updated 1/12/2008 11:19:55 AM ET 2008-01-12T16:19:55

Taiwan's opposition Nationalist Party scored a landslide victory in legislative elections Saturday, dealing a stinging blow to the government's hard-line China policies just two months before a crucial presidential poll.

The results were a clear humiliation for President Chen Shui-bian, who has been criticized for aggravating relations with Beijing by promoting policies to formalize Taiwan's de facto independence from China. Critics say that has allowed the island's once-vibrant economy to lose competitiveness, and has ratcheted up tension in the perennially edgy Taiwan Strait.

The March 22 presidential election to chose a successor to Chen, who must step down after eight years in office, pits Frank Hsieh of Chen's Democratic Progressive Party against the Nationalists' Ma Ying-jeou. Recent opinion polls give Ma a 20-point lead.

After the extent of the DPP's loss became clear, Chen announced he was resigning as party chairman — a role that gave him great influence in shaping Hsieh's presidential campaign.

"I should shoulder all responsibilities," Chen said. "I am resigning now as DPP chairman. I feel really apologetic and shamed."

Opposition confidence
The Nationalists favor more active engagement with China and do not rule out eventual unification. The DPP wants to make official the independence Taiwan has had since a civil war nearly 60 years ago, but has held back due to fears that Beijing would make good on its repeated threats to attack.

With most votes counted, TV station San Li projected the Nationalists would win 82 seats in the 113-seat legislature, against only 27 for the DPP, with four going to independents. In Taiwan's bitterly partisan media environment, San Li is a strong DPP supporter.

The legislature was halved in size, from 225 seats, under electoral reforms approved by voters in 2005. Even so, on a proportional basis the DPP's showing and that of the allied Taiwan Solidarity Union were the parties' worst performance in an island-wide election since 2001.

Speaking at Nationalist headquarters in Taipei, Ma said the party had won 81 seats — enough to give it a 3/4 majority together with four pro-Nationalist independents — but cautioned against overconfidence ahead of the presidential elections.

"We need to be cautious about the presidential poll, and hopefully we can win," he said. "With a Nationalist presidency and Nationalist-controlled legislature, we can push forward the reform expected by the Taiwanese people."

Relations with China
If the Nationalists go on to recapture the presidency, they will be in a strong position to end years of deadlock between Taiwan's legislative and executive branches, and to stabilize the island's rocky relations with China.

Taiwan specialist Shelley Rigger of North Carolina's Davidson College said it was still possible for Hsieh to win the presidency, but only if he distances himself from Chen, whose approval rating has plummeted amid a series of debilitating corruption scandals and a sputtering economy.

"Hsieh needs to pull himself out of the shadow of Chen Shui-bian and run his own campaign," Rigger said. "He needs to convince people that he is different from the rest of the party."

During Chen's two terms as president, the Nationalists used a slender legislative majority to block many of his policy initiatives, including the purchase of a multibillion-dollar package of U.S. weapons. Also left stagnating have been negotiations to open direct air and shipping routes between Taiwan and China.

Economy a big issue
Ma took a high-profile role in the legislative campaign, pressing home his message that Chen's reluctance to engage China inflamed tensions with Beijing and hurt the island's economy, one of the 20 largest in the world. Taiwan is also a major research and manufacturing base for the computer industry.

Ma also drew attention to American unhappiness with Chen's China policies. Twenty-nine years after it shifted recognition from Taipei to Beijing, the U.S. remains Taiwan's most important foreign partner, supplying it with the means to defend itself against any future Chinese attack.

But Washington has made it clear it finds Chen's China policies dangerous and provocative — particularly a planned referendum on Taiwanese membership in the United Nations, which appears designed to underscore the island's political separateness from the mainland.

China's government did not immediately react, but Beijing was likely to be comforted by the election results.

"The election will have a positive impact, benefiting stability across the Taiwan Strait," said Yu Keli, head of the Taiwan Studies Institute, a Chinese government-backed think tank in Beijing. "The Taiwanese electorate has delivered a no-confidence vote on Chen Shui-bian."

Yu said the loss would largely defang Chen, effectively restraining him from enacting more provocative pro-independence policies during his remaining months in office.

In contrast to Ma, Hsieh maintained a relatively low profile in the legislative campaign, apparently because of his ambivalence over Chen's pro-independence stance.

Hsieh hews to the DPP's pro-independence line in principle, but has made it clear he rejects some of Chen's hard-line policies, including his moves to limit Taiwanese economic ties to the mainland.

He has come out in favor of ditching Chen's across-the-board requirement that Taiwanese companies limit their investments in China to less 40 percent of their asset value. He has also indicated a willingness to expand direct charter flights across the Taiwan Strait.

Ma and the Nationalists go considerably further. They want to remove the asset requirement altogether, and sanction scheduled flights between China and Taiwan.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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