Sizing Tsai up

YOUNG designers have come up with a rose-gold brooch for the ushers at the presidential inauguration on May 20th of Tsai Ing-wen. One of the designers, Zita Hsu, explains that they found inspiration in a mathematical concept known as Euler’s formula to create an abstract design. Both mathematics and Ms Tsai, she adds, embody rationality and calmness.

Ms Tsai will need plenty of both. A quiet, cat-loving former legal scholar, Ms Tsai worked hard in opposition to nudge her party, the Democratic Progressive Party (DPP), away from economic populism and an anti-China, pro-independence stance towards more moderate views. She was rewarded with a landslide in January elections, in which her party also secured control of the parliament, the Legislative Yuan.

Yet her new administration will have no honeymoon. At home she is under pressure to revive an economy that is barely growing and offers few good jobs to the young. Abroad, she will need to manage delicate relations with China. The Chinese government has made very clear in recent days that it will blame Ms Tsai for any crisis across the Taiwan Strait that might erupt after she takes office.

The economy first. Ms Tsai inherits a growth rate of less than 1%; a trading system skewed heavily towards China; an ageing population; and a pension system for public officials that is going bankrupt. When growth was sizzling, earlier Kuomintang (KMT) governments used to pick developing industries and throw money at them. Now Ms Tsai has to foster an environment that is friendly to innovation and foreign investment. It means dismantling unhelpful regulations, fostering co-ordination among ministries and sharpening up the civil service. Not only KMT-linked business interests will oppose her. Her own left-leaning party is suspicious of business.

Ms Tsai’s government line-up favours technocratic competence over politicking. The prime minister will be Lin Chuan, a former finance minister, reflecting a focus on the economy. Ms Tsai has even put experienced KMT hands in the cabinet. Ms Tsai’s choice of defence minister, Feng Shih-kuan, the former head of a state-run aerospace company, reflects her desire to build up a local defence industry. And the economics minister, Lee Chih-Kung, is an energy expert—the DPP pledges to make Taiwan nuclear-free.

As much as anything, Ms Tsai wants to strengthen trade ties. She seeks better business links with South-East Asia and is keen to launch negotiations for a free-trade agreement with Japan. But greatly expanding trade agreements depends, as ever, on China. It has long frustrated Taiwan and has the power, behind the scenes, to discourage countries or blocs from signing free-trade deals with Taiwan. To date only Singapore and New Zealand have bilateral agreements with both China and Taiwan, while the island is outside South-East Asian initiatives.

As for trade with China itself, it ballooned under the outgoing president, Ma Ying-jeou (as did Chinese tourism to the island). Indeed, Taiwan is one of very few countries to run a trade surplus with China, thanks mainly to contract manufacturing and exports of capital equipment. Yet many Taiwanese resent the relationship, along with the cross-strait trade and economic agreements that multiplied under Mr Ma. Indeed the signing of a services agreement led two years ago to the “sunflower” movement of protesters, who argued that the deal would lead to China’s exerting undue influence on Taiwan. The movement, and subsequent student occupations of the Legislative Yuan, greatly undermined Mr Ma’s presidency.

Yet Ms Tsai has no choice but to grapple with trade issues across the Taiwan Strait. They remain for now at the heart of her island’s prosperity. And not to engage on trade would only confirm Chinese suspicions that Taiwan under the DPP is not to be trusted and is intent on drifting further away from the mainland. She is quietly negotiating with Taiwanese civic groups and student leaders over a bill for monitoring cross-strait trade and economic agreements, one of the protesters’ key demands. Some say they accept Ms Tsai’s tactful avoidance of language that casts Taiwan and China as two separate countries in the DPP’s draft of the bill. To do otherwise would enrage China, which insists that Taiwan, a democratic country, is merely a renegade region that must be reclaimed.

The bill will be deliberated during a parliamentary session that ends by July. Already, one main complaint is that it does not give enough room for public participation or for in-depth legislative review of future agreements. For now the DPP has fallen in line behind Ms Tsai on the bill. The question is how long she can maintain unity on such issues in a party with hardline pro-independence members who do not favour thicker ties with China.

Yet it is not just over trade that Ms Tsai must tread carefully with China. It insists that the rapprochement that took place under Mr Ma, whom China’s president, Xi Jinping, met in a surprise summit in Singapore last November, should continue. But Mr Xi has also made it clear that Ms Tsai’s government must acknowledge that Taiwan, however loosely, remains part of China. To date, the president-elect has promised peace, and no unilateral changes to Taiwan’s status (ie, moving towards formal independence). But China will surely want more. The honeymoon is over before Ms Tsai even begins.