claim to be China, not Taiwan (which is the name of the island). Taiwan’s official name is Republic of China (RoC).
The independence agenda is exclusive to the DPP, which is a newly founded party and which is in power right now. The problem is that, albeit the Taiwanese people does vote for the DPP for the presidency, they do not vote for independence: a party may be elected by a myriad of reasons, which may or may not be the main point of its manifesto.
So far, some ten years of DPP in power (of the presidency, not the parliament), it was not able to amend the constitution to both change the name from RoC to RoT (which was in their manifesto originally) — the only concrete measure they promised to the electorate so far. Taiwan’s constitution remains untouched by the DPP.
It is also important to highlight two things: 1) Taiwan is a parliamentary representative liberal democracy, not a presidentialist one: the president is not the supreme authority (or should not be — see Chiang Kaishek’s distortions of the system after he settled in the island with his ilk); so having the president doesn’t necessarily mean a party has the “vox populi” and 2) there is no run-off in Taiwan’s presidential elections: the DPP never had 50%+ of the vote. Indeed, their vote share has fallen, and they just lost majority in the parliament (which is or should be its true supreme political institution).
Another important factor to highlight: the Guomingdang (Nationalist Party) is not the solution to the CPC either. They defend reunification, but a capitalist reunification, i.e. the extermination of the CPC and the absorption of the Mainland to Taiwan and not vice versa, with themselves (obviously) as the new elite of this reunified China. It’s not like if the KMT wins a presidential election China will be reunified peacefully and instantly, by the stroke of a pen.
All in all, this status quo is the best scenario for the Mainland: the DPP and the KMT are destroying each other in a fratricide war over a philosophical issue (the name of the RoC in the constitution). This philosophical issue became the main issue for Taiwan (Republic of China) because, as I said in my first comment here, Taiwan has already lost: a society in decline produces its correspondent ideology of decline; a society in collapse produces its correspondent ideology of collapse.
The PRC does not advocate incorporating the ROC by force. But it does commit to intervention if the ROC allies itself with foreign powers to divide the Chinese nation permanently, which is still a gross violation of the principle of self-determination. It is the US that insists on active military interventions and alliance building aimed against reunification.
The argument that political and cultural change justify tearing apart a country is the same argument that Texas should resume its independence, because it has become Trumpist and is anti-woke, unlike the blue states. This is reactionary drivel here in the US and in China. There is no claim that Singapore should be part of the PRC because Singapore’s history and common life are not part of the Chinese nation. Nor is there any claim for special political rights for Chinese people in the Philippines or Malaysia or Indonesia. “Das Volk” sounds bad but it’s too silly to be effective malice.
The claim “the people” of Taiwan don’t want to be ruled by the PRC is nothing other than the claim “the people” of Taiwan are anti-Communists like Charles1848. I say again, I believe that if the GMD or the DPP or the TPP believed the PRC was capitalist, they would be pushing for reunification. And I say again, they have better judgment than Charles1848 who thinks the PRC is the rising imperialist threat “we” need to support the democracies like the US against.
My blogpost on Taiwan and Hong Kong, rebutting the justification for “self determination” so often advocated by Western-Centric protagonists – both the far rights and the self-labelled lefts: https://chinaandworlddevelopment.wordpress.com/2023/02/11/china-anti-imperialism-and-the-political-economy-of-historical-justice/
What drives nationalism are the two LLs, language and living standards. Taiwanese capitalism grew rich by combining Western Technology with cheap Chinese mainland labour. Here we think of Foxconn and TSMC in particular. But this nexus is breaking down. Already Foxconn is being squeezed out of China by local rivals such as Luxshare Precision. Should China achieve technological equivalence in Chip design and production then it will be TSMC’s turn. That day may not be far off. The nanometer race is a mug’s game as the toaster pretending to be an iPhone showed.
It is said that countries are undermined not only by artillery but by a barrage of cheap goods. This is why Taiwan is so vulnerable. Should China replace the US as the hegemonic economic power on the basis of its home grown technology, then the whole economic basis for Taiwan’s former prosperity will have been overturned. Should this transpire, China will not need to invade what has become a poor province of the country, because the Taiwanese capitalists, who always know which side of the bread the butter is on, will have handed their island over to China in order to share in its prosperity.
There is a good bit of sense here. But I think it concedes too much to the notion that in today’s democracies it is the opinions of the mass of the people that drives nationalism. I believe a realistic examination of movements for national self-determination will always reveal a motor of bourgeois and petty-bourgeois advocates who believe they will benefit materially by separation. Scottish independence became popular with some mainstream politicians when the revenues from North Sea oil beckoned. Catalonia/Catalunya found the autonomy wasn’t enough when it advanced economically beyond the rest of Spain, now perceived as losses, something indistinguishable for the rich from oppression. The old Northern League of Italy wanted to get rid of the backward South (and they may be transformed but the people behind are still here, uniting with fascists as I understand it.) The nascent Croatian bourgeoisie wanted economic union with capitalism and to get rid of backward Serbs. Etc. Etc.
Class collaboration with bourgeois forces in the name of national unity has always been a problem of fundamental strategy. That’s why conceding the right of national self-determination is not necessarily the same as advocating it. Also, effective independence in the sense of a sound national currency and banking system and secure bourgeois property amazingly frequently seems to require ethnic cleansing/population transfers and territorial cessions ending in border disputes. This raises issues that can’t be resolved wisely by simplistic slogans, much less standing with the democracies. Democracy is the US and the UK and France and Germany and so on, after all. I get the impression the Catalans are more intent on including Valencia than Aragon? Or, is there really a country of Bosniaks? And these problems arise even if you are indifferent or hostile to the goals of revolution.