Taiwan’s Ma Aims to Boost Economy, Public Confidence with Cabinet Reshuffle

Taiwan’s Legislative Yuan opened its new session on February 26 following the installation of a revamped cabinet the previous week. President Ma Ying-jeou appointed a new premier—his fourth in five years—and retooled his economic team in an effort to reverse his sagging public approval ratings and to tackle Taiwan’s economic malaise from a fresh perspective. The performance of the new team, and particularly Premier Jiang Yi-huah, is likely to shape the outlines of the political debate on the island ahead of key election contests in the run-up to the next presidential campaign in 2016.

Q1: What was the impetus for President Ma’s latest cabinet reshuffle?

A1: Sean Chen resigned as Taiwan’s premier on January 31 and his cabinet followed suit in early February. Although Chen officially resigned on health grounds, he stepped aside only a few weeks after tens of thousands gathered to protest high housing prices, increasing gas and electricity prices, and what they claimed is a broken pension system. Taiwanese media has speculated that Chen had grown weary of serving as the fall guy for the Ma administration’s apparent inability to jumpstart the stalled economy.

Q2: What are the challenges facing Jiang Yi-huah as he takes office? Is he up to the task?

A2: Jiang is charged with the equally daunting tasks of boosting Taiwan’s economy and pushing through much-needed government and economic structural reforms. To name a few of the items on Jiang’s priority list, he is seeking to revamp Taiwan’s pension system and to promote alternative energy prospects through advancing the construction of Taiwan’s fourth nuclear power plant while addressing persistent popular concerns over nuclear safety issues. In the trade arena, he is focused on successfully managing the continuing rollout of the Economic Cooperation and Framework Agreement (ECFA) with the mainland and resuming the Trade and Investment Framework Agreement (TIFA) talks with the United States, which had languished for several years over concerns that the U.S. beef imports could contain mad cow disease and chemical enhancers.

Jiang spent the majority of his career in academia before Ma appointed him as research minister of the Development and Evaluation Commission in 2008 and subsequently as interior minister and vice premier. As another member of Ma’s inner circle, Premier Jiang’s late entry into politics has prompted criticism that the President relies too heavily on political allies instead of filling top cabinet posts with seasoned officials who are economic or political figures in their own right. Reflecting these sentiments, recent surveys by a range of local media outlets and Taiwanese political organizations suggest the public questions Jiang’s suitability for his new post and are wondering if he has the substantive credentials to achieve his stated goals.

Q3: What about the new economic team?

A3: Taiwan’s new minister of economic affairs, Chang Chia-juch, also is facing intense scrutiny given the persistent economic malaise. A transportation expert by education and experience, his appointment has been greeted by an equally tepid response from the public. To counter these concerns about his economic management credentials, official statements have emphasized Chang’s relevant experience in the private sector, where he had a solid track record leading China Airlines and China Steel, as well as his time in government, where he served as vice minister of transportation and communications. Premier Jiang also has argued that he picked Chang because he believes Chang is well-equipped to communicate and defend government policies to an increasingly skeptical public.

In his initial public comments, Chang has acknowledged the need to reform state-run enterprises by lowering management costs and reemphasizing profit as the primary goal. In particular, he has said the cabinet plans to tackle rising fuel prices by addressing the organizational flaws and management problems of Taiwan’s state-run energy companies, CPC Corporation and the Taiwan Power Company, that Chang argues contribute to unnecessarily high energy production costs. Chang also is preparing the ground for what is sure to be a contentious debate over the possible construction of a fourth nuclear power plant. Shortly after being sworn in, he emphasized the importance of safely managing Taiwan’s three operational nuclear power facilities and promised high safety standards and tight inspection criteria for the existing plants.

Q4: What are the implications of the cabinet shuffle for President Ma’s standing and the electoral prospects of his Kuomintang (KMT) Party?

A4: After winning reelection in January 2012 with 52 percent of the vote, Ma’s current public approval ratings are at an all-time low. Annual economic growth also has slid to its lowest level since the 2009 financial crisis. Against this backdrop, President Ma understands that his personal legacy, as well as the KMT’s political fortunes, will be substantially shaped by the public’s assessment of the Ma administration’s performance in the next few years. To bolster his position, Ma has laid out a robust strategic economic agenda to push forward in his remaining time in office. He has stressed that he wants Taiwan to become a more consequential economic actor through its inclusion in proposed regional trade architectures including the Trans-Pacific Partnership and ASEAN’s Regional Comprehensive Economic Partnership. In remarks at a lunar New Year function earlier this month, Ma stressed to Taiwanese businessmen investing in the mainland that increasing trade with the China and other large trading partners, particularly the United States, will be critical to improving Taiwan’s economy.

Premier Jiang will bear much of the burden in advancing Ma’s agenda, which in turn may impact the KMT’s succession planning. Prior to Jiang’s appointment as premier, he was believed to be a frontrunner for the KMT nomination in the 2014 race for mayor of Taipei City. Several Taiwanese media outlets are now speculating that Jiang may even be slated to top the KMT’s presidential ticket in 2016. To get there, Jiang will have to demonstrate that he has the cure for Taiwan’s economic ills. The KMT’s future electoral prospects may well depend on it.

Christopher K. Johnson is a senior adviser and holds the Freeman Chair in China Studies at the Center for Strategic and International Studies in Washington, D.C. Nicole White is program coordinator and research assistant with the Freeman Chair at CSIS.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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