Ma Wins Second Term as Taiwan Voters Back His Push for Closer China Ties

President Ma Ying-jeou was elected to a second four-year term as Taiwan’s president, giving him a renewed mandate to press for closer ties with China that have eased decades-old tensions across the Taiwan Strait.

Ma, the 61-year-old leader of the ruling Kuomintang Party, defeated challenger Tsai Ing-wen, the Democratic Progressive Party chairwoman, by 51.6 percent to 45.6 percent, with all the votes tallied, the Central Election Commission reported on its website. The commission said 74.4 percent of Taiwan’s 18 million eligible voters cast ballots.

“This isn’t a personal victory, this is a victory for the Taiwan people,” Ma said at a rain-soaked victory rally in Taipei late yesterday. “The people have approved our efforts to shelve disputes and strive for peace across the Taiwan Strait.”

Ma’s victory is an affirmation of his effort to improve Taiwan’s relationship with China after decades of strained ties under his DPP predecessor and previous Kuomintang governments. A stable cross-strait relationship may also benefit U.S.-China ties as Washington seeks help from the leadership in Beijing to contain the nuclear programs of Iran and North Korea.

‘Profound Importance’

“Cross-Strait peace, stability and improved relations, in an environment free from intimidation, are of profound importance to the United States,” the White House said in a statement congratulating Ma on his victory.

Ma’s victory removes a potential irritant in the U.S.-China relationship, said Bryce Wakefield, a program associate at the Woodrow Wilson International Center for Scholars, a Washington policy group.

A second term for the incumbent means “there will be continued cross-Straits stability, which mean that Taiwan will not be a major destabilizing factor going forward,” Wakefield said.

China’s Taiwan Affairs Office said in a statement issued through the Xinhua News Agency that Ma’s victory shows that the “peaceful development of cross-straits ties” in the last four years was “the correct path that has won the support of the majority of the Taiwanese compatriots.”

Ma was backed by executives of Taiwan’s biggest companies, who said his policies, including a 2010 trade agreement with China, have boosted investment and helped the island’s economy grow.

“The stock market will rally on Monday,” Terry Gou, chairman of Apple Inc. supplier Foxconn Technology Group (2317), said in an interview with local television station TVBS in predicting a Ma victory yesterday.

‘Very Sorry’

Markets may have assumed a Ma victory. Option traders placed increasingly bullish bets earlier this month on an exchange-traded fund tracking Taiwan stocks. The ratio of calls to buy the iShares MSCI Taiwan Index Fund versus puts to sell rose on Jan. 6 to the highest level since March 2008, two months before Ma was sworn in for his first term.

“We’re very sorry that we let the public down,” Tsai, 55, said in a concession speech in Taipei yesterday evening, in which she also offered to resign as head of the DPP. “The cross-strait relations is a complicated matter and cannot be treated in the naive way that the KMT is doing now or it will become a source of conflict for Taiwan people later.”

Direct Links

In his first term, Ma ended a six-decade ban on direct air, sea and postal links and signed 16 trade agreements with China, arguing that better ties with the mainland would create stability attractive to investors who feared the political risk was too high to put their money into Taiwan.

Chinese tourist numbers jumped 68 percent to 1.63 million in 2010, overtaking Japan as the island’s biggest source of visitors.

“Cross-strait relations and economic growth will be even better than before,” Taipei City Mayor Hau Lung-bin said at an annual party held by Foxconn Technology Group today. “‘We’ll definitely see a lot more mainland tourists coming to the city.”

Ma, who has law degrees from New York University and Harvard University, soothed Chinese leaders when he came into office in 2008 with his vow of “no unification, no independence, and no use of force.” China had criticized a push by the DPP’s Chen Shui-bian to seek sovereignty during his 2000-08 tenure as president. Chinese officials had warned that relations would suffer if Tsai won.

‘Challenging Global Conditions’

“You can argue Ma overlooked some of the domestic issues, but it’s easy to criticize others,” said graphic designer Eric Wang, 27, who voted for Ma in 2008 and this year. “I don’t think Tsai can do a better job than Ma given such challenging global conditions.”

The Chinese government, which itself will undergo a leadership change later this year, has never ruled out the use of force to reunite with the island. Taiwan has been governed separately since 1949 after KMT forces were defeated on the mainland by the Communists in a civil war. China had as many as 1,200 short-range missiles deployed opposite Taiwan as of December 2010, according to an annual review by the U.S. Defense Department.

“I will devote my life to protect the Republic of China’s sovereignty and dignity,” Ma said, using the formal name for Taiwan. “This is my solemn vow.”

Parliamentary Election

Taiwan’s voters also elected members of the Legislative Yuan, the island’s parliament. The Kuomintang Party retained its majority, winning 64 of 113 seats, the Central Election Commission said, down from 81 seats in 2008. The DPP won 40 seats and the People First Party won 3 seats. The PFP presidential candidate, James Soong, won 2.8 percent of the vote.

Chen, the former president, is serving a 17-year prison sentence for corruption and bribery. His son, Chen Chih-chung, lost his bid for a parliamentary seat yesterday. Chen Chih-chung was convicted of perjury in his father’s corruption case last year.

Taiwan’s economy will slow to 4.05 percent this year from 4.5 percent in 2011 and 10.7 percent in 2010, according to economists’ estimates compiled by Bloomberg. China’s economy grew at a 9.2 percent rate in 2011 and its expansion will slow to 8.5 percent this year, the data show.

Ma vowed to learn from the criticism leveled at him during the campaign by Tsai, who said Taiwan was losing jobs to China and that the gap between rich and poor was increasing.

“I hope in the next four years the wealth gap will narrow and we will take care of the underprivileged,” Ma said. “I want Taiwan to continue to have a stable environment for growth.”

To contact the reporters on this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net; Yu-Huay Sun in Taipei at ysun7@bloomberg.net; Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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