Vantage | Why China wants Foxconn founder to drop out of Taiwan presidential race

The ongoing conflict between China and Taiwan, a long-standing issue, has taken an unexpected twist with Foxconn, Taiwan’s multi-billion-dollar tech giant, becoming the latest casualty. China has opened investigations into the firm, and it will have implications politically given the broader context of Taiwan’s upcoming presidential elections.

Foxconn under investigation: The tax probe

China has launched a tax investigation into Foxconn, a company renowned for manufacturing iPhones, among other products and with substantial operations in China. The investigation centres on the land use at multiple Foxconn plants in the country raising concerns about the company’s substantial presence and economic contributions.

Geopolitical context: Taiwan-China relations

To understand the motives behind this investigation, it is crucial to appreciate the fraught relationship between Taiwan and China. Taiwan is a self-governed island that has never been ruled by the Communist Party in Beijing. However, China considers Taiwan a wayward province and has repeatedly vowed to reunify it with the mainland, even if by force. This results in tensions that ebb and flow depending on the political dynamics in both Taiwan and China.

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Current situation in Taiwan

Taiwan’s political landscape is currently led by the Democratic Progressive Party (DPP), which advocates for Taiwan’s formal independence from mainland China. This stance has not been well received by Beijing, which has been consistently pressuring Taiwan, cutting off government-to-government talks and actively supporting the DPP’s opponents in elections.

Taiwan’s upcoming presidential elections

Taiwan is set to hold presidential elections and the leading candidate is Vice President Lai Ching-te, a member of the DPP. China’s goal is clear: it wants to ensure that the DPP candidate does not come to power. By supporting the opposition party, the Kuomintang, which is seen as more conciliatory towards Beijing, China aims to weaken the DPP’s chances in the upcoming elections.

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“During an election, China does not need to put pressure on Taiwanese companies, demanding they declare a position, or even that they directly support a candidate they prefer, because this is a behaviour where both sides can only lose,” said Taiwan vice president Lai Ching-Te.

Terry Gou and China’s interests

Terry Gou, the founder of Foxconn, is a key player in this political puzzle. In the 2020 elections, he attempted to run on a Kuomintang ticket but failed. In the current election cycle, he is running as an independent candidate, creating a potential problem for Beijing. Gou’s candidacy could split the opposition vote and boost the ruling DPP’s chances of victory, which China considers a worst-case scenario.

Pressure on Foxconn to influence the elections

With Gou’s solo candidacy posing a significant challenge to China’s preferred political outcome, Beijing has put pressure on Foxconn to convince Gou to withdraw from the presidential race. This is not mere speculation; China’s state-controlled media, The Global Times, has inadvertently confirmed this effort, stating that the Foxconn investigation could impact Taiwan’s elections.

Repercussions for Foxconn

The investigation into Foxconn has had financial repercussions, with the company’s shares losing over 5 per cent of their value in just two days. This has translated into substantial financial losses for Terry Gou. As a result, Gou has chosen to keep a low profile until the storm blows over.

The Opposition’s cautious stance

The opposition Kuomintang party has been notably quiet, likely recognising the potential backlash associated with aligning too closely with Beijing. Past experiences have shown that being perceived as pro-Beijing can be detrimental in Taiwan’s elections and the party is keen to avoid a third consecutive loss.

The Foxconn investigation in China is not merely a matter of routine tax inspections. It is a political move aimed at influencing Taiwan’s upcoming presidential elections with China using its economic leverage to shape the political landscape. As the election date approaches, all eyes will be on Taiwan to see how these geopolitical tensions play out and whether Foxconn will emerge unscathed from this political storm.

Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.

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