Lai is likely to continue the policies of incumbent Tsai Ing-wen and seek to maintain the status quo with China over the next four years after he takes office in May.
His victory comes despite what his ruling DPP called China's most heavy handed attempt to meddle in the election through means such as a disinformation campaign and an overt military threat. Communist China has never ruled Taiwan, a democracy of 23 million people, but sees it as its territory and has not ruled out taking the island by force.
Lai declared victory at party headquarters in Taipei. With ballots counted from 99% of polling stations, Lai had 40.14% of the vote, according to Taiwan's Central Election Commission. Hou Yu-ih from the China-friendly Kuomintang (KMT) got 33.44% and Taiwan People's Party (TPP) Chairman Ko Wen-je took 26.43%.
The race was much closer than the previous presidential election, when Tsai crushed KMT rival Han Kuo-yu with 57% of the vote. Founded in 1986, the DPP has now won five out of eight direct presidential elections.
The DPP, however, lost its majority in the Legislative Yuan. The KMT won 52 seats, while they DPP secured 51, the TPP took eight, and candidates with no party affiliation won two, according to Taiwan’s Central Election Commission. This will make it more difficult for Lai to pass legislation over the next four years.
The New Power Party, which emerged from the 2014 Sunflower Movement against a cross-strait trade agreement, was unable to secure any seats after winning three in the previous election in 2020.
Taiwan's sovereignty and future is one of the biggest points of contention between Beijing and Washington. Should China lash out following Lai's victory, it could further strain ties between the two superpowers.
Taiwan's sovereignty and future is one of the biggest points of contention between Beijing and Washington. Should China lash out following Lai's victory, it could further strain ties between the two superpowers.
While Lai has pledged to continue on Tsai's path in dealing with China and maintaining the status quo, his previous support for "Taiwan independence" -- a formal declaration of an independent and sovereign Taiwanese state in a break from the Chinese polity -- could further exacerbate tensions with Beijing.
Speaking to journalists after his victory declaration, Lai sought to reassure allies such as the U.S. that he would stick to Tsai's policies.
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"In the past eight years President Tsai had a very steady foreign policy and national defense policy. Her way of doing things has received recognition from the international community," he said. "So according to the constitutional order of the Republic of China, I will conduct cross strait affairs according to that system, so that cross strait relations can return to a healthy and sustainable way of exchanges."
Lai said that as leader, he has a responsibility to "maintain peace and stability in the Taiwan Strait" and that Taiwan will "continue to walk side by side with democracies from around the world" -- a key point of the DPP's campaign.
Lai also expected to push forward with DPP policies such as phasing out the use of nuclear power and forging even closer ties with the U.S.
Vice president-elect Hsiao Bi-khim, the former de facto ambassador to Washington, has been dubbed the "best U.S. expert from Taiwan." She is also the island's first-ever vice president not born on the island.
Lai, 64, a miner's son who lost his father as a toddler, was a physician before going into politics. He was mayor of Tainan, where Taiwan's top chipmaker TSMC has massive advanced semiconductor plants. Before becoming Tsai's vice president in her second term, he was her administration's premier from September 2017 until early 2019.
Ties between Taipei and Beijing have deteriorated since China stopped talking to the Taiwanese government after Tsai took office in May 2016. Relations have further soured due to the escalating U.S.-China tech and trade war. The Tsai administration has tightened its export controls on technology and enacted an economic espionage law to prevent trade secrets from flowing into China following Washington's blacklisting of Huawei Technologies in 2019.
Sean King, senior vice president of Park Strategies, told Nikkei Asia that Lai's win means more of the same in terms of Taipei's relations with Beijing and Washington. China is expected to fly more military aircraft over the median line in the Taiwan Strait, attempt to poach more of Taiwan's formal diplomatic allies and punish Taiwan business interests that favor Lai, the analyst said.
"However, the PRC [China] may also simultaneously try reaching out to newly elected opposition members of the Legislative Yuan whom it deems at least worthy of engagement," King said.