How Tsai Ing-wen aligned Taiwan with the free world

During the Cold War, Taiwan was governed by a military dictatorship that masqueraded as “Free China” to shore up its anti-communist credentials and crucial American support.

Under the presidency of Tsai Ing-wen, a now-democratic Taiwan has re-imagined the old formula: “China” is downplayed given rising Taiwanese nationalism and antipathy towards the neighboring communist juggernaut, while the island’s liberalism is trumpeted alongside its prowess in semiconductor fabrication.

As the leader of the free world, the United States has pride of place in Tsai’s foreign policy for strategic reasons.

Yet her administration’s focus on the U.S. has not come at the expense of outreach to smaller liberal democracies that are more likely geopolitical bedfellows for the island. These include Lithuania, the Czech Republic and Estonia, all of which are wary of the ambitions of a revanchist Russia. Though these small Baltic states cannot offer Taiwan any significant economic or security benefits, their support has diplomatic value given that they are all members of the European Union.

By several measures, Tsai’s foreign policy has been a success. First, even though Beijing has picked off nine of the island’s erstwhile diplomatic allies during her presidency, Taiwan has a larger global voice than ever thanks to its closer ties with the West.

In the appointment of her confidante Hsiao Bi-khim to the post of top representative to the U.S. in July 2020, Tsai chose well. The current Democratic Progressive Party (DPP) vice presidential candidate excelled at cultivating American support during her three years as de facto ambassador. Her adroit navigation of Washington ensured that ties with Taiwan’s paramount partner remained steadfast despite the pandemic, a tumultuous change in administrations and Russia’s invasion of Ukraine.

Much media coverage of the U.S.-Taiwan relationship during Tsai’s presidency has focused on defense and how Washington is supposedly “arming Taiwan to the teeth.” But other elements of the bilateral relationship have arguably deepened in more consequential ways.

For instance, in the twilight of the Trump administration, then-Secretary of State Mike Pompeo lifted the labyrinthine State Department restrictions on interactions between U.S. officials and their Taiwanese counterparts put in place to reassure Beijing that the U.S.-Taiwan relationship was “unofficial.” This move prompted an ecstatic tweet from Hsiao. "Decades of discrimination, removed. A huge day in our bilateral relationship. I will cherish every opportunity," she wrote on the platform now known as X.

In April 2021, the Biden administration responded to Pompeo’s move by issuing its own guidelines that allow U.S. and Taiwanese officials to meet more freely than in the past. These guidelines encourage working-level meetings with Taiwanese officials in federal buildings as well as at Taiwan’s representative office in the Twin Oaks estate. Previously, such meetings usually occurred in hotels because it was prohibited to hold them in the former locations. U.S. officials are also now permitted to attend some events at Twin Oaks.

The U.S. and Taiwan can now engage with each more directly even if their relationship remains unofficial. As China ramps up pressure on the island in its bid to compel unification, these improved communication channels will be a strategic asset for both Washington and Taipei.

At the same time, Tsai has leaned into Taiwan’s economic relationship with the U.S. as a key part of her strategy to reduce economic dependency on China. China (including Hong Kong) remains Taiwan’s top trading partner, accounting for about 39% of the island’s exports in 2022.

However, changes are afoot. Taipei and Washington are negotiating a bilateral trade deal that will both deepen their economic ties and likely open the door for similar agreements between Taiwan and other market democracies, while Taiwanese chipmaking juggernaut Taiwan Semiconductor Manufacturing has invested $40 billion in fabrication facilities in Arizona.

Analysts who criticize TSMC’s Arizona investment based solely on financial considerations — especially the U.S.’ high labor costs — miss the broader geopolitical point. As the largest company in the island’s paramount industry, which retains close ties to the central government, TSMC can be considered as a bellwether for Taiwanese industry — and Taiwanese industry no longer sees China as its future.

Subsequent TSMC investments in Japan and Germany, as well as a budding presence of Taiwan’s semiconductor industry in Central Europe, reinforce that paradigm shift.

On the less-advanced end of the manufacturing spectrum, Taiwan under Tsai has simultaneously ramped up its investments in Southeast Asia and South Asia. The so-called New Southbound Policy, which has revived a core economic policy of former Taiwanese President Lee Teng-hui (1988-2000), has borne fruit: Taiwan invested more than $2.1 billion in the aforementioned regions and Oceania in the first half of 2023 compared to about $1.9 billion in China, according to data compiled by its ministry of economic affairs.

Tsai’s economic focus on Southeast Asia and South Asia shows the practical side of her foreign policy calculus. She emphasizes democracy and human rights when engaging with the U.S. and Europe. Closer to home, she recognizes that few, if any of these countries, wants to join hands to champion liberal values or speak up for Taiwan diplomatically, but they see plenty of upside in economic engagement with Taipei.

The one area of Tsai’s foreign policy in which she has come up short is cross-strait relations. She will leave office in May 2024 with the cross-strait relationship at a nadir. From a security standpoint, Taiwan’s position vis-a-vis China has weakened significantly since she took office in 2016, with Chinese fighter jets and naval vessels operating ever closer and in ever greater numbers to the island. The possibility of intensified gray-zone coercion by China involving cyberattacks and/or disruption of shipping routes cannot be dismissed.

The deterioration in the cross-strait relationship can be primarily attributed to the imperious truculence of Chinese leader Xi Jinping, who insists Taiwan accept Hong Kong’s model of governance despite the erstwhile British crown colony’s rapid loss of autonomy under Beijing’s rule and the preference of the Taiwanese population for self-governance.

In her resistance of Chinese pressure and preference for close ties with the U.S., Tsai has made a strategic bet that Taiwan can weather the storm of poor cross-strait relations indefinitely provided it does not seek formal independence. She has bet that despite its own political travails, the U.S. will continue to uphold the rules-based order and that its deterrence of Chinese military adventurism will succeed.

During her final National Day address as president on Oct. 10, Tsai emphasized tension reduction in cross-strait relations. “Let me reiterate that peace is the only option across the Taiwan Strait,” she said. “Neither side can unilaterally change the status quo,” she added, in what seemed like a pledge not to seek independence.

The question now is to what extent Tsai’s foreign policy legacy will endure after Taiwan’s 2024 presidential election on Jan. 13. After all, her presidency saw much of her predecessor Ma Ying-jeou’s Beijing-friendly policies unwind.

It seems likely that Tsai’s legacy will be more profound. Incumbent Vice President and DPP presidential candidate Lai Ching-te has led in the polls all year — and he faces a fragmented opposition.

If he and Hsiao win, Taiwan’s voters will have decided they are in favor of even deeper alignment with the free world even if it means more-fraught relations with China.