Jan. 12 (Bloomberg) -- Taiwan's opposition Kuomintang is heading for a landslide victory in today's parliamentary election, boosting its chances of taking power when a new president is elected in March.

The KMT, which favors closer links with China, claimed victory in 81 of the 113 seats, party spokesman Su Jun-pin said. It won 51.2 percent of the popular vote, according to Taiwan's Central Election Commission, compared with 36.9 percent for the independence-leaning Democratic Progressive Party.

``This is a big setback for the DPP,'' said Hong Ci-chang, a six-term DPP lawmaker. The commission said it would announce results by 10:30 p.m. local time.

Ma Ying-jeou, 57, the KMT's presidential candidate, leads his DPP rival Frank Hsieh, 61, in opinion polls for the March 22 election. The DPP's popularity has fallen amid President Chen Shui-bian's focus on the island's sovereignty and allegations of corruption by his family. The U.S. and China, which considers Taiwan part of its territory, have also rebuked Chen for his pro-independence rhetoric.

``The legislative election is seen as the first battle in the campaign for the presidency,'' said Chang Wu-ueh, a political science professor at Taipei's Tamkang University. ``Doing well boosts the KMT's chances of winning the war.''

The DPP won 35.7 percent of the vote in the 2004 legislative elections, while the KMT and its offshoot the People First Party, which isn't contesting today, won 46.7 percent.

The KMT had targeted 60 seats and the DPP 50 in the island's 113-seat Legislative Yuan, which is half the size of the previous parliament after reforms to synchronize its election with the presidency and to make it more effective.

Economic Challenge

While Chen's 2000 election as president ended 51 years of KMT rule on the island, the party retained control of parliament, leading to gridlock and delays in enacting laws including last year's budget. Taiwan's economy shrank in 2001, with growth wavering between 3.5 percent and 6.2 percent since then after climbing at least 4.6 percent each year during the 1990s.

``We have given Chen a chance for eight years,'' said Chang Yi-shue, 57, a community bus driver. ``What we want now is to improve the economy and have better relations with China. We want the status quo, but we want jobs and a better economy.''

Ma has pledged to raise growth and cut unemployment by easing trade and investment restrictions with the mainland. Chen, 56, has said that Taiwan's investments in China are already too high and greater integration threatens the island's sovereignty.

He wants a referendum on joining the United Nations to be held with March's presidential election, a move the U.S. calls provocative and that China warns it won't tolerate. China has threatened to invade Taiwan if it declares independence, while U.S. law requires it to assist the island in its defense.

To contact the reporters on this story: James Peng in Taipei at jpeng7@bloomberg.net; Tim Culpan in Taipei at tculpan1@bloomberg.net

Last Updated: January 12, 2008 07:49 EST