Taiwan’s Opposition in Disarray as Alliance Talks Stumble

(Bloomberg) -- Taiwan’s main opposition parties are running out of time to form a joint ticket in a presidential election that would bolster their chances of unseating an incumbent party with rocky ties to Beijing.

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The Taiwan People’s Party and the Kuomintang, which both favor engagement with China, announced last Wednesday that they’d agreed to form an alliance and would announce on Saturday which of their candidates would lead the ticket. Instead, this past weekend saw those talks fall into disarray over over the question of who would be their nominee in January, the TPP’s Ko Wen-je or the KMT’s Hou Yu-ih.

Ko appeared to raise the stakes even further on Sunday when he told supporters at an event that he intended to run for president and “continue to fight to the end.”

After his comments, Ko visited Foxconn Technology Group founder Terry Gou, the fourth candidate in the race, at his residence for about 90 minutes.

Hou appeared to acknowledge the breakdown in talks with the TPP on Monday, saying: “We’ll respect Ko Wen-je’s decision no matter what the final outcome is.”

If a joint ticket never materializes and both Ko and Hou continue their separate bids, it would increase the odds that the ruling Democratic Progressive Party’s Lai Ching-te — who has topped polls for much of this year — wins in January. The deadline for officially registering candidates is Friday, meaning the opposition parties have just a few days left to strike deal.

Lai led a poll released Wednesday by My Formosa, a private company whose founder is linked to the DPP, with the backing of 33.1% of respondents. Hou was second at 26.5% and Ko third with 17.3% support. Gou had the backing of 5% of respondents.

After last week’s market gains amid expectations that an opposition victory would reduce geopolitical tensions, investors were largely unperturbed Monday. The benchmark Taiwan Stock Exchange Index declined 0.2% after climbing every session last week. The Taiwan dollar rose to its highest since August at open, along with other Asian currencies that benefit from a weak greenback.

The impact of the breakdown in opposition talks will be “very mildly negative,” said Stephen Chiu, chief Asia FX and rates strategist at Bloomberg Intelligence. He added that investors expect a weaker US dollar now.

Both Ko and Hou have said if they are elected, they would seek to establish high-level dialogue with China. Beijing claims self-governing Taiwan as part of its territory, and has pledged to bring the island under its control, even if it must use military force.

The DPP has been unable to talk to Beijing since Tsai Ing-wen led the party to victory in 2016, becoming the first woman to serve as Taiwan’s president. Beijing has insisted that Tsai affirm an understanding known as the “92 Consensus,” which essentially states that Taiwan is part of China, before there can be talks.

Tsai and Lai, the vice president, have said they won’t do that.

Despite the faltering negotiations, a TPP-KMT alliance is still possible. Ko said Saturday he was “willing to continue negotiating” and that both sides needed more time to talk.

The KMT also said it will push for more discussions to seal the deal. The party’s chairman, Eric Chu, said he hopes a decision will come before Wednesday, according to local media.

--With assistance from Iris Ouyang.

(Updated with additional details.)

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