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Taiwan’s new president wants to revitalize the economy. Don’t expect much help from China.

Taiwan's new President Tsai Ing-wen gestures during her inauguration ceremony in Taipei. (Sam Yeh/AFP/Getty Images)

Taiwan's new president faces a tough task: balancing the demands of the Taiwanese electorate and the question of cross-strait ties with China.

On Friday, in her first speech as president, Tsai Ing-wen focused on the former, vowing to revitalize Taiwan’s flagging economy and create new and better jobs. Her challenge will be to do so with no help — and perhaps some hindrance — from Beijing.

Despite the fact that Taiwan is a vibrant, thriving democracy, China’s ruling Communist Party still insists it is the province that got away.

In the run-up to Tsai’s inauguration, Beijing pressed her to accept the idea of “one China,” a framework negotiated in 1992 that allows both sides to recognize that there is one China without specifying what that means. The Chinese side calls this the 1992 “consensus,” but many Tsai supporters deny consensus was reached.

In her closely watched inaugural speech, Tsai took a cautious line, saying that she “respects” the 1992 meetings as “historical fact,” but did not venture further. Beijing, predictably, hit back, with the Taiwan Affairs Office on Friday blasting her line as “vague” and comparing her remarks to an “incomplete answer sheet.”

Tsai was elected in February following a year-long campaign bolstered by the near-implosion of the outgoing Kuomintang (KMT) government led by Ma Ying-jeou, whose policy of cross-strait rapprochement failed to deliver sustained economic benefit and alienated many Taiwanese.

Taiwan kicked out its ruling party for getting too close to mainland China. Here’s what comes next.

Tsai’s speech suggested she will make the economy her priority. She promised to pursue multilateral and bilateral trade relations rather than focusing on a single market — she means China — as Taiwan has done in the past. She also vowed to protect labor rights, raise wages and protect the environment.

Tsai, a U.S. and British-educated former trade negotiator, campaigned on bread-and-butter issues and wants to create jobs. To please voters, that’s what she will need to do. But Taiwan’s economic picture is complicated — and often constrained by international affairs.

Tsai’s rise was powered to some extent by the 2014 Sunflower movement. In March of that year, anger over how the government was handling a trade pact with China boiled over into the occupation of Taiwan’s legislature. Long after protesters dispersed, their call for greater transparency and autonomy lingered, setting the stage for Tsai’s successful campaign.

Many young Taiwanese are worried about the future. They feel that years of closer ties to China did little to create good jobs or make housing more affordable. They want the island's economy to be thriving but independent and are wary of any policy that ties Taiwan's fate to people or policies across the strait.

Tsai’s cross-strait economic strategy will be tested quickly. The first item on the government’s legislative agenda is a “supervisory” bill that requires Taiwan’s government to get legislative go-ahead before, during and after talks with Beijing. Under the proposed rules, they can’t sign agreements with the People’s Republic of China without all three stages of approval.

The legislation is seen by Tsai's supporters as the antidote to what they considered a closed-door approach from Ma. But the bill has already been criticized by Taiwanese business groups and Taiwan-watchers in Beijing. In March, Chinese officials said they would "resolutely oppose" any plan to "put up man-made blocks."

After that is sorted out, the president will then need to decide how to proceed on the trade pact that sparked the 2014 protests.

Both Washington and Beijing will be watching her early moves closely.

The United States and Taiwan are old friends and unofficial allies, but the United States also wants and needs to engage with China. Over the last eight years, Washington has been wary of anything, or anyone, that might rock the boat.

When Tsai campaigned for president in 2012, she was brushed aside by the White House. She has since pushed hard to ease U.S. fears, reiterating her cross-strait “status quo” stance. With China-U.S. ties cooling and a presidential election in the United States, she may get a warmer welcome going forward.

China, though, has been anything but welcoming.

In recent weeks, China pressured both Kenya and Malaysia to deport Taiwanese suspects to the Chinese mainland, a move that many in Taiwan saw as an assertion of sovereignty, but Beijing insisted was a matter of due course.

China has also taken new steps to curb Taiwan's participation in international affairs. China has also taken new steps to curb Taiwan's participation in international affairs. In March, China established formal diplomatic ties with Gambia, ending an eight-year "diplomatic truce." Gambia had previously recognized Taiwan, but not China. In April, Taiwan's delegation to the Organization for Economic Cooperation and Development's steel committee was given the boot after China complained.

And there could be a similar showdown at the World Health Organization's annual summit in Geneva, which Taiwanese observers are supposed to attend. China has said its participation is predicated on Tsai acknowledging the 1992 consensus — meaning it may well be excluded.

And in case its message was lost, Beijing this week held large-scale war games on its Taiwan-facing coast.

Chinese officials and academics have also warned, repeatedly if vaguely, of an economic toll should Tsai refuse to fall in line. While China could move to curb tourism or trade, some question how far it is willing to go. China sees Taiwan as an integral part of its territory and aims to “reunify.” As such, it has an interest in deepening, not destroying, ties to Taiwan’s business community, said Jean-Pierre Cabestan, a political scientist from Hong Kong’s Baptist University.

Wang Jianmin, a research fellow with the Taiwan Research Institute of the Chinese Academy of Social Sciences in Beijing, said a return to the kind of "frosty" cross-strait ties of the past would "constrain economic development," leaving Tsai's government "doomed to fail."

“China’s strategy is not to make Taiwan more isolated from China, but more dependent on China. They have to walk a fine line there,” he said.

While China's foreign ministry and party-controlled papers cast cross-strait relations as something to be won or lost by Taiwan, many outside observers see Beijing, not Taipei, as the wild card right now.

They emphasize that Tsai has been consistent on the question of cross-strait ties, sticking with her "status quo" formulation through the campaign, her election and the inauguration, while Beijing has been less clear, publicly, about how it plans to proceed.

"What happens next is going to depend on China," said William A. Stanton, a career diplomat who served as de facto U.S. ambassador to Taiwan from 2009 to 2012 and now heads the Center for Asia Policy at Taiwan's National Tsing Hua University.

"They are not going to do Tsai Ing-wen any favors."

Liu Liu reported from Beijing.

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