Taiwan's Midterm Report Card

With Taiwan deep into its presidential and legislative cycle, President Ma Ying-jeou's approval ratings are dismal, hovering around the 20 percent mark and appear unlikely to get any better.

He will see out his term - his second and last as stipulated by the Constitution of the Republic of China (Taiwan). Under Taiwan's semi-presidential system, impeachment must be ratified by two-thirds of the legislature and since the Kuominang holds 64 of the 113-seats in the Legislative Yuan, Taiwan's parliament, there is no real reason to throw him out, unlike his crooked and unloved predecessor Chen Shui-bian.

Ma will insist on remaining as KMT chairman and will run again for the job in July despite inner-party grumbling. He is doing so to ensure that his cast of KMT politicians - people who, like him, come from academia - will maintain the upper hand at the dawn of a new party leadership era.

Ma can do so because his rivals have refrained from challenging him before the seven-in-one municipality elections to be held in November 2014.

Barring some felicitous and unforeseen recovery, the KMT has reason to fear a beating in those polls, which are significant because they encompass all directly-elected local-government positions. Simply put, aspiring KMT figures prefer staying on the sidelines in order to emerge later as saviors.

It's been a long and abrupt slide down. Ma was swept to power in 2008 with 58.5 percent of the vote, regarded at the time by the Taiwanese as the world's best-looking leader. As a soft-spoken princeling who earned his doctorate in Juridical Science at Harvard and who later became right hand to the much-revered President Chiang Ching-kuo, Ma started his presidency as Mr Clean, in glaring contrast to Chen, the Democratic Progressive Party (DPP) standard bearer, who was embroiled in corruption scandals and now languishes in jail.

Ma wasted no time implementing a complete U-turn on Chen's pro-Taiwanese independence policies, causing a spectacular easing of cross-Strait tensions. However, critics vociferously accuse Ma of "selling out Taiwan", or at least driving the island into a kind of self-belittling Finlandization. And given six decades of bullying by Beijing, such unification wariness is hardly surprising.

Both Ma and his former counterpart in Beijing, former Chinese President Hu Jintao, understood this well, and opted for a gentler pace in bilateral dealings. In other words, Hu showered Taiwan with economic goodies, while Ma got away with conceding very little.

Ma abruptly lost the extraordinary approval of the Taiwanese public, who came to dislike him personally after a typhoon devastated southern Taiwan in 2009. His trip to destroyed villages was obviously reluctant. And when he got there, instead of comforting the survivors, he blasted them for not having consented to evacuation - hard to swallow for people whose relatives had been buried alive a day or two earlier.

Ma's approval ratings fell from 52 percent to 29 percent almost instantly and have never recovered.

In 2010, Taiwan and China signed the Economic Cooperation Framework Agreement (ECFA). Ma painted this as a stepping stone to free-trade agreements (FTAs) with other countries, a very important notion to the Taiwanese psyche given the long, Beijing-imposed isolation that has gnawed at the island's self-esteem.

It was also important because it had become clear that Taiwan's trade arch-rival, South Korea, was reaping successes with its aggressive FTA strategy - partly resulting in the rise of South Korea's biggest conglomerate, Samsung - sending chills down Taiwanese spines.

However, when the ECFA tariff concessions for Taiwanese goods were implemented, the global economy was slow, and the results weren't significant enough to be of much help to the export reliant economy. Even worse, economists said the ECFA had made Taiwan reluctant to take on meaningful industrial reform.

Taiwan could be on its way to degenerating into a mere spot on the Chinese economy's periphery, with tourism poised to become the island's breadwinner. Nearly half the jobs created in 2012 have reportedly been in the island's hotels, restaurants and shops, an outcome of the record influx of Chinese tourists.

Despite the ECFA and the tourism bonanza, real wages have shrunk and the Taiwanese have continued to despise Ma. But in January 2012, he was re-elected with 51.6 percent of the vote. The electoral run-up was defined by a neck-and-neck race between Ma and his DPP challenger Tsai Ing-wen, but on the eve of the polls, one Taiwanese tycoon after another unexpectedly stepped onto the political stage and picked Tsai's cross-Strait position to pieces.

The tycoons, who in Taiwan are listened to as Hollywood stars are in the US, told the Taiwanese that if they didn't vote for Ma, the economy would go down the drain. That resonated with the public: a Ma win might not be good, but under Tsai relations with China would inevitably deteriorate, and how could that possibly be any better?

Losing the reins but glued to the saddle

Ma's second term has been defined by indecisiveness and blunders. There was the emergence of a stock gains tax, which has been dragging down the bourse since it was first proposed. His move to raise energy prices didn't go down well either. Responding to public outcry, he has tinkered with both these issues.

The Economist highlighted Ma's awkward governing style in an article entitled "Ma the bumbler" which caused a storm on the island. That two of Ma's most trusted aides were jailed for corruption-related acts didn't help the embattled president's image. Tellingly, the two were about the only figures in his inner-circle who weren't academics.

KMT lawmakers are increasingly rebelling against unpopular government policies so as not to ruin their standing in their own constituencies. This means that despite the handsome KMT legislative majority, the Ma government has begun to struggle to pass major legislation. And unsurprisingly, Ma's inner-party rivals are busy staking out positions.

Most importantly, there is Lien Chan, former vice president and current honorary KMT chairman. Lien is old and unpopular, but his son, Sean Lien, looks increasingly attractive.

Lien Jr was formerly the chairman of the company that introduced the EasyCard, with which Taipeiers can pay for metro (MRT), bus rides and countless other services. Customer satisfaction with the Taipei MRT is among the highest for any subway system in the world, so the junior Lien's political career will likely benefit from EasyCard's popularity.

Lien Jr is the KMT's most likely contender in next year's elections for Taipei mayor, a job traditionally regarded as a stepping stone to the presidency. Lien S is very close to Hu Jintao, and when he recently travelled to Beijing, he brought Lien Jr along. There he introduced him to Xi Jinping - then still China's president-in-waiting.

The state media didn't miss the significance of the meeting, claiming that Xi's handshake with Lien Jr lasted longer than any other. Those close to Ma and Premier Jiang Yi-huah (a former university professor and presumably Ma's favored successor) say the two want China-Taiwan unification delayed indefinitely, while the Lien clan can't wait to see that event happen.

In recent months, the Liens have reportedly invited young to middle-aged KMT figures to attend cosy gatherings in an obvious bid to close ranks for an inner-party coup after a possible KMT defeat in the seven-in-one elections.

If all goes well for the Liens, it could either be that Lien Jr runs for the presidency in 2016 or a suitable interim puppet fills in so that Lien Jr can build up his credentials by serving out one term as Taipei's mayor. Current Mayor of Taipei, Hau Lung-bin, could be a choice.

DPP resurgent?

The DPP, meanwhile, is pinning all of its hopes on 2014. Even if it only snatches Taipei or New Taipei from the KMT, it will be a huge success for Chairman Su Tseng-chang. The chances for the party are considerable. A majority of voters live in the evacuation area of Taiwan's fourth nuclear power plant (Nuke 4) which is the subject of a proposed national referendum in the autumn.

Anti-nuclear sentiment is strong in this area and there is every likelihood that the KMT will succumb to the DPP on this issue. But the referendum result, if it favors scrapping the plant, will deal another body blow to the KMT.

Premier Jiang has stated that if the public votes to end the plant's construction, he will resign. Before that can happen, though, antinuclear groups will need to muster 4.57 million 'Yes' votes (half of all eligible voters).

On the other hand, if the numbers threshold isn't reached (the most likely outcome), the post-Fukushima/anti-nuke movement will turn decisively against the KMT. Taiwan's celebrities are already in the starting blocks, ready to add their weight to furious social campaigns.

Another great opportunity for the DPP is Ma's plans for pension reform. He must tackle Taiwan's chronically underfunded pension system but whatever he does there will be losers. The DPP is already attacking these plans with accusations that they favour civil servants.

Still, the president has aces up his sleeves. The signings of FTAs with New Zealand and Singapore are pending, which, even though economically insignificant, are huge diplomatic successes for an economy that has very few.

Earlier this year, Ma managed to revive US-Taiwan trade talks following a six-year hiatus. That, along with the recent signing of a Japan-Taiwan fishery agreement (which had Beijing furious as the flags of Japan and Taipei's Republic of China stood next to each other on the signing table) as well as his aggressive handling of the "Philippine shooting incident" (the 9 May fatal shooting of a Taiwanese fisherman by Philippines coast guard personnel), has made Taiwan look as if it indeed is an independent country. These developments proved popular with citizens of an island starved of international recognition.

And soon, free economic zones (FEZs) will get the starter's gun in a bid to attract Chinese investment and that of China-based Taiwanese firms, presumably to leave some positive mark on the recently bleak macro-economic data.

Ma: bumbler with aces up his sleeve

Whether Jiang's or Lien's man will run for the KMT in 2016, Beijing will do everything it can to help because it distrusts the DPP. Two recent China visits by DPP heavyweights illustrate Beijing's DPP dilemma: former premier Frank Hsieh travelled to the Mainland, was wined and dined by authorities there and talked a lot of "family reunion", while DPP Chairman Su, while visiting China's arch-rival, Japan, rambled on about Taiwan becoming part of "an alliance of East Asian democracies that contains China."

Su stopped short of meeting former Tokyo governor Shintaro Ishihara, the Japanese right-winger who in April last year inflamed already tense relations between the two countries over the disputed Diaoyu (known by the Japanese as Senkaku) Islands by announcing plans to buy the islands while on a trip to Washington.

In dealing with Taiwanese public opinion, Beijing has come a long way since it threatened to soak the island in blood if ever it dared vote against China's wishes. Verbal glitches by Chinese officials irritating the Taiwanese have not occurred for a long time and will certainly not before the coming elections.

Although a recent effort by Taiwan's pro-unification and China-based rice cracker tycoon, Tsai Eng-meng, to gain overwhelming control over Taiwan's media landscape by purchasing the Taiwan print-media outlets of Hong Kong media mogul Jimmy Lai failed, China's influence in the local media is surely increasing, one way or another. And, something bad could always happen to the DPP in the electoral home stretch. Auguring what could be in store was a recent mass attempt by gangsters to become party members. No one knows what or who made hundreds, if not thousands, of Heavenly Way Gang and Four Seas Gang members apply for party membership all at the same time, but there is always room for conjecture over the the role of organized crime in Taiwan's colorful political theatre.

(Jens Kastner is a regular correspondent for Asia Sentinel. He wrote this for the Hong Kong-based financial research firm Asianomics.)