How Beijing uses economic coercion to try and sway Taiwan’s elections

From pineapples to petrochemicals, Beijing uses trade to influence opinion, but analysts say it has little impact.

China banned Taiwan pineapples in early 2021, devastating the industry [File: Ritchie B Tongo/EPA]

Taipei, Taiwan – In early 2021, Chien and his fellow pineapple farmers in southern Taiwan received bad news: China had added their crop to a list of banned imports, claiming concerns about pests and other safety issues.

At the time, Taiwanese pineapple farmers were sending nearly all their fruit to China in an industry worth $284m a year, even after factoring in the COVID-19 pandemic. Within a month, the price of their pineapples had dropped from 60 US cents per 600gm to mere pennies, according to Chien.

“As soon as the news broke, the whole thing collapsed within a month,” he said, asking not to use his full name for fear of economic repercussions because he sells pineapples to Hong Kong.

Worse still, the recently harvested crop could not be sold locally or exported to neighbours like Japan and Hong Kong because of issues over product quality, he added.

“Taiwan had not really promoted export products because they relied on China in the past. Farmers were very nervous about the political situation, and the price of pineapples was very low because they could not sell them,” he told Al Jazeera.

People walking past crates of pineapples. Posters on the wall behind are advertising Taiwan's tropical fruit
Beijing has also targeted other produce from Taiwan as part of its attempt to sway public opinion on the island [File: Ritchie B Tongo/EPA]

Beijing, which claims Taiwan as its own territory, announced more bans over the subsequent months, targeting other tropical fruits such as sweet custard-like sugar apples and crunchy pear-shaped wax apples.

For observers in Taiwan, the import bans had little to do with food safety or concerns about pesticides. It appeared to be another case of Beijing expressing its anger at the governing Democratic Progressive Party (DPP), which it regards as “separatist” and hell-bent on independence.

‘Clear correlation’

Since the DPP took power in 2016 under President Tsai Ing-wen, Beijing has resorted to various means of coercion to undermine her government, including military exercises in the Taiwan Strait, picking off Taiwan’s last few diplomatic allies, stirring up misinformation campaigns online, and isolating the self-ruled island from international organisations.

Beijing has also turned to economic coercion, banning individual tourists from visiting Taiwan in 2019, fining Taiwanese companies operating in China such as Far Eastern Group in 2021, and placing import bans on Taiwanese products from fruits to fish.

Hitting out at Taiwanese farmers like Chien has limited economic impact on Taiwan’s economy, but the message is clear to Taiwan watchers.

Most farmers live in southern Taiwan, a stronghold of the DPP. In August 2022, China banned more than 2,000 Taiwanese imports, including biscuits and pastries, in protest against a historic visit to Taiwan by then-US Speaker of the House of Representatives Nancy Pelosi.

These efforts have continued in the lead-up to Taiwan’s presidential and legislative elections on January 13. As campaign season kicked off last April, Beijing announced a major investigation into Taiwanese trade practices, ruling last month that Taiwan had unfairly imposed “trade barriers” on more than 2,000 Chinese products.

“This timeline aligns perfectly with Taiwan’s presidential election. There seems to be a clear correlation indicating China’s intention to leverage trade issues as bargaining chips to influence Taiwan’s voters’ distrust in the DPP’s governance and decrease their credibility in handling cross-Strait trade conflicts,” wrote Chun-wei Ma, an assistant professor for international affairs at Tamkan University, in a recent report on the issue.

The aim is to encourage voters to move away from presidential candidates like the DPP’s William Lai and towards a more “China-friendly” party, Ma said.

A KMT supporter at a rally. He is an older man and wearing a blue cap decorated with small Taiwan flags and hearts.
The Kuomintang is seen as more China-friendly than the DPP, which has been in power since 2016 [I-Hwa Cheng/AFP]

Taiwan’s government has also accused Beijing of election interference through economic coercion, such as when it ended tariff cuts on a dozen Taiwanese petrochemical imports in late December – just as voters were starting to make their final decisions.

Similar allegations were made when Beijing targeted Apple supplier Foxconn with a surprise tax investigation in November in what was widely seen as a rebuke of founder Terry Gou’s decision to run for president.

The move was also criticised as “political” by Taiwan’s National Security Council, as Beijing did not want Gou to divide the opposition in the upcoming election, raising the chance of a DPP victory, according to department head Wellington Koo.

The more conservative Kuomintang (KMT), in contrast, has a long working relationship with Beijing. The independent Taiwan People’s Party has also called for more cooperation and renewed talks on a controversial service trade agreement with China.

Still, despite Beijing’s flurry of activity, Taiwan experts such as Bonnie Glaser, managing director of the Indo-Pacific Program at the German Marshall Fund, argue its economic coercion remains restrained and largely symbolic compared with the damage it could potentially inflict.

With cross-strait trade valued at $205bn in 2022 according to Taiwanese data, China is Taiwan’s largest trading partner – a position that holds no small influence. Beijing has shown that it is not afraid to punish other close trade partners – in 2021 it cut off coal and other imports from Australia, for instance, after Canberra called for an independent investigation into the origins of COVID-19.

“Unlike the cases of Australia, South Korea and other countries which were meant to punish and to deter others from challenging Chinese interests, economic pressure on Taiwan has been small-scale and part of a broader strategy of preventing Taiwan independence and promoting reunification,” Glaser told Al Jazeera by email.

Analysts note that Beijing has yet to target Taiwan’s all-important semiconductor industry, the world’s biggest, or the landmark 2010 Cross-Strait Economic Cooperation Framework Agreement, which cut tariffs on major imports and exports.

Semiconductors on a circuit board
Beijing has not targeted Taiwan’s semiconductor industry, which is vital to its own economy  [File: Florence Lo/Reuters]

Glaser feels Beijing’s economic coercion is likely to have the most impact on undecided voters.

“The use of economic coercion to influence Taiwan’s elections is only one of the tools that Beijing is using,” she said. “It is unlikely to have any impact on voters who are the base for the [KMT] and [DPP] or those who have already decided who they will vote for. But it may have some impact on undecided voters.”

New generation of voters

While China relies on old methods to sway voters, Taiwan’s voter base is changing.

Voters born towards the end of martial law and later see themselves as Taiwanese and not Chinese are tired of their overbearing neighbour to the north and its punishment for asserting their identity.

They have also grown up in a much more stable environment than some of their parents and grandparents. They may have missed the economic boom of the 1970s and 80s, but they also grew up with an overall higher standard of living with benefits like health insurance and widespread higher education.

Austin Wang, who studies Taiwanese public opinion at the University of Nevada, Las Vegas, said China’s coercive activities have begun to backfire at a transitional moment for Taiwan.

“Economic benefit from China indeed influenced the public opinion in Taiwan in the past,” he said.

“The elder generation who experienced poverty cared about the economy more than identity. However, since the younger generation in Taiwan entered the era of post-materialism, economic benefits can hardly change their identity or attitude toward independence.”

As Taiwan’s political landscape changes, its economic presence in China is also falling. Thanks in part to the pandemic, the population of Taiwanese people working in China fell from a high of 261,000 in 2011 to a low of 163,000 in 2021, according to government data.

Some businesses operating there also questioning the future.

A 2022 survey of 500 Taiwanese companies by the US Center for Strategic and International Studies (CSIS) revealed that while 60.8 percent of respondents had business operations in China, 76.83 percent felt Taiwan needed to reduce its “economic dependence on China”.

A quarter of respondents said they had already moved some of their business out of China, and a third were considering moving some operations.

Taiwan's Vice President and presidential candidate of the ruling Democratic Progressive Party (DPP) William Lai Ching-te. He is standing in an open top vehicle on his way through the streets of in Kaohsiung to greet supporters.
Taiwan’s vice president is running for the top job in Saturday’s election. Beijing claims he is a ‘separatist’. On Tuesday, he said he wanted to maintain the status quo [Alastair Pike/AFP]

On the ground in Taiwan, even farmers are having similar thoughts.

Beijing reversed its ban on Taiwanese pineapples in 2023, but it was also a lesson in why they needed to reduce their dependence on China.

During the three years they were locked out of the Chinese market, farmers worked together, and with the government, to grow better quality pineapples that could be exported to more demanding markets in Hong Kong and Japan, farmer Chien explained.

As business and prices rise, Chien said older farmers may return to business as usual, but the younger generation will not forget what happened.

“We don’t want to be used as bargaining chips. Because even if it’s fine today, even if the [Chinese market] was replaced, and a different president was chosen, the situation would still not change,” he said. “If China is unhappy, we could still be cancelled or banned, so that’s a very unhealthy trade relationship.”

Source: Al Jazeera