Taiwan’s 13 January presidential and legislative elections were a three-way fight between the incumbent Democratic Progressive Party (DPP), the conservative Nationalist Party and the new “third way” Taiwan People’s Party. The DPP held onto the presidency for a third term while the People’s Party soaked up significant pools of disaffection from both major parties.

For international policy wonks, this election was a critical verdict on “cross-strait relations”—a euphemism for whether Taiwan can avoid being invaded by China or becoming ground zero in a US-China war. So China quite literally “loomed” over Western press coverage.

“China looms over Taiwan’s fateful election” (Washington Post, 12 January); “For China, Taiwan’s elections are a looming crisis” (Economist, 4 January); “China’s Xi claims ‘reunification’ with Taiwan is ‘inevitable’ as crucial election looms” (CNN, 26 December); “Taiwan presidential election: Opposition in chaos as China looms in background” (Guardian, 6 December).

The return of the DPP is viewed as a “blow” to Beijing. But the election was not fought primarily over China relations. It was about the economy. All three parties downplayed their traditional cross-strait positions, and the biggest beneficiary was the one that did so the most—the People’s Party.

Popular national-democratic sentiment did secure a third term for the historically pro-independence DPP under new president Lai Ching-te. But the victory was narrower than in 2020, Lai receiving just 40 percent of the vote compared to 57 percent for his predecessor Tsai Ing-wen. The DPP also lost its outright majority in the Legislative Yuan (parliament).

The Nationalist Party, for 40 years the leader of a one-party military dictatorship, is closer to Beijing and socially conservative. Its candidate, Hou Yu-ih, an ex-cop, won 33 percent of the vote. The stridently pro-independence New Power Party, once a rising star born of the 2014 Sunflower movement, suffered a complete parliamentary wipeout.

Voters swung sharply towards the People’s Party, which fielded a presidential candidate for the first time. Ko Wen-je, a surgeon and the mayor of Taipei, won 27 percent of the vote, allying with the Nationalist Party but downplaying the China question. Ko talked more about his housing policy and touted a number of progressive social positions, despite the People’s Party not being a working-class or progressive organisation.

Ko is a careerist with close ties to Foxconn billionaire Terry Gou, who has jumped between the “Pan-Green” (pro-independence, pro-Washington) and “Pan-Blue” (pro-unification, pro-Beijing) camps to ride alternating waves of political disaffection.

The claim that Taiwan is part of China is historically baseless and cruelly dismissive of the democratic rights of Taiwan’s majority. Young people in particular are practically unanimously against unification with China and identify only as Taiwanese. Yet they also value peace and oppose moves that would provoke Chinese aggression, such as formally declaring independence. US House Speaker Nancy Pelosi’s inflammatory visit in 2022 and China’s threats of reprisal brought the issue to its tensest in decades.

But the daily grind of Taiwanese capitalism seems to be weighing heavier than the prospects of a future invasion. Inflation is eroding the value of wages, which can barely cover rents.

Workplace exploitation, nuclear power, anti-migrant racism, and women’s and LGBT rights are more important issues for many young people than the intrigue involved in the politicians’ cynical balancing act between military superpowers. The DPP poses as a progressive alternative on these social issues, but rules in the interests of big business. That was the main reason it lost so much support.

Taiwan is home to some of the world’s most advanced semiconductor plants. Yet economic growth has been sluggish for years. Most workers are not employed in the high-tech industries, but in low-end manufacturing and the services sector.

According to Marxist economist Michael Roberts, real wages have barely risen in twenty years. While the median annual wage at silicon chip giant TSMC is A$84,000, workers in most sectors earn around $18,000 a year. Migrant cleaners and farmworkers from Thailand and the Philippines fare even worse.

Economic hardship has increased during eight years of DPP rule. In 2016, the new government “revised” the Labour Standards Act, scrapping minimum overtime pay and other conditions. Taiwanese workers now have the fourth-longest working week in the world. Tsai’s government made deep cuts to teachers’ pensions and increased their retirement age by eight years. House prices have risen by 50 percent in the past five years, while youth unemployment sits at a near-record 12 percent.

Taiwanese capitalists, on the other hand, are living it up. The Forbes 50 richest Taiwanese have a combined wealth of $232 billion. And inequality is at its highest level since 1983. The DPP is too busy serving business interests to care about this.

The party was on track to lose badly in the 2020 elections. But in that campaign’s closing months, the island watched millions of Hong Kongers heroically rise up against the Chinese Communist Party dictatorship, only to fall under its brutal baton. The DPP enjoyed a stunning reversal of fortune and won in a landslide, banking on its reputation as the leader of the 1980s democracy struggle and champion of Taiwan’s de facto independence from China.

Yet the DPP is a nationalist one-trick-pony. The constant threats and warnings from a belligerent, imperialist China, enabled it to claim another election victory. But it is wearing thin on a working class suffering degraded living standards. The problem is that the other parties represent different interests among the Taiwanese elite, rather than any break with it. The debate in the political class is about how to balance profitable Chinese trade and investment with strong military ties to the United States.

So sweatshop billionaire Terry Gou and microchip billionaire Morris Chang can stand on opposite sides of the China-US debate but be in broad agreement when it comes to policies screwing over workers in Taiwan and China.

One breath of fresh air in the campaign was a labour protest held in Taiwan’s major cities on 23 December. A few thousand in Taipei and Kaohsiung demanded higher wages, higher pensions and shorter working hours. Smoke bombs were thrown outside the presidential building.

“Protest leaders said they had submitted their demands to all three candidates, but none of their replies had satisfied them, so they would not ask their supporters to vote for any specific candidate”, the Taiwan News reported.

More of this kind of working-class independence is sorely needed. Otherwise, the Taiwanese people will remain squeezed by Chinese aggression on one side, US domination on the other, with the self-interested Taiwanese capitalists and politicians occupying the space between the two.