On May 20, 2020, President Tsai Ing-wen of Taiwan began her second term in office. In a more subdued ceremony than is the norm, Tsai took the office of oath, along with new Vice President Lai Ching-te. Her second inaugural address focused on the COVID-19 pandemic and Taiwan’s response; it also set forth Tsai’s priorities for the next four years. In her speech, Tsai said, “No matter the difficulties we face, we can always count on our democracy, our solidarity, and our sense of responsibility towards each other to help us overcome challenges, weather difficult times, and stand steadfast in the world.”

To discuss the future of Taiwan under Tsai, the Foreign Policy Research Institute has commenced a Round Table discussion between some of its Asia Program scholars: Jacques deLisle, Director of the Asia Program at FPRI and Stephen A. Cozen Professor of Law and Professor of Political Science at the University of Pennsylvania; June Teufel Dreyer, Asia Program Senior Fellow at FPRI and Professor of Political Science at the University of Miami; Vincent Wei-cheng Wang, Asia Program Senior Fellow at FPRI and Dean of the College of Arts and Sciences and Professor of Political Science at Adelphi University; and Thomas J. Shattuck, Asia Program Research Associate at FPRI.

What part of President Tsai’s inaugural address struck you as most interesting or unexpected?

Jacques deLisle: The major points were all pretty much as expected: a lot about the COVID-19 crisis and Taiwan’s impressive response and the implications of the lessons learned for economic and social policies; sections on economic policy, health and social welfare, national defense reform, international participation and space, and cross-Strait relations that were consistent with the positions set forth in Tsai’s first inaugural and with policies pursued over her first term.

Although not surprising, the discussion of COVID-19 was strikingly pervasive. Of course, there were going to be eloquent statements of praise for the heroes of Taiwan’s COVID-19 battle—from government leaders and staff to ordinary citizens, and there were going to be invocations of how Taiwan’s response supported the case for international respect and support for Taiwan. But, beyond that, the significance of COVID ran through the sections on national security, economic policy, and social policy.

One noteworthy feature of the speech was what it did not say. It was less explicit than her first inaugural—and than some of her predecessors’ inaugurals—on the issue of the sovereignty of Taiwan/the Republic of China. That should not be read as a retreat on that issue. It’s a matter of tone and, perhaps, even a signal of confidence. Transitional justice—that is, addressing the events of the era of authoritarian rule in Taiwan—was downplayed as well. The section on state institutions and democracy was notably “small ball” and, I thought, surprisingly a bit light by historical standards in touting Taiwan’s democracy. Given the concern about Chinese interference in Taiwan’s democracy through social media and other means, I was a little surprised at the lack of attention to that issue. Overall, these gave the speech a notable tone of not stoking controversies.

June Teufel Dreyer: Tsai’s inauguration speech confirmed her reputation as a sober-minded pragmatist. Observing that Taiwan’s economic growth had again exceeded that of the other Asian Tigers and that its stock market was robust, she cautioned about the challenges ahead, noting the reorganization of supply chains and her determination that Taiwan take advantage of its strengths in information and digital industries, cybersecurity that can integrate with 5G; biotech and medical technology; and renewable energy. She vowed to continue to upgrade defenses against attack while seeking Taiwan’s active participation in international fora. Domestically, a constitutional amendment committee is to be established—an issue which will undoubtedly raise concerns in Beijing—and to further improve the nation’s social safety net.

While encouraging cross-Strait dialogue, Tsai’s speech is apt to be best remembered for what it did not say: recognition of the historical fact of negotiations between representatives of the Chinese Communist Party and the then-ruling party on Taiwan, the Kuomintang, as she had done in her 2016 inauguration address. Possibly on the reasoning that Beijing had rejected it as “an incomplete examination paper.” The omission did not go unnoticed in China where Zhang Hua of the Institute of Taiwan Studies at the Chinse Academy of Social Sciences described the four words Tsai used, “peace, parity, democracy, and dialogue,” as “play[ing] a destructive role in cross-Strait relations.” The experience of the past four years, Zhang continued, showed that the two laws Tsai recommitted to using as the basis for relations, i.e., the relevant laws of Taiwan and the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, “are not enough to maintain a stable and peaceful relationship.” Secretary of State Mike Pompeo congratulated Tsai on her inauguration, using her title of president while putative Democratic Party nominee for president Joe Biden’s congratulations referred to her as “doctor.”

Vincent Wang: I was most struck by the fourth part. Here, she grouped under “Democratic Deepening” several disparate items, including establishing a constitution revision committee within the Legislative Yuan (the Parliament), continuing to restructure the Executive Yuan (the Cabinet), creating a National Human Rights Commission within the Control Yuan (a watchdog body) in August, pushing to lower the voting age to eighteen as a priority, continuing judicial reform, implementing a “national justice” system within four years, etc. The constitution committee is most interesting and controversial. President Tsai’s real motivation is unclear. Although the Republic of China (ROC) Constitution, enacted in 1947 on the mainland, has undergone seven rounds of amendments in order to cope with political realities on Taiwan, it still does not satisfy everybody. The constitutionalists want to tackle certain fundamental constitutional issues, such as delineating the power between a popularly elected chief of state (president) and an appointed head of government (premier) answerable to the legislative majority. The “Taiwan Independence” purists want to enact a brand new constitution for Taiwan, severing any remaining ties with China. In early May, a legislator from Tsai’s Democratic Progressive Party (DPP) proposed to remove the reference “Before the reunification of our country” from the ROC Constitution and the Statute on the Relations Between the Peoples of the Two Sides of the Taiwan Strait. The pragmatists in the DPP (including Tsai) clearly understood Beijing’s sensitivity to such highly symbolic moves, so they foiled that plot. Amending the ROC Constitution is exceedingly difficult procedurally. So, setting up this committee may be Tsai’s “harmless” nod to the Deep Green as well as “reassurance” to Beijing because it’s nearly impossible to amend the constitution without a national consensus.

Thomas Shattuck: I found her discussion about economic reform—specifically the supply chain issue—the most interesting because it focused on issues that other countries, particularly Japan and the United States, have worked on since the COVID-19 outbreak started. Tsai really played up Taiwan’s role in the semiconductor and cyber industries—demonstrating Taiwan as a viable alternative for companies and countries seeking a way out of China. Keeping Taiwan in the supply chain for these areas will help to boost Taiwan’s economy further. Most of the address discussed expected topics of the pandemic and Taiwan’s response, healthcare, and cross-Strait relations. How Taiwan responds to the proposed “economic decoupling” from China will set the future course of the country for years to come.

What are the most significant foreign policy challenges that Tsai faces in her second term?

deLisle: The most significant foreign policy challenges Tsai is likely to face in her second term are mostly continuations of ones from her first term. First, she is very likely to encounter a continued cold shoulder or cold peace in cross-Strait relations and continuing efforts to squeeze Taiwan’s international space. Beijing was not pleased with Tsai’s reelection—especially after a campaign that made much of Beijing’s hard line toward the Hong Kong protests as a harbinger of what Taiwan’s unification with the PRC would mean, and especially after Beijing’s hopes for Tsai’s defeat had been raised after the DPP’s losses in the 2018 local elections. While the speech included a pointed rejection of the One Country, Two Systems model that implicitly referenced the Hong Kong crisis and its impact on Taiwanese attitudes toward cross-Strait relations, and a reiteration of her post-election formulation of “peace, parity, democracy, and dialogue” as a basis for cross-Strait engagement, her second inaugural address did not depart from the basic positions on cross-Strait issues articulated in her first inaugural, which Beijing deemed unacceptable. The poaching of diplomatic allies that occurred during her first term is likely to continue. Beijing’s blocking Taiwan’s participation at the World Health Assembly meeting on the eve of Tsai’s inaugural—notwithstanding the international criticism of Beijing’s role in the COVID-19 pandemic and the global praise of Taiwan’s effective response to COVID-19—signals a lack of change in Beijing’s approach. Tsai’s call in her address for Beijing to recognize the “historical turning point” in cross-Strait relations, to “find a way to coexist over the long term,” and (more implicitly) to tolerate greater international space for Taiwan will, for now, fall on deaf ears.

Second, Tsai must navigate relations with the United States. Support for Taiwan in the U.S.—in Congress and in the executive branch—has increased significantly in the last few years and it is underpinned, in part, by greatly increased skepticism in the U.S. about the possibility of good U.S.-China relations and a greater willingness to take positions that offend China. Those factors will not change if Biden and the Democrats win, but there will be changes in the style and substance of U.S. Taiwan policy to which Taiwan will have to adjust—including a U.S. turn back toward multilateralism. If Trump wins, simple continuity is not assured. Volatility and impetuousness, and a lack of clear principles and ideology, are the hallmarks of Trump foreign policy, and there is no guarantee that Taiwan policy will continue to be relatively immune from their consequences.

There are, of course, many others issues that one could list. And there is a good chance that there will be major challenges that we do not yet foresee. If I were answering this question a year ago, I would not have put a COVID-19 style pandemic at the top of the list of policy challenges, domestic or foreign, for Taiwan or others.

Dreyer: Keeping up the positive momentum that Taiwan enjoys, in no small part due to Beijing’s heavy-handed attempts to exclude it from world fora, including most recently the WHA, and indeed to remove mention of Taiwan from the globe—“mapfare” may be considered a subset of the PRC’s Three Warfares concept. At the same time, the PRC’s “wolf warrior” diplomats continue to antagonize governments in countries including Sweden, the Czech Republic, the Netherlands, and Australia with threats of punitive economic measures if they do not back Beijing’s position on various issues such as an independent investigation into the coronavirus outbreak, control of the South China Sea, human rights issues such as Muslim internment camps in Xinjiang, and, of course, Taiwan. Taiwan shines not only on its own merits but also by comparison with the PRC. Sentiment in the U.S. has become more vocally supportive of Taiwan’s continued de facto independence. For Tsai, the challenge is to continue to expand Taiwan’s international living space without pushing so hard as to make Beijing’s inevitable threats seem credible in Washington. In effect, to counter the PRC’s salami tactics with salami tactics of its own, which will be a delicate balancing act. Thus far, she has proved very good at it.

Wang: The most significant foreign policy challenge Tsai faces in her second term will be managing Taiwan’s relationships with the United States and China. While Tsai would more decisively side with the U.S. in the increasingly confrontational U.S.-China relationship, she is also sufficiently cautious not to give Beijing excuses to attack Taiwan without provocation. As U.S. President Donald Trump’s electoral fortune drops due to his administration’s handling of the coronavirus, Tsai would prudently hedge against a possible new Democratic administration under Joseph Biden, whose positions on China and Taiwan have yet to be tested, or reluctantly hedge against the need to engage Xi Jinping’s China that intensifies pressure against Taiwan. Tsai reiterated her principle for cross-Strait relations: “peace, equality, democracy, and dialogue.” While this may help prevent further deterioration of cross-Strait relations, it would certainly be insufficient for improving cross-Strait relations. In her speech, Tsai also professed her desire for Taiwan to participate in international organizations and regional cooperation institutions. While U.S. support will increase, so will China’s opposition.

Shattuck: Taiwan’s president always has a number of foreign policy challenges to juggle due to its international status. I think that for the remainder of 2020, President Tsai’s challenges will be threefold: the usual pressure from the PRC that could perhaps increase depending on the global fallout from COVID-19; finding ways to utilize the great press that Taiwan has received due to its stellar response to the outbreak and ongoing goodwill campaign delivering masks to countries in need; and being caught in the middle of a U.S. presidential election in which China is set to be one of the biggest campaign issues.

Tsai charted cross-Strait relations quite well during her first term. Beijing will always see her as a pro-independence leader due to her stance on the 1992 Consensus, so pressure from the Mainland is not likely to let up during the next four years. Unless there is a provocation by Beijing, I expect cross-Strait relations to continue on the current trajectory of poaching of Taiwan’s diplomatic allies, keeping Taiwan out of international organizations, and continuing the military incursions into Taiwan’s territory. Fortunately for Taiwan, more governments and people are paying attention now—thanks to its COVID-19 response, but also, at least in the U.S., the ongoing scandal about the NBA. This gives Tsai an opportunity to make a better case for Taiwan, which is a challenge in its own right. Taiwan has the spotlight: what will it do with this new opportunity? Last, the U.S. election “season” might produce undue pressure on Taiwan. The China focus may provide Taiwan more opportunities to get closer to the U.S. as Trump may try to use Taiwan as a way to show how “tough” he is on China. Tsai will need to navigate that possibility carefully.

What should Tsai’s priorities be in her second term? What unfinished business does her administration have from the first term?

deLisle: In external relations, and particularly security affairs, key priorities necessarily will include managing the ongoing challenges in relations with China and the U.S. that I noted in answering the prior question. The perennial quest for international space in the face of China’s undermining efforts—but with recently enhanced support from the U.S. and other countries—will remain a priority as well. In domestic affairs, there is a good deal of unfinished business from her first term, when she articulated a highly ambitious agenda of social and economic reforms. On issues ranging from education to culture to energy to judicial reform to transitional justice (addressing the legacy of KMT authoritarian rule), there is still work to be done in achieving the domestic goals set forth in Tsai’s first term. With Taiwanese citizens being a target of online political disinformation (significantly but not entirely from China), earnest efforts to safeguard Taiwan’s democracy may need to be a priority as well, especially given the prospect of a hotly contested presidential election in 2024, when there will be no incumbent running for president.

But, barring a crisis in external relations or some other unforeseen exogenous shock, the biggest challenges and, thus, top priorities for Tsai in her second term may well be economic. Tsai emphasized economic issues in both of her inaugural addresses. She won reelection partly on the strength of a good, though not great, economy. Taiwan’s economy faces significant difficulties, old and new. Exclusion, due to China’s opposition, from regional trade agreements is costly for Taiwan, all the more so as the international economic regime re-centers away from a battered World Trade Organization. The U.S.-China trade-plus war and limited moves toward U.S.-China economic decoupling pose dangers as well as opportunities for Taiwan—with the downsides becoming more concerning, as shown, for example, by Trump administration discussions of, in effect, trying to stop TSMC sales to Huawei. The COVID-19-driven drastic slowdown in the global economy is threatening to a deeply internationalized economy like Taiwan’s. As Tsai and her advisers have recognized and as the inaugural speech acknowledged, Taiwan has long needed to take steps to regain Taiwan’s edge in the high-end and high-tech industries of the future. An economically dynamic and internationally competitive Taiwan is important not only for Taiwan’s prosperity, but also for “making Taiwan matter” to other countries whose support Taiwan needs for its security.

Dreyer: Tsai has already shown herself cautious—too cautious according to some of her supporters—in cross-Strait relations, by accepting “the historical fact” of discussions between SEF and ARATS in 1992 in which they agreed to work together to resolve common differences, thus putting the ball in Beijing’s court and being insulted by it for “an incomplete test paper.” Apart from an increase in PLAAF flights near Taiwan, which the US has responded to aerially and with ship transits, cross-Strait relations have been stable. This could change: the Taiwan Statebuilding Party is drafting a “China Relations Act” to replace what it says is the outdated Act Governing relations Between the People of the Taiwan Area and the People of the Mainland Area that a TSP legislator, Chen Po-wei, says will reflect Taiwanese self-determination and highlight the nation [a word anathema to Beijing]’s autonomy. To the extent that the act, on which Chen says he wants nationwide debate, gains traction, it will elicit sharp reactions from Beijing.

Domestic issues, like advancing the inclusiveness of society—Taiwan becoming the first Asian state to recognize the legitimacy of gay marriage—and the Transitional Justice project have made progress as well as burnishing Taiwan’s image in many liberal democracies.

However, given the reasonable expectation that cross-Strait relations will remain stable, and apart from attempting to keep things that way, Tsai’s major challenge will be economic. The economy grew 1.54 % in Q1, decent under the circumstances and in stark contrast to the sharp 6.8 % contraction of the PRC’s economy, but likely to be much lower in Q2 due to the worldwide depression caused by the coronavirus pandemic. Taiwan has benefited from countries moving their supply chains out of China in response to the U.S.-PRC trade war and also from threats from Beijing to withhold crucial supplies from importers who do not agree with its policies. The government’s incentive programs for Taiwanese investors to return home have also been successful. Taiwan manufacturers’ spending on R&D was up 7.9% in 2019, a five-year high, with the electronics components, computer, and optoelectronics industries collectively accounting for nearly 85% of it.

According to recent statistics from the U.S.-based Business Enterprise Risk Intelligence (BERI) group, Taiwan ranks #1 in Asia and #3 in the world, behind Switzerland and Norway, as the best place to invest. Apple has announced that it plans to establish its third overseas business hub, after Japan and South Korea, in the Hsinchu Science Park. The New Southbound economic policy mentioned by Tsai in her 2016 inaugural address has made progress. Pension plan reform, a priority in the 2016 speech, has been carried out, albeit with considerable pain to the many people affected.

Taiwan has yet to join the CPTPP, its efforts notwithstanding. It has obtained Japan’s support, an important but hardly definitive step.

Wang: Plugging the holes of social security, developing asymmetrical fighting capabilities, and promoting six “core strategic” industries (on the basis of the “5+2” industries promoted during her first term) are among the unfinished business her administration hopes to complete during the second term.

Shattuck: For priorities in her second term, we’re all kidding ourselves if it isn’t recovering from COVID-19. That is the priority for every nation until there is a vaccine. Avoiding recurrences, reforming the economy, and stopping a global depression are all that will matter for the next four years and beyond. I will even go as far as to say that nothing else matters at this point. Nothing will be the same after this. Taiwan may have an easier time at this because it is “ahead of the game” with its ability to control the virus early but the second- and third-tier effects of the pandemic on other countries will affect Taiwan, too. There’s a chance that Taiwan could benefit economically as governments and companies seek to move out of China. It’s unclear how much Taiwan could benefit since companies have been moving to Taiwan as a result of the ongoing U.S.-China trade war. It’s odd to think that Taiwan’s pandemic response entirely occurred during the “transition” period between the election in January and inauguration day in May.

How has her administration’s response to the COVID-19 pandemic set the stage for the next four years domestically?

deLisle: Taiwan’s exemplary handling of the COVID-19 pandemic—a big theme in her address—should be a boon to Tsai politically. The public health and economic impacts in Taiwan have been astoundingly low by world standards. This success is attributable largely to an effective government response, rooted in the lessons learned from SARS, led by Taiwan’s Central Epidemic Command Center, and bolstered by a high-functioning universal healthcare system and high levels of social cooperation. Moreover, Taiwan achieved impressive results without compromising its democratic norms and without the draconian methods adopted in China and elsewhere. Tsai and her public health team acquitted themselves well as the public face of the government response to the crisis.

That Taiwan emerged as a much-praised model for the world to emulate should also help Tsai politically. The public in Taiwan tends to look favorably on leaders who can raise Taiwan’s international profile and stature. And China’s bullying approach to Taiwan’s pursuit of engagement with the WHO reinforces the critical-of-China platform that Tsai recently ran on, and won.

How much this does for her politically in the longer run is less clear, however. The economy faces significant headwinds. The DPP’s legislative majority is significantly reduced from her first term. Some of the policies she wants to pursue will be controversial in Taiwan. And the beginning of a likely polarizing race to succeed Tsai is not all that far in the future.

Dreyer: See my answer to the previous question, and one answer may be seen in the upcoming cabinet reshuffle. Tsai’s next big challenge is going to be to meet an anticipated dip in the economy. Schemes involving consumer vouchers or consumer coupons, the latter involving a matching household contribution as well, are being discussed.

Wang: Scarred by the experience with SARS in 2003, Taiwan handled COVID-19 with transparency and aplomb, which contributes to Tsai’s high approval rate and provides considerable political capital for her next four years. The KMT used to be an effective ruling party, but the DPP gradually demonstrates its ability to govern. This bodes well for the DPP’s staying power beyond 2024.

Shattuck: The Tsai administration’s COVID-19 response receives top marks. A few other countries in Asia and Europe have managed as well as Taiwan, but considering Taiwan’s greater exposure to China, the feat becomes even more astounding. Right now, Taiwan only has seven recorded deaths despite battling the virus since January 21, around the same time that the first case appeared in the U.S. As the majority of the world continues to struggle, Taiwan is getting back to some semblance of normality. Tsai’s popularity, as a result of the response, has skyrocketed to the mid-70s. She is going into her second term with perhaps more of a mandate than in 2016.

Has Taiwan’s stellar response to the pandemic created new opportunities for the country in its international space and foreign affairs?

deLisle: Yes and in several ways, but only to a limited extent.

First, with the dismal responses by China (suppressing information early on, employing harshly authoritarian measures to contain the virus, and so on) and the United States (with the Trump administration failing to act long after the danger was clear, and attempting to deflect blame to China for its own faulty responses that made the U.S. the global hotspot of COVID-19), smaller countries that handled the pandemic far better—Taiwan, South Korea, Vietnam, New Zealand, and so on—have gained international stature. In a world where pandemics seem at least as great a threat as conventional conflict, governmental competence may become more important, and hard power somewhat less so, as a source of global influence and standing.

Second, Taiwan’s highly competent response has allowed it to punch above its weight internationally, offering expertise based on its success at home and providing material resources (for example, PPE desperately needed abroad but in ample supply in Taiwan because of Taiwan’s successful preparation for, and taming of, the pandemic). It is a prominent example of the cultivation and use of soft power and reprises the provision of disaster relief and humanitarian assistance that have been significant elements of Taiwan’s diplomacy for years.

Third, the COVID-19 pandemic and Taiwan’s successful response have strengthened the normative case and boosted international support for a key element of Taiwan’s pursuit of international space. With Taiwan especially at risk from epidemics originating in China (given its proximity and heavy cross-Strait travel), and with public health in Taiwan and around the world potentially imperiled by the obstacles that Beijing has created to Taiwan’s full and free cooperation and exchange of information with the WHO, many states are less willing to acquiesce in Beijing’s political bullying on issues such as Taiwan’s attendance at the World Health Assembly (which Beijing had tolerated when Ma Ying-jeou was president in Taiwan but blocked after Tsai came to power). The U.S., Japan, Australia, some European states, and Taiwan’s diplomatic allies backed the call for Taiwan’s renewed inclusion at the WHA’s May 2020 annual meeting. But it was not enough, even in the circumstances of the pandemic. Taiwan’s prospects for similar access at several other major international organizations, and the international status it would bring, are at least equally bleak in the near term. And support from the U.S. can be problematic, given that the Trump administration is often and plausibly perceived as using Taiwan as a stick to beat China, including especially in the feud between Washington and Beijing over responsibility for COVID-19.

Dreyer: See my answer to the above, and one answer may be seen in the upcoming cabinet reshuffle as it concerns security. The new cabinet lineup is strong, and includes several people with strong connections to Tsai, including Wellington Koo Li-hsiung, currently head of the Financial Supervisory Commission and formerly a defender of Lee Teng-hui, Tsai Ing-wen, and the Sunflower activists. Although the Blue camp questions his expertise in national security, intelligence, and foreign policy. Hsiao Bi-khim as ambassador-equivalent in Washington is also a good choice.

Wang: Taiwan’s stellar response to the pandemic has made it easier for the U.S., EU, Japan, and other like-minded democracies to support its return to the WHA and its inclusion in global governance. It also elicits China’s sharp opposition, as international criticisms of Beijing’s handling of the pandemic mount. More and more countries understand that continued exclusion of Taiwan in deference to Beijing jeopardizes their own interests (and health). How China governs its own society and people affects the livelihood of people in other countries and is therefore legitimate international concerns.

Shattuck: With the news of Taiwan’s inclusion in the WHO getting pushed to a later date, it is unclear what new opportunities there are for Taiwan as long as Beijing keeps its stranglehold on international organizations and successfully pressures other countries to keep Taiwan out. Despite this, more people and countries are speaking out against China’s tactics and speaking up for Taiwan. Tsai’s pandemic response will be a boon for bilateral relationships with countries around the globe. Countries facing PPE shortages will not forget that Taiwan was there to help. So, at the moment, it’s a mixed bag, but stronger relations with European countries, and the usual suspects of the United States, Japan, Korea, India, New Zealand, and Australia is maybe even more important than getting a seat at the now-controversial WHO.

The views expressed in this article are those of the author alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.