 and welcome to today's IIEA discussion on Taiwan, a smallish but globally significant island at the other end of Eurasia from us here in Ireland. In a year of many significant elections around the world, Taiwanese voters went to the polls in January and elected a new president, Lai Ching-tae, of the party that has held the presidency for almost a decade, the Democratic Progressive Party. We are grateful to be joined by two speakers based respectively in Taipei and Hong Kong to discuss a range of economic, political, and geopolitical issues for Taiwan itself, East Asia, and indeed the world. Our first speaker, Zuzana Forenzi, is affiliated scholar at the Department of Political Science of the Free University of Brussels, a research fellow at the Institute for Security and Development Policy in Stockholm, and adjunct assistant professor at the National Donghua University in Taiwan. Our second speaker is Nick Morrow of the Economist Intelligence Unit. He is lead analyst for global trade, and he has spent over a decade in Asia analyzing trade policy. He also concurrently helps to lead the EIU's coverage of China and Taiwan. Nick previously conducted trade research in Beijing with the US-China Business Council. Our two speakers will speak for about 10 minutes each, and then we will go to Q&A with the audience. You'll be able to join the discussion using the Q&A function on Zoom, which you should see in your screens. Please feel free to send your questions in throughout the session as they occur to you, and we'll come to them once our speakers finish their presentations. A reminder that today's presentation and Q&A are both on the record. Please feel free to join the discussion on X1Reed Twitter using the handle at IIA. So with that, I hand over to Zuzana for the opening remarks. Zuzana. Thank you. Thank you, Dan. And let me just say thank you to you and your institute and also your team for organizing this webinar. It's really a pleasure to join you from Taipei. So because we don't have much time, I'll jump right into it. So what I would like to do is actually two main things, and unpack the outcome in a way of the elections through a European lens, as I am based in Taiwan. And that allows me also to kind of shed light perhaps on some of the nuances that are often lost in the European debate. And it's important to pay attention to those, as I've learned as a European. And also the second part I would like to do is to talk about the implications of the elections for EU-Taiwan relations. So transition from part one to part two and kind of look at the bigger picture. So in terms of the outcome, I think there's no big surprises, no big winners and no big losers in these elections. The DPP, as you already announced earlier or mentioned, the DPP's candidate to lighten to won the elections with a little over 40% of the vote. And this is the party that is in power. It has been in power for two mandates, eight years. The same party that Beijing has refused to have dialogue with since 2016 when Taiwan came to power. So that's just the background. So what's the outcome's implications? Well, an overwhelming majority, I think the meaning of the elections is that an overwhelming majority of Taiwan's people prefer to preserve the status quo. That's one thing. Second, I think for Beijing, any outcome of an election held in Taiwan that is free, fair, held in transparency and is praised internationally, is a risk. So in that sense, I think that lies victory in itself doesn't raise the risk of war because for Beijing, it doesn't change much. Beijing's plans to take Taiwan by force if necessary will remain. So Beijing will continue to calculate its plan to take Taiwan according to perceived risks, benefits and costs. And I think here on, because I already mentioned nuances and I mentioned that DPP's victory might not raise the risk of war. I think one nuance here is that there's a misconception I think in Europe that I sense when I have discussions in Europe or with Europeans, but not just Europe, but outside of Taiwan is that DPP is often seen as a pro-independence party and KMT as a pro-China party. And that is an oversimplification of what Taiwan's society is. It's immensely polarized. It's not black and white. The question is not whether we want as Taiwan to be with or without China to put it simply. So I think that's important to keep in mind. Nonetheless, even though there's a lot of polarization, I think there's one common element or consensus in society that democracy matters and that's really the problem for Beijing. Because whether you're blue as in KMT or green as in DPP or white with TPP, democracy is a core element of what it means to be Taiwanese. And also central to Taiwan's self-perception. So what can we expect from from Lai Qingta as a president? Well, I think he ran as a continuity candidate. So I think we can expect him to be a continuity president and also in a way continue on the path of Tsai Ing-wen, the current president, in terms of actually has four priorities that he put forward is to build deterrence, economic security as a national security matter. So reduce trade over reliance on China to form partnerships with democracies. And number four is to pursue steady and principled cross-trade leadership. So again, because democracy is so vital and so central to the DPP, but also in general to Taiwan, Lai himself on the eve of the election, he said that this is a new chapter in our democracy. He said that between democracy and autocracy, we stand on the side of democracy as in Taiwan. So in contrast to that, of course, if we ask the question what to expect from Beijing, I think in a way also continuity in terms of pressure. So no compromise on Taiwan, no dialogue, which is suspended, as I mentioned since 2016, and no de-escalation really. I mean, we haven't really seen de-escalation for the past decade. And we've seen pressure built up and that particularly ahead of the elections, there was a lot of or increased tension and pressure in terms of military maneuvers, economic coercion, cyber attacks, foreign interference, or information manipulation, shaping the narrative inside Taiwan, at least trying to do so. And not so much with, say, fake news, but using generative AI or fake, sorry, not fake, but deep fakes. Yeah, that's still fake, but deep fakes and using the technology in order to amplify that polarization that already exists in society. So they would pick up an issue that is already, that is homegrown, it polarizes people, you know, blue or green or white, and then there would be through social media accounts, fake accounts and all that, there will be an amplification of that. So this allows me to kind of transition to the European context in a way or at least to the EU-Taiwan context, because the same sort of tactic in a way or the idea of putting pressure on Taiwan internally and to shape the narrative and impose false narratives is something that China has also been pursuing in its relations with Europe when it comes to Taiwan. So this is something that in a way has brought Taiwan and Europe closer. And it's also to a good point or a good time to point out that Taiwan in a way is a testing ground for hybrid warfare and hybrid tactics. So whatever can be tested and can work in Taiwan then can be used in other parts of the world. So the democracy element therefore is important. So it's not just because it sounds good and it's a nice value to cherish, but it's really through an attack to undermine democracy and through that to undermine the public's trust in its own democratically elected government that Beijing tries to really have an impact on Taiwanese society. So Taiwan has actually I think done really well in terms of withstanding attacks. Of course, Taiwan is very vulnerable. That's no question about that. But I think in terms of resilience, there's been a lot of awareness. Also Taiwan has capitalized on its recognition as a partner in the Indo-Pacific, a vital element or a vital actor in the economy, when it comes to semiconductors and supply chains. So Taiwan has used this recognition and capitalized on it through the Taiwan can help. And Taiwan is helping slogan through COVID. So I go back in time, but that's I think it helps us to also see what is happening in EU Taiwan relations, not just now in 2024, but how we got here. So I think there's a shift in perceptions in Europe, definitely when it comes to Taiwan, and that's closely linked to how we see China. So we see Taiwan as a as a frontline democracy, something that has intensified after Russia's invasion of Ukraine as well. And also a high tech island and Taiwan's ability to kind of leverage these two in the Indo-Pacific. I think that secured Taiwan, this kind of global recognition, despite its abnormal international status and the growing pressure. So when I say that there's a new reality in EU Taiwan relations, I really mean that there is one more awareness of Taiwan in the EU and Taiwan's geostrategic importance to Europe's prosperity and security. Second, there's more clarity in the EU's discourse, both on Taiwan and China. Third, there is a more assertive language that comes out of institutions, some member states more than others. And therefore there's a more pushback from Europe against attempts from Beijing to undermine democracy, but also to undermine global governance and international rules based order. And so this pushback is in a way, to me, it illustrates that this change in the shift in perception has taken place. And in a way, I think it's irreversible. So we started seeing Taiwan more as the opposite of China in this. I mean, I'm simplifying it, but when it comes to transparency, reliability, a partnership, none of that is something that we can claim that we have with China today, although we consider each other strategic partners. So perceptions have changed. Obviously, I'm aware that the old issues remain in terms of the EU's divisions internally. The EU is 27 countries with a lot of more fragmentation within each country. There's different governments, different corporate sector, different interests. So with that in mind, I think there is a convergence because there's more awareness that the threat is real. And so we see, and I'm coming to an end here because I probably am reaching my 10 minutes, but I think we see Taiwan both through a democracy lens, which I already elaborated as a partner on its own merit, not through a China lens only. And second, we also see Taiwan through a security lens. And that is maritime security, given that the Taiwan Strait is the main shipping route between China, Japan, the US, Europe, and so much is happening there in terms of global trade. So if something happens there, it will affect definitely European interests. And the EU is the largest investor in Taiwan. I did not mention that, but it's important. And perhaps the last thing before I finish is also because I want to just add a sentence, why I say that there's more clarity in the EU's discourse is to say, and it's closely linked to the pushback, is to say that what we're doing with Taiwan does not violate our relationship with China. We are committed to a one China policy, according to which we recognize the PRC as the sole legal government of China. And at the same time, we maintain cooperation with Taiwan. So what's changed is that we are more assertive about this right or this cooperation that we can do. So that clarity was not there five years ago. And I think that clarity is important to send signals towards Beijing, also Taiwan, and like-minded partners in the region. So Taiwan matters for Europe's security. But the EU is still cautious in elaborating how events or anything that happens in the Taiwan Strait can impact its interests. So perhaps I'll stop here so we have more time for discussion. Thank you. That's great. Thank you for that. And just to follow up and maybe to link both of you as speakers, Nick's economist intelligence unit does an annual democracy index on Taiwan. It may be something that is not so well known, but I think certainly the last time I looked at it, Taiwan was the highest ranking in terms of its quality of democracy in the region. And indeed, in the top 10 globally in terms of its free media, rule of law, personal freedoms, you might as somebody who lives there, you might just elaborate a little bit on the quality of the democracy that exists in Taiwan. Sure. If I can do that in a minute, let me see. So yes, what I appreciate a lot is this bottom up approach and society's participation in the decision making process. And that happens because the government has, I think, opened up towards society to kind of collaborate with society. And this is not a perfect collaboration, right? Because Taiwan's democracy is robust. There are, of course, challenges when it comes to certain issues. But I think the process is very transparent. And I would use the digital minister's Audrey Tang, her description of a radical transparency that is used in order to gain the trust of the people and also to have people trust the government. So it's a two way trust. And I know that in a European context, speaking about trust between the people and the government is a very difficult one. But this is what I experienced. And I think there's a lot we can learn in terms of how this is done in Taiwan in spite of that pressure that comes from China. Great. Thank you. Good. Nick, we look forward to your opening remarks. The floor is yours. Great. Thank you very much. And I'm happy that you brought up the Democracy Index because that's how I wanted to begin my remarks. So just to throw out some numbers for the group, Taiwan is ranked 10th in our Global Democracy Index rankings. It's second regionally, but that's if you include New Zealand. So if you're looking at kind of a traditional geographic scope of Asia, it's number one. It's headed South Korea, Japan, Singapore, definitely Hong Kong. And we upgraded Taiwan to full democracy status in 2020 in recognition really of the democratic reforms that Taiwan has undergone since the 90s. If you look at the state of democracy in Taiwan, I think that's a nice starting point to kind of kind of set the stage for my remarks, which I'm going to try and do looking at the U.S.-Taiwan relationship to balance the E.U.-China ties that were so thoroughly laid out by Yuzha. But if you look at the state of democracy in Taiwan, I think the January elections were very much a validation of the strength of Taiwan's democratic institutions. And as Yuzha mentioned, importantly, it was a validation of the public support and respect for those institutions with most candidates, all candidates, eventually accepting the win. There was a bit of a touch-and-go moment with some of the candidates for a while, but nothing serious and nothing compared to what we're seeing in the U.S., for example, where I'm from. I think the issue of combating fake news is really interesting. It's something to watch, but that's a commonality across all democracies. And in Taiwan's case, you've had some discussions around kind of the media landscape. So back in, I think, November 2020, the ruling DPP bans a media outlet called Zhong Tian, Wanwan, China, given their unabashedly pro-China stance. But it was beyond that. Essentially, that TV station was promoting what I think even reporters without borders came out with saying was fake news. All of that said, even since that incident, Taiwan has taken remarkably light touch when it comes to pushing back against this combating of disinformation, combating of kind of how deep fakes, everything that you just mentioned around how that's changing the electoral and political landscape. And that's something which really puts Taiwan in contrast with many of its regional neighbors and peers. You look at what's happening in Singapore and South Korea, where laws are being passed to disenfranchise certain candidates or to smother discussion under the pretext of fighting fake news. And I think Taiwan has taken a very, very careful approach in terms of being aggressive in combating disinformation, but also not moving too harshly to undermine the civil, civic media and political institutions that underpin Taiwanese society. There's still some areas of improvement in Taiwan, ranging around the absence of voting. There's no voting by absentee ballot, for example, there's still some instances of social and institutional discrimination against migrant workers. But on balance, Taiwan's democracy is healthy, although we are seeing this feeling of growing disenchantment, which Azuzan mentioned, which had emerged as kind of a theme during the elections this past January. And that brings me to kind of a very quick discussion, which I hope will be complimentary to that assessment of the elections, which when we think about Taiwan's elections, particularly at the presidential level, it's very much done in the context of that overarching China question, that question of how does Taiwan relate to China? And if you look at the victory by Lai Qingde, he won with the plurality, not an absolute majority. And it's potentially likely that if the TPP, this third party hadn't been in the running, the vote could have been split in a much different way, and we could have had a very different outcome. I think we see these dynamics much more prominently in the legislative elections, where we saw the TPP lose its majority of the legislative yuan, which really I think speaks to kind of the feelings of kind of the broader electorates. When we look at Taiwan and look at the governing record of the DPP since it's been in power since 2016. And the reason why I want to talk about that is when we look at some of the economic issues in Taiwan and how they relate to democracy and latching this policy as he looks to 2028, we see a number of issues that are really driving popular concern. Monthly wages in US dollar terms, for example, have largely stagnated. They're still below Singapore, Japan, South Korea, and you know if they're still above Malaysia, Vietnam and China. But even that's very industry dependent. So for example, Chinese tech sector wages are very, very high. And they've been very successful at worsening this brain drain that Taiwan's been dealing with the last couple of years, whereby salaries in China are just so much higher that Taiwanese workers are finding opportunities in the Chinese market. And that's raised some national security concerns in tandem, as well as some kind of policy responses by the DPP. Wage growth in China and Vietnam has outpaced that in Taiwan, while real wage growth, that is wages benchmarked against inflation, it's largely been flat in Taiwan over the past decade and actually turned negative last year. And so this dissatisfaction with the economic and political status quo, that really drove a lot of electoral dynamics in January. And it's likely why we saw the Taiwan People's Party, the TVP, this third force in Taiwanese politics, it's likely why we saw it do so well, particularly in the legislature. These issues might be things to watch as we think about the next elections in 2028, particularly because the legislative UN right now is divided. The KMT is the main opposition, the Guamidang. And they have adopted a very kind of obstructionist approach. The TVP is playing kingmaker in terms of throwing its weight behind the TVP or the KMT to get policies through. But it's also going to be looking out for itself. It's going to be kind of making decisions based on its own political interest of, we're going to do what we need to do to survive as this third force in Taiwanese politics and to avoid being wrapped up into the wider dynamics under the TVP or the KMT, which is very much the fate of past third parties. And that might also play an obstructionist role in policymaking. The current speaker of the legislative UN is a man named Hanguo Yu, who is somewhat of a controversial figure in Taiwan. He was the presidential candidate of the KMT in 2020, lost by quite a wide margin. He was eventually recalled as mayor from the city. He was kind of serving his mayoral ship because of public just unhappiness with his role. But it goes to show that Taiwanese politics are becoming increasingly interesting and perhaps a bit more theatrical and maybe even combative when we think about the next four years. So that's kind of a domestic political outlook. I want to take this opportunity now and kind of zoom back and look at the US-Taiwan relationship because when we think about Taiwan's most important security and economic partners, it really comes from its unofficial partnerships. Taiwan only has about, I think, 13 official allies. And so it's those unofficial partnerships with Japan, the EU, Australia and the US, which really are the guiding, most important pillars for Taiwanese foreign policy. And for the US, the big issue here, the big kind of role here is its role as a security guarantor. When we talk about Taiwan, I think we're going to try our best in this session to not let the discussion be dominated by the cross-strait question. But of course, that is the big question moving over everyone's heads. And when we think about the risk of a war between Taiwan and China, we see the greatest deterrent really being the likelihood that the US would involve itself in a cross-strait war. The US policy towards Taiwan is specifically officially one of something called strategic ambiguity. It means that if China invades, the US might intercede. It might not. Who knows? And that's very purposeful because it doesn't want to kind of encourage pro-independence voices in Taiwan to effectively declare dependence, which would then be the main cause for a war. But all that being said, we are seeing a de facto deepening in US-Taiwan ties. We're seeing this on a bipartisan level. Although I should note that the goals and strategies here are very different. Democrats in the US, for example, tend to engage with Taiwan on shared values of democracy, institutions, progressive issues, human rights. Republican and sent to see Taiwan as more of a chip when it comes to bargaining with China. This idea that they can use tighter Taiwan ties as a way to get concessions from Beijing. That's not the, you know, that's a very oversimplification of kind of partisan dynamics in the US. I think the visit by Nancy Pelosi to Taiwan was also couched in this idea of political optics. It looked very good for her to visit a place that the economist Newt Daper called the most dangerous place on earth, which I did say it's not the EIU's position, but for her to visit the most dangerous place on earth as a political bargaining chip for her own voter base. But that really shows that within the US, the conversation around Taiwan, it's bipartisan in that there's strong support, but it differs in terms of the tactics and the goals that are trying to come out of this relationship. And then when we look into Taiwan, especially or domestically as well, we see a little bit of a difference between how the DPP, the KMT and the TPP view the relationship with the US. The KMT has advocated a bit more of a distance position primarily because they're worried about how China will react to deepening US Taiwan ties. But I should say that on balance, you know, the Taiwanese electorate is generally very pro US. And we see that replicated in the politics as well. The big risk here is of course what happens if Donald Trump comes back into office. We are currently conducting an assessment of the economies and countries that are most exposed to a Trump 2.0 presidency. And we see Taiwan as among the top 10, mostly because of Taiwan's trade relationship with US, including its dominance in chip supply chains. And so that's something which could move Taiwan US ties back to a more transactional basis if we see Donald Trump take back the White House. But perhaps we can just save some of those questions for the engagement of the audience after this. And I'll try and finish up my remarks very quickly. And I'll do that by just having a very, very quick discussion on risk. So I alluded to this idea that there's so much else going on in Taiwan that goes beyond the cross trade story, but the cross trade story is still incredibly important. That's something that we talk to companies in Hong Kong or governments in the region. It's the number one question. And our core view with the EU is that, you know, we don't expect the Chinese invasion of Taiwan anytime soon. Again, US deterrence is the main factor here, but I want to really emphasize that China has watched what Russia's experience has been following the invasion of Ukraine. It's seen Russia become an international pariah. One of China's biggest diplomatic priorities is ensuring that third markets don't turn against it. This idea of choosing sides between China and the US, that really makes policymakers anxious. And this is very much contextualized China's own relationship with Europe in recent years, given that that relationship has come under significant strain. And China is trying to rebuild that to separate topics, not going to go into that too much. But I think a Chinese invasion of Taiwan would really turn a lot of third countries against China, particularly in Southeast Asia, given that their own, those countries already very worried about dynamics and say the South China Sea. There are a number of triggers that we should be watching in terms of the conflict. I mentioned that a declaration of independence by Taiwan would be the biggest trigger, but we don't see that as likely. Laiqing, though, as Zhuzhan mentioned, he's a continuity candidate. Although the DPP has been characterized, particularly by international media, as the pro-independence party, really it's the pro-status quo party. And Laiqing is not going to move in that direction, despite the fact that in the past he had said things that he's a pragmatic worker of Taiwanese independence, but he has genuinely kind of softened that view, particularly as he's come into government. The bigger thing to watch are what we call gray zone tactics, which I know are very familiar to many of our audience members in Europe, but this would essentially be China's attempts to unilaterally change the cross-strait status quo. In the last couple of years, that's involved aerial intrusion into Taiwan's air defense identification zone. It's involved in the last couple of weeks, the dispatching of balloons across the Taiwanese main island, as well as efforts to change flight paths and to change kind of the administrative status quo in the Taiwan Strait. By that, I mean we're now seeing incidents whereby the Chinese Coast Guard is demanding entry into Taiwanese tourist vessels, for example, or stopping ships and requiring them to comply with Chinese inspections, which didn't used to happen in the past, but is now changing. And the reason why this death by a thousand cut strategy is important, because the more you do it, the more you're changing the status quo, and the more you're making it difficult for the world to respond in kind. I mean, gray zone tactics are very much set up to be noticeable, but to pass under the radar. No one wants to start a war or have confrontation over the collision of fishing vessels, for example. But it's that collision of fishing vessels, which might then lead to the deployment of Chinese military resources in and around waters close to Taiwan, which then may change the status quo in China's favor. And indeed, if we think about kind of the intrusions by China into Taiwan's air defense identification zone or across the median line, they're happening with such frequency now that three or four years ago, people would have been very spooked now and no one bats an eye. And so looking at these kind of gray zone tactics, that's going to be really important. Because if we were to see a conflict, we would likely see an unintended incidents as really being the big trigger here, collision between fighter jets, the accidental firing of a missile, the confrontation of, you know, coast guards on both sides. I think the risks around a direct war are a little less likely, given all the factors I mentioned around the blowback economically and diplomatically to China. But if you want to have a bit more of a nuanced discussion there, perhaps we can save it for the Q&A and just end on my final kind of thesis here, which is as worrisome as the cross-strait scenario is in Taiwan, it looks to be containable. And there's so much else going on in Taiwan that we should really get Taiwan the respective reserves in terms of talking about things that go beyond the cross-strait relationship. So I'll stop there.