Regardless of who wins the January 13 election, Chen and other representatives of Taiwanese businesses – from fish farms to chemical manufacturers – say they are now clear-eyed about the need to minimise as much as possible their dependence on trade with mainland China as they expect more turbulence in cross-strait relations.

Beijing’s dilemma if DPP wins Taiwan election: what level of response?

While Chen has already registered his own fish farm to export to other markets, he volunteers to help elders who want to branch out but find the government’s registration process hard to understand.

“Sometimes they want me to help fill out forms and explain the latest government regulations to them. It can be really tough for them to change the business model they have had for over a decade,” Chen said.

“The older generation in the industry were reluctant to do so because exporting to China was an easy and direct way out … but the hiccups in trade the last few years have finally become a catalyst for even the older businessmen to want to change their business model.”

Chen said the government had doubled the number of lectures it was hosting for Pingtung’s fishing businesses to six this year after seeing the increased demand from companies interested in exporting to new markets.

In June 2022, Beijing banned grouper fish from Taiwan in an expansion of export bans on the island’s agricultural, food and drink products – from pineapples to liquor – citing licensing or customs inspection problems.

While the bans on some products were lifted after months of review, others were imposed as cross-strait tensions ramped up. For example, Beijing banned 2,000 food products from the island after then US House speaker Nancy Pelosi visited Taiwan in August 2022.

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Taiwanese fish farmers hurt by mainland China import bans after Pelosi visit

Taiwanese fish farmers hurt by mainland China import bans after Pelosi visit

When announcing the partial lift of the grouper fish ban in late December, Beijing’s Taiwan Affairs Office (TAO) said any economic problems could be resolved as long as Taiwan was “against independence”.

Beijing sees the island as part of its territory to be reunited with the mainland, by force if necessary. While most countries, including the United States, do not officially recognise Taiwan as an independent state, many are opposed to a change in the status quo by force.

Beijing views the DPP as pro-independence compared to the Kuomintang (KMT), the island’s main opposition party. The DPP has said it wants to maintain the cross-strait status quo.

Chen grew up at his family’s fish farm, which once shipped 90 per cent of its fresh fish products to mainland China, while 10 per cent went to the domestic market.

“No matter how big of a volume of fish we produced each year, China basically bought as much as we could offer because of their market size,” Chen said.

Mainland China and Hong Kong are the top export destinations for Taiwan’s agricultural and aquaculture products. According to data from Taiwan’s foreign trade bureau, the island had an overall trade surplus of US$37 billion with the mainland in 2022.

Beijing sees its robust trade with Taiwan as the “carrot” in its “carrot and stick” approach to “peaceful reunification”. In a 1991 policy document, Beijing called boosting trade and economic cooperation “the most useful tool” in containing and deterring the island from separatism.

However, observers say Beijing has increasingly turned to economic tactics since Taiwanese President Tsai Ing-wen of the DPP took office in 2016 and refused to accept the one-China principle – the idea that there is only one China, though there is ambiguity over whether it is governed by Taipei or Beijing.

“China’s trade and economic moves have been perceived as carrying strong political intentions,” said Wang Yeh-lih, a political-science professor at National Taiwan University. “And when it gets closer to election times, it is perceived as especially so.”

Taiwan elections: Hsia takes KMT message to voters in mainland China

While Beijing has removed some export bans on Taiwanese products in the past six months, it has also launched a probe into the “restrictive measures” Taiwan has imposed on 2,455 mainland products.

The investigation was timed to end on January 12, a day before Taiwan’s presidential election. However, Beijing reached an early conclusion on December 21 and retaliated against the island by removing the preferential tax status of 12 Taiwanese goods, including propylene and paraxylene, covered by the Cross-Strait Economic Cooperation Framework Agreement (ECFA) signed in 2010.

“I think it is an early warning, and more economic coercion can be expected to come if the DPP wins the election in January,” said Chang Wu-ueh, a professor of China Studies at Tamkang University in New Taipei.

Be it the carrot or the stick, Beijing’s economic approach has had limited impact on Taiwan’s voters, according to both Chang and Wang.

“People in Taiwan have become very used to economic coercion from Beijing, so it would hardly have a direct impact on how they vote,” Wang said, adding that he believed the key factor would still be which candidate voters thought could best face the growing security threat from mainland China.

“If economic ties are to affect the votes of anyone, it would be those of the businesses that have strong economic ties with China, but that is a very small group of people,” Chang added.

Beijing has been counting on Taiwanese business leaders to be its strongest backers in discouraging the island’s government from seeking independence. The TAO said last year that since Taiwanese companies had enjoyed growth on the mainland, they should also “assume corresponding social responsibilities and play a more active role in promoting peaceful development of cross-strait ties”.

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Beijing has used the close business ties to send other political messages.

Gou’s decision to run as an independent candidate was considered a blow to the island’s mainland-friendly camp as it would further divide opposition voters, who were already faced with a choice between the KMT and the Taiwan’s People Party.

A source with knowledge of the matter told the Post that Guo understood the taxation probe to be a message of Beijing’s “explicit disapproval” of his run for office. The tycoon dropped out of the race in December.

As part of its campaign, the KMT has called for the resumption of communication with mainland authorities and credited the partial lifting of Beijing’s ban on fish imports as an example of how the opposition party is better at managing cross-strait relations than the DPP.

According to trade data from the first 11 months of 2023, mainland China accounted for around 35 per cent of Taiwan’s total exports – the lowest in years.

Darson Chiu, a research fellow at the department of international affairs at the Taiwan Institute of Economic Research, said cross-strait trade was transitioning to a “new trade balance”.

“It is hard to say whether this drop will be continuous … but exports to China are still expected to take up a substantial part of Taiwan’s market,” Chiu said.

As for industries affected by Beijing’s export ban, Chiu said the government has been trying to help diversify the market, “but of course these cannot be achieved overnight,” he said, “especially for agricultural products that have a shelf life.”

Given the tensions in cross-strait ties, it is uncertain whether Taiwan would be able to join other regional trade deals to diversify its markets, Chiu said.

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Pingtung fish farmer Chen has already invested in new technology and machinery to help him produce high-quality frozen fish that can be sold to other Asian markets such as Malaysia and Japan.

Exports to mainland China have fallen from 90 per cent to 60 per cent of his fish farm’s sales over the past eight years, while the Taiwanese market accounts for 20 per cent and the rest goes to Asian markets including Malaysia and Japan.

“We also have other younger fish farmers developing products like canned fish and dried fish snacks to increase the customer base and markets,” Chen said.

However, not all businesses are enthusiastic about the prospects for diversifying export markets.

Lai Cheng-i, president of the General Chamber of Commerce of the Republic of China, described the possibility of more economic coercion from Beijing as “extremely worrying”.

“Even if businesses try to export to the Southeast Asia market, you can at most shift 3 to 5 per cent there for now, and the mainland market is still the biggest. We still hope there can be more cross-strait communication,” Lai said.

“Right now, businesses still have to find a way to survive, so the only way out is to look for other markets.

“But the mainland market is so big, why should we give it up?”

Chang of Tamkang University said Beijing was unlikely to completely turn trade and economic ties with Taiwan around even if the DPP won the election.

“Beijing’s economic tactics are to demonstrate Taiwan’s reliance on it and also its power over Taiwan,” Chang said.

“But ultimately, Beijing knows it depends on them whether a ‘peaceful reunification’ can be achieved, and without normal economic activities, it would be hard to achieve it legitimately.”