Taiwan election: Why the outcome matters to the world

All eyes will be on Taiwan when the self-governing island of 23 million people goes to the polls on 13 January

All eyes are on Taiwan as the self-governing island of 23 million people goes to the polls on Saturday.

Some 19.5 million Taiwanese are voting to elect a new president and legislature.

Three men are vying to become the self-governed island's next leader - William Lai Ching-te of the ruling Democratic Progressive Party (DPP), Hou Yu-ih of the main opposition Kuomintang (KMT) and Ko Wen-je of the Taiwan People's Party (TPP).

Whoever is elected president will shape relations with both Beijing and Washington - Taiwan is a key flashpoint in their tussle for power in this region.

It will also have crucial implications for the island's neighbours as well as allies like Japan who are wary of Beijing's aggressive moves in the South China Sea.

The China factor

China is among the top concerns in this election, given that its People's Liberation Army has dialled up pressure on the island over the past year with a record number of incursions. And Beijing has made clear which presidential candidate it opposes - Mr Lai who is trying to give his party an unprecedented third straight term.

On Friday, the PLA said that it would "smash" any Taiwan independence "plots" and that it "remains on high alert at all times". China's Taiwan Affairs Office also warned voters in Taiwan to make the "right choice", claiming that Mr Lai would further promote separatist activities if he were elected.

"[He] would continue to follow the evil path of provoking 'independence' and... take Taiwan ever further away from peace and prosperity, and ever closer to war and decline," it said in a statement which echoed warnings made earlier in the week.

Beijing has long claimed the island, but ties have especially soured in recent years under President Tsai Ing-wen and the DPP.

Her careful but unwavering defence of the island's sovereign status led to China suspending formal communications with Taiwan - Beijing said it was because of Taiwan's refusal to accept the One China principle, which is the belief that Taiwan is an inalienable part of China and will be unified with it one day.

• The Taiwan party asking voters to choose war or peace

• China is ramping up the pressure for Taiwan's election

Things got worse in 2022, when then US House Speaker Nancy Pelosi visited Taipei. A furious Beijing staged elaborate military drills in the Taiwan Strait that resembled a near-blockade of the island. Later that year, the US said Xi Jinping had sped up the timeline for unification.

During this time, Taiwan has grown closer to the US, and securing billions of dollars in new weapons from Washington.

Beijing could up the ante on military pressure in the Taiwan Strait. It could also cut internet cables or supply routes to outlying Taiwanese islands.

Chinese President Xi Jinping and his foreign minister Wang Yi have repeatedly warned that the Chinese military is prepared to take Taiwan by force if necessary. But many experts believe that the prospect of a full-blown war is low, at least for now, given how much it would cost China when its own economy is struggling.

Beyond China

Any escalation between China and Taiwan runs the risk of turning into something bigger and more dangerous - the US has a big naval presence in the region, while Australia and Japan, too, have bases around the island.

Washington is yet to clarify exactly what form its support will take in the event of a Chinese attack - and it's unclear if Japan, which hosts the largest concentration of US troops in the region, will itself fight.

People fly a lantern in New Taipei, bearing their wishes for peace on the island

Washington hopes the possibility of its involvement will deter Chinese aggression. And many analysts say Beijing also wants to avoid conflict, pointing to its refrain of "peaceful reunification".

Managing these many possibilities and alliances - and crucially the US relationship, which could very well change if Donald Trump wins the presidency - will fall to Taiwan's next president.

The US has said a win for the KMT could increase Chinese sway over Taiwan. But analysts say a Lai presidency also worries Washington.

If it happens, a war in Taiwan would be devastating - both in its human toll and as a blow to the island's democracy.

It would also devastate the global economy. Close to half of the world's container ships pass through the Taiwan Strait every year, making it a critical hub for international trade.

Taiwan also makes most of the semiconductors that power modern life, from cars to refrigerators to phones. Any disruption to this would paralyse the global supply chain. Sanctions against China would only aggravate the damage to the global economy.

According to several estimates, a complete disruption of China's trade would reduce world trade in added value by $2.6tn, or 3% of the world's gross domestic product.

Mending ties with China, Taiwan's biggest threat but also its biggest trade partner, is a top agenda for whoever governs the island. Cost of living and jobs are major domestic issues on the ballot.

Analysts expect a divided government, where the executive and legislative will be controlled by different parties. Despite the possibility of political gridlock, some are hopeful that a more experienced DPP and a less powerful KMT could strike the right balance between spurring the economy and keeping peace with China.