Taiwan is a self-governing democratic island nation off the coast of mainland China. It’s status is a highly contentious issue, with Beijing viewing Taiwan as a breakaway province to be reunified with the mainland, by force if necessary. This ongoing tension significantly shapes Taiwan’s domestic and international affairs.

Political Situation (2024-2025):

  • Presidential and Legislative Elections (January 2024): William Lai Ching-te of the Democratic Progressive Party (DPP) won the presidency, marking the first time a party has won more than two consecutive presidential elections since direct elections were introduced in 1996. However, the DPP lost its majority in the Legislative Yuan, with the opposition Kuomintang (KMT) securing a plurality of seats (52) followed closely by the DPP (51). The Taiwan People’s Party (TPP) gained 8 seats, making it a crucial swing vote. This divided government creates challenges for President Lai to push through his agenda.
  • Legislative Reform Controversy (May 2024 onwards): A series of bills proposed by the KMT and TPP, aimed at granting more powers to the Legislative Yuan (including greater authority to question officials and demand documents, and to punish those who refuse), sparked significant protests across Taiwan. Opponents, including the DPP and civil society groups, argued that these reforms lacked transparency and risked undermining democratic governance. The Constitutional Court annulled many provisions of the bills in October 2024 for breaching the constitution.
  • Cross-Strait Relations: Tensions with mainland China remain high. China continues its “gray zone” tactics, including frequent military activities around Taiwan, such as increased air force incursions into Taiwan’s Air Defense Identification Zone (ADIZ) and crossings of the median line in the Taiwan Strait. Beijing has also continued its diplomatic pressure, with Nauru severing ties with Taiwan and establishing relations with the PRC in January 2024. Taiwan’s government, under President Lai, maintains its commitment to preserving Taiwan’s free and democratic constitutional system and sovereignty.

Economic Outlook (2024-2025):

  • Robust Growth in 2024: Taiwan’s economy demonstrated strong growth in 2024, with a preliminary real GDP growth rate of 4.59% for the whole year. This was primarily driven by the resurgence of global merchandise trade and robust demand for advanced technologies, particularly in the semiconductor and information & communication industries, fueled by the expansion of Artificial Intelligence (AI) applications. Exports and imports both saw significant increases.
  • Positive Projections for 2025: The real GDP is projected to grow by 3.14% in 2025. This continued growth is expected to be sustained by strong demand for computing power and Taiwan’s competitive domestic supply chains. Private consumption is also anticipated to grow due to steady wage hikes and outbound travel. Investments, especially in the semiconductor sector to meet AI-driven demand, are expected to contribute to growth, offsetting some geopolitical and trade uncertainties.
  • Key Sectors: The manufacturing sector, particularly semiconductors and electronics, continues to be a major driver of the economy. The financial and insurance sector also showed strong growth.
  • Challenges: While the overall outlook is positive, concerns include global economic uncertainties, rising housing costs in major cities, and potential impacts from geopolitical developments. The Consumer Price Index (CPI) is projected to increase in 2025 due to rising wages and sustained price increases in food, rent, and medical services.

Social Issues (2024-2025):

  • Political Polarisation: The 2024 elections highlighted ongoing political polarisation, particularly in online discourse, where over 80% of internet users perceive political comments as polarised.
  • Legislative Protests: The legislative reform controversy in May 2024 saw significant public protests, reflecting concerns over transparency and democratic processes.
  • Disinformation and Cyberattacks: Taiwan faces ongoing disinformation campaigns and cyberattacks, some linked to Chinese state-affiliated actors, particularly around election periods. Civil society, technology sectors, and the government are actively working to counteract these threats.
  • AI and Technology: The “Taiwan Internet Report 2024” indicates a high perception of risk associated with AI technology among citizens, with a majority supporting formal regulation. The report also highlights shifts in news consumption, with digital platforms playing an increasingly significant role.
  • Parental Mediation in Technology Use: The report notes a shift in parental mediation patterns regarding children’s technology use, moving towards more authoritative parenting (high restriction, high involvement).

International Relations (2024-2025):

  • Limited Formal Diplomatic Ties: As of January 2024, Taiwan (ROC) has formal diplomatic relations with only 11 UN member states and the Holy See, a number that has shrunk due to pressure from China.
  • Strengthening Unofficial Relations: Despite limited formal ties, Taiwan continues to strengthen unofficial relationships with many countries, particularly the United States, Japan, and European nations. There is growing support in some Western countries for deepening ties with Taiwan and supporting its participation in international forums where statehood is not a prerequisite.
  • US Support: The US continues to demonstrate support for Taiwan through arms sales and legislative initiatives, although political transitions in the US may introduce some uncertainty.
  • Cross-Strait Tensions: Cross-strait relations remain the most critical aspect of Taiwan’s international standing. Beijing continues to assert its “One China Principle” and to oppose any actions it perceives as promoting Taiwan’s independence.
  • International Participation: Taiwan actively seeks opportunities to join UN specialised agencies and other international organisations.

In summary, Taiwan in 2024-2025 navigates a complex landscape marked by a vibrant domestic democracy, a strong export-driven economy heavily reliant on the tech sector, and persistent geopolitical tensions with mainland China, which continue to shape its foreign relations and domestic policy.

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