Key Takeaways 

  • Victory for independence-leaning candidate Lai Ching-te

    in Taiwan’s presidential election will likely mean

    cross-strait tensions remain somewhat elevated over

    the next few months.

  • However, Lai’s Democratic Progressive Party failed to

    win a majority in the legislature, tempering the election

    outcome from Beijing’s perspective as the more

    Beijing-friendly opposition parties can potentially

    curtail some aspects of Lai’s agenda.

  • Both Lai and the US have sought to de-escalate

    tensions with Beijing, emphasising the maintenance of

    the status quo. Beijing’s relatively muted reaction to

    the election result and the visit to Taipei by an

    “unofficial” US delegation should limit any spillover

    effect to the recent modest improvement in US-China


  • Taiwanese politics is unlikely to be the main driver of

    tensions and conflict risk over the coming 12 to 18

    months. The US election potentially threatens to

    introduce significant policy uncertainty and

    inconsistency, potentially leading to a de facto end of

    “strategic ambiguity”, which has been a key pillar of

    deterrence for the past 50 years.

  • Indeed, in part reflecting the increased chances of a

    Trump presidency, we decreased the probability of the

    status quo persisting (40%, -5ppts) and increased the

    prospect of Taiwan risks becoming front-and-centre

    within China-US tensions (35%, +5ppts). We continue

    to judge that the risk of conflict remains low (10%)

    even if rhetoric often veers into the incendiary.


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