Taiwan’s elections have given Beijing much to celebrate

[Tipup]

Local elections in Taiwan went poorly for the ruling party on Saturday (Nov. 24). But in China, Beijing has been given much to celebrate.

The independence-leaning Democratic Progressive Party (DPP) lost seven of the 13 cities and counties it currently holds to the China-friendly opposition Kuomintang (KMT). As a sign of how badly things went for the DPP, it lost Kaohsiung, in the south, despite holding it for decades. It also ceded Taichung, Taiwan’s second most populous city. The stinging results prompted Taiwan president Tsai Ing-wen to resign as DPP chair Saturday.

China chalked up another win with voters’ rejection of a proposal  regarding the 2020 Olympics. The measure proposed using the name “Taiwan” when applying to compete in the contest, rather than  “Chinese Taipei.” China prefers the latter name because it considers Taiwan a renegade province, despite decades of democratic self-rule.

The elections are considered a status check for Tsai, who came to power two years ago at the expense of the KMT. Since assuming office she’s walked a fine line on relations with China, emphasizing Taiwan’s sovereignty while avoiding calls from within her party to move toward declaring formal separation from the mainland.

During her term, China has stepped up its military intimidation and undertaken various measures to undermine Taiwan’s economy and diplomatic standing. For example, it has restricted the flow of mainland tourists, and persuaded former diplomatic allies of Taiwan to cut off ties. Such pressure has hurt business confidence in Taiwan.

The KMT stresses economic ties with the mainland and eschews talk of going it alone. Beijing, not surprisingly, prefers it over the DPP.

“Certainly, I think the Chinese government would like to see the KMT come on strong in this election as a pointer to the presidential and legislative elections in 2020,” Michael Boyden, managing director at TASC Taiwan Asia Strategy Consulting, told CNBC’s “Squawk Box” Friday. “The trade relationship with China matters a great deal to many people here.”