Updated at 7:35 a.m. ET: Taiwanese President Ma Ying-jeou wins re-election fight, leveraging his message of greater prosperity through expanded ties with China to beat his populist-minded opponent Tsai Ing-wen, The Associated Press reports.
With about 90 percent of the vote counted, Ma had 51 percent with Tsai had 46.3 percent.
"This is not my personal victory, the victory belongs to all Taiwanese," Ma told thousands of jubilant supporters in downtown Taipei. "They told us that we are on the right track."
Updated at 6:30 a.m. ET: Taiwan's ruling party claims victory in the island's presidential election. With about 80 percent of the vote counted, incumbent Ma Ying-jeou was leading challenger Tsai Ing-wen, of the opposition Democratic Progressive Party, by about six percentage points.
Updated at 5:40 a.m. ET: With about half of the ballots counted, incumbent Ma Ying-jeou had 52.3 percent of the vote in Taiwan's presidential elections, compared to 44.9 percent for his main rival, Tsai Ying-wen.
Updated at 4:40 a.m. ET: Incumbent Ma Ying-jeou takes an early lead in Taiwan's presidential elections, The Associated Press reports. With 10 percent of votes counted, he had 52.6 per cent to his main rival Tsai Ying-wen's 44.5 percent.
Published at 2:50 a.m. ET: Taiwanese voted Saturday in a closely fought presidential election that pits incumbent Ma Ying-jeou's vision of better relations with China against his main challenger's attempts to galvanize resentment over growing income inequality.
Ma and Tsai Ing-wen, of the main opposition Democratic Progressive Party, have been crisscrossing the island for weeks in a hard-hitting campaign, offering their competing visions for Taiwan's future.
Eighteen million Taiwanese are eligible to vote. Opinion surveys published a week ago — the last permitted under Taiwanese law — showed Ma clinging to a slim 3-4 percentage point lead that was within the statistical margin of error, despite Tsai never having won an election for public office in Taiwan.
A third candidate, James Soong, a former heavyweight in Ma's Nationalist Party, has little chance of winning, though political analysts say he could draw voters away from the president.
Legislative elections being held at the same time are likely to see Ma's Nationalists retain a majority in the 113-seat house, although with a diminished margin.
Improved China relations
Ma, a 61-year-old former justice minister and Taipei mayor, is staking his re-election on his success in tying Taiwan's high-tech economy ever closer to China's lucrative markets.
During his 3 1/2 years in office, his China initiatives — including opening Taiwan to Chinese tourists and increasing the number of flights across the 100-mile-wide Taiwan Strait — have helped reduce tensions between democratic Taiwan and authoritarian China to the lowest level since they split amid civil war in 1949.
Ma's signature achievement has been the completion of a China trade deal in June 2010 which lowered tariffs on hundreds of goods.
"I see a little sunshine now," Ma told reporters at his polling station in a Taipei church after a slight drizzle eased. "I'm very happy, I urge everyone to come out early and vote. This weather should help the voting rate."
While most of Taiwan's $124 billion worth of exports to China last year were electronic goods like television displays and cellphone chips, there was also a big upsurge in agricultural sales from southern Taiwan, long a stronghold of Tsai's party.
Voters queued up in orderly lines in Taipei and other cities islandwide after polls opened at 8 a.m. Saturday (7 p.m. ET Friday).
"I feel calm and hopeful," said Hwang Shiu-mei, a mother of three who was in line to vote at a booth in a Taipei market.
"I hope we can see a win-win situation with China in the coming four years. We don't want to see a stalemate and hope for a better economy, along with peace and stability."
Taipei bank manager Frank Chang said he voted for Ma because of his efforts to improve ties with Beijing.
"China is a major economic power with the world's biggest demand for goods," he said. "As a small island, Taiwan cannot isolate itself from the mainland and still maintain a viable economy."
Tsai, 55, who has a doctorate from the London School of Economics, shows no signs of undoing the economic aspects of Ma's China policies, though she charges that they have helped spawn economic inequality in Taiwan.
Independence undermined?
She has also accused Ma of undermining Taiwan's de facto independence in exchange for benefits from the mainland — a claim that resonates strongly with her party's pro-independence base.
Taipei office worker Chen Yen-fen said she voted for Tsai because she appeared to be a capable leader.
"A change of government will help resolve the widening gap between the rich and poor and many other problems," she said.
Taiwan, one of Asia's economic successes for decades and now a center of high-tech development, has turned in a mixed performance under Ma. Unemployment has fallen in the past two years after reaching a high of 6.16 percent in 2009, and preliminary growth figures for 2011 were a respectable 4.5 percent.
But housing prices in urban areas have skyrocketed and the income gap has widened, as large companies that invested in the China trade have profited handsomely from new opportunities.
In the closing days of the campaign Tsai moved relentlessly toward the center, promising to open a channel to China to offer assurances that she has no intention of embracing the pro-independence policies of Ma's predecessor, the DPP's Chen Shui-bian. Chen's policies infuriated Beijing, and caused great consternation in the U.S., Taiwan's most important security partner.
Through proxies, Ma has been trying to undermine support for Soong out of fear that if enough Nationalist backers choose the third-party candidate, the president could lose the election. Some analysts have suggested that if Soong garners 7 percent of the vote or more, Ma will be defeated.
Ma has been buoyed by the arrival of an estimated 300,000 China-based Taiwanese businesspeople, most of whom are expected to vote for the president. Many Taiwanese businesses on the mainland are big Ma backers and have encouraged their workers to support him.