Time running short for Taiwan to protect its democracy
Domestic power struggles are altering Taiwan’s security outlook while Beijing expands political influence campaigns.
In a nutshell
- Taiwanese political paralysis may serve Beijing better than military scenarios
- China is targeting Taiwan’s institutions rather than its territory
- Democratic resilience now matters as much as military deterrence for Taipei
- For comprehensive insights, tune into our AI-powered podcast here
Two years into Lai Ching-te’s presidency, changes within Taiwan and in cross-strait relations with China have not been conducive to the health of Taiwan’s democratic system. Behind the surface prosperity – including an estimated gross domestic product (GDP) growth of 8.7 percent in 2025 – a deepening crisis is becoming apparent.
Taipei has little time left for trial and error.
Growing influence of Taiwan’s opposition parties
In the 2024 general election, the opposition Kuomintang (KMT) won 52 seats, and the ruling Democratic Progressive Party (DPP) secured 51 seats in the 113-seat Legislative Yuan. The People’s Party, a more recently formed political body that falls outside the traditional independence-versus-unification dichotomy and plays a centrist role, secured eight.
Since then, tensions between the DPP and the opposition have noticeably worsened. In October 2025, KMT Chairperson Cheng Li-wun joined forces with the People’s Party to take the legislative initiative. In 2026, Ms. Cheng visited mainland China and met with Chinese President Xi Jinping, whose endorsement of her cross-strait positions has allowed the Chinese Communist Party (CCP) to adjust its Taiwan strategy.
Beijing’s goal is to hamstring the Lai administration’s decision-making – ensuring it achieves nothing – while persuading the Taiwanese public to trust President Xi’s promises.
The CCP is now working more intensively to install pro-Beijing forces in Taiwan’s Legislative Yuan, a unicameral legislature, while simultaneously waging an information war to influence undecided Taiwanese voters. Beijing’s goal is to hamstring the Lai administration’s decision-making – ensuring it achieves nothing – while persuading the Taiwanese public to trust President Xi’s promises.
The KMT frequently labels the DPP a party promoting independence, citing provisions in its party constitution advocating a sovereign Republic of Taiwan and a new constitution. Although the DPP’s 1999 Resolution on Taiwan’s Future explicitly states that Taiwan is already a sovereign and independent nation – under its current name, the Republic of China – both the KMT and the CCP continue to portray President Lai Ching-te as an independence advocate.
Interpretations of Trump’s remarks
Beijing and the KMT have exploited United States President Donald Trump’s remarks after his May 2026 summit with President Xi to attack the Lai administration. Before the Beijing visit, China had high hopes for President Trump, viewing him as someone who handles geopolitical issues from a business perspective. During the summit, President Xi directly asked Mr. Trump whether the U.S. would defend Taiwan if China attacked. President Trump replied, “I’m not going to answer that question.”
In their May 14 meeting, President Xi targeted Japanese Prime Minister Sanae Takaichi and President Lai, calling both of them threats to regional peace. President Trump publicly praised Prime Minister Takaichi but struck a more balanced note on Mr. Lai, telling reporters: “We’d have to travel 9,500 miles to go to war. I don’t want that. I hope they calm down, and I hope China calms down.”
Although President Trump later reaffirmed in a Fox News interview that U.S. policy toward Taiwan had not changed, Beijing and the KMT seized on his earlier remarks. The core issue is definitional: Mr. Trump interprets Taiwanese independence as a concrete act that alters the status quo, such as amending the constitution or renaming the country; Beijing’s definition is far broader, treating any assertion that the two sides of the strait are equal and that Taiwan is not subordinate to China as advocacy for independence.
What has genuinely alarmed officials in Washington is that the president appears to have broken with the Six Assurances to Taiwan upheld by every administration since Ronald Reagan, by treating weapons deliveries as a bargaining chip with Beijing. The $14 billion arms sale approved by Congress in January remains under White House review. Less than a week after the Beijing summit, Acting Secretary of the U.S. Navy Hung Cao stated on May 21 that the sale had been placed on hold to ensure sufficient ammunition for use in any American military operations against Iran. This has further emboldened Beijing, even as the record of President Trump’s actual arms transfers to Taiwan – $11 billion already completed, plus the planned $14 billion – is unprecedented in scale.
DPP’s setbacks and the coming test
The DPP suffered a significant setback in 2025 when a mass recall campaign targeting 24 KMT legislators and one People’s Party mayor failed entirely: All survived their recall votes. The campaign, driven by President Lai’s DPP, damaged the administration’s standing rather than strengthening it.
The ruling party’s next test comes in late November 2026, when local government elections will be held across Taiwan’s 22 counties, cities and special municipalities. The vote is inauspicious. In the previous equivalent election cycle in 2022, the KMT won a landslide and the DPP suffered its worst local result in years, forcing then-chairperson Tsai Ing-wen to resign.
The current outlook is not much better. In Taipei – a traditional KMT stronghold – President Lai’s endorsed mayoral candidate, Shen Bo-yang, faces near-certain defeat; securing 40 percent of the vote would be considered a strong result. A poor showing in November will directly constrain the Lai administration’s room for maneuver in its final two years.
The challenges facing Cheng Li-wun
After meeting President Xi in May, Ms. Cheng traveled to the U.S. for a 16-day visit. Through these two trips, her plan was to project an image of a leader who can talk to both Beijing and Washington – positioning herself as the only Taiwanese politician capable of mediating across the strait and building political capital for a 2028 presidential run.
Her approach, however, has been raising concerns in Washington. Before her departure, American Institute in Taiwan Director Richard Bush stated publicly that U.S. agencies would ask whether the KMT was “fundamentally changing its political orientation.” The impression Ms. Cheng has given Americans is that the KMT is adopting Beijing’s stance on key diplomatic and security issues. When President Lai proposed a special defense budget of 1.25 trillion New Taiwan dollars (approximately $40 billion), the KMT-dominated Legislative Yuan blocked it for months. Ms. Cheng herself advocated cutting the figure to $300 billion New Taiwan dollars, well below the 800 billion backed by most legislators and local party leaders. The final budget was set at 780 billion – a result the Trump administration would not welcome from a potential future president. Her U.S. trip turned out to be a disaster, because no key figure from the American side met with her.
Read more on Taiwan
- Taiwan considers a Plan B
- Taiwan’s geopolitical relevance for Japan
- Will there be a second Xi’an Incident in Taiwan?
Ms. Cheng also faces resistance within the KMT itself. Her approval rating fell to 23.8 percent in a May poll by the Formosa Post (a pro-DPP publication, so caution applies), with a disapproval rating of 51.7 percent. President Lai’s approval rating, meanwhile, rose to 45.7 percent, slightly exceeding his disapproval rating for the first time. While KMT slogans such as “uphold the 1992 Consensus, oppose Taiwan independence” resonate with the party’s base, personal support for Ms. Cheng is weaker than support for those slogans.
Xi Jinping’s frustration, waning patience and role of the military
One development working against Beijing’s reunification timeline is the shift in Japanese strategic posture. President Trump’s call for democratic nations to spend 3.5 percent of GDP on defense has spurred Japan to rebuild its defense industry. Japan is also deepening its presence in East and Southeast Asia, including a joint statement with the Philippines on maritime boundary negotiations in the Bashi Strait between Taiwan and the Philippines. Thanks to its proximity, Japan’s cooperation with the Philippines will definitively enhance Taiwan’s defense capacity as well. Overall, Japan’s military resurgence will force Beijing to exercise greater caution before contemplating the use of force against Taiwan.
To pressure the Taiwanese public to take a stance favorable to Beijing, President Xi is more likely to pursue a strategy of external military encirclement or blockade – akin to the U.S. approach in the Strait of Hormuz – rather than attempt a direct military seizure. Domestic economic pressures in China, marked by a bifurcated economy with a booming high-tech sector and a declining manufacturing and services sector, are intensifying and will accelerate Mr. Xi’s timetable. The political crisis facing the Lai administration is therefore driven as much by external pressure as by internal dynamics.
Scenarios
Most likely: Beijing forces a settlement via encirclement and internal pressure
President Lai performs poorly in the November 2026 local elections and the CCP’s information warfare makes further inroads among Taiwanese voters. Beijing privately secures U.S. agreement to scale back or delay the $14 billion arms sale. Emboldened, it deploys a combination of naval encirclement, a blockade and internal cooperation from the KMT to push Taiwan toward a (manipulated) referendum favorable to Beijing or to generate mass protests comparable to those preceding German reunification. Once a favorable referendum result is in sight, Beijing moves to complete a takeover that the U.S. is unable to prevent. American Secretary of State Marco Rubio has publicly warned that this scenario is being considered.
Somewhat likely: U.S. pressure contains Beijing while Taiwan buys time
The U.S. recognizes Taiwan’s strategic and economic value and continues to support the Lai administration while pressuring the KMT to prevent it from drifting too close to Beijing. Washington quietly strengthens support for democratic forces within the First Island Chain, including reviving the U.S.-Japan-India-Australia Quadrilateral Security Dialogue, and counters China’s naval and missile capacity with more effective military technology.
President Xi is compelled to postpone any military action or forced unification attempt for at least the next two years. President Trump has at least two further meetings with Mr. Xi scheduled this year, in which he may quietly resolve the arms sale impasse and the question of a direct call with President Lai.
Least likely: Lai modifies his position and the DPP stabilizes
President Lai amends the DPP’s party constitution provisions to counter the KMT and CCP’s branding of the party as a Taiwan independence faction, while reframing the cross-strait relationship from historical and linguistic perspectives. The DPP exploits anti-Cheng factions within the KMT to win centrist legislators to its side, boosts the economy by supporting small and medium-sized enterprises, and improves living standards for ordinary Taiwanese. Buying time for short- and medium-term stability leaves the long-term resolution of the Taiwan question to future generations. This approach presents significant challenges for the Lai administration but is the most sustainable path. There are signs that Taipei is showing a certain degree of flexibility in its policy toward the mainland. Yet, even so, Beijing will not buy it.
Contact us today for tailored geopolitical insights and industry-specific advisory services.
Sign up for our newsletter
Receive insights from our experts every week in your inbox.
