Taiwan’s Leader Signals Firm Line on China After Election Defeat

(Bloomberg) -- Taiwanese President Tsai Ing-wen warned against continued threats from China, signaling a hard line despite her recent election losses to the island's more Beijing-friendly party.

“The election result doesn't mean the Taiwanese people want to abandon sovereignty, nor does it mean the Taiwanese people will give up Taiwan's autonomy,” Tsai said Tuesday in a New Year's Day address. “We are facing national safety threats and risks, particularly from China.”

The speech was Tsai's first major address since her party -- the pro-independence Democratic Progressive Party -- suffered a resounding defeat to the Kuomintang in local elections in November. China, which views Taiwan as a province, cut off communications with the island after the DPP swept the KMT from power in 2016 and upended rapprochement talks between the two sides.

Chinese President Xi Jinping was slated to deliver his own remarks on Taiwan on Wednesday. The speech was intended to mark the 40th anniversary of a landmark Beijing overture to Taipei after the U.S. and China established relations.

The scale of the DPP's electoral defeat on Nov. 24 was far greater than forecast, with the party losing seven cities and counties of the 13 the party had held. Tsai has just over a year to win back public support before presidential elections in January 2020.

Read: Pro-China Party's Big Win in Taiwan Puts Tsai Future in Doubt

Tsai touted new measures to entice Taiwanese companies to return from the mainland, a counteroffensive against Chinese efforts to attract the island's investors. The incentives, which took effect Tuesday and will last three years, include two years of free rent in industrial zones developed by Taiwan's economic ministry, supplies of basic utilities and low interest rates.

“Cross-strait interactions need to be healthy and normal,” Tsai said. “These interactions can't based on vague political preconditions, or forced passwords. We are not against normal interactions between Taiwan and China.”

Taiwan will establish three “safety nets” to safeguard local livelihoods, information technology and communications -- including preventing “fake news” -- and democracy, Tsai said.

The KMT -- the party that lost the Chinese Civil War against the Communists 70 years ago -- supports stronger ties and eventual unification with the mainland. The Chinese authorities would welcome its return to power, since Tsai continues to refuse its negotiating framework that both sides belong to “one China.”

Read: China Lures Taiwanese With Free Schooling, But There's a Catch

The U.S.-China trade war would also impact Taiwan's industrial development and financial stability, she said.

Tensions over the island have increased amid the trade spat, with Trump administration moves to support Taiwan -- including sending warships through the Taiwan Strait, and approving legislation to allow high-level diplomatic visits to Taipei -- drawing China's ire.

To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Karen Leigh

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