Taiwan to elect president as economy and China ties in focus

TAIPEI (Reuters) - Taiwan goes to the polls on Saturday to elect a new president, its third in the island's brief democratic history, perhaps heralding a new era of improved trade ties with political archrival China regardless of who wins.

China has claimed self-ruled Taiwan as its territory since the end of the Chinese civil war in 1949 and pledged to bring the island under its rule, by force if necessary.

But despite often-tense rhetoric between the two, trade ties have flourished over the past two decades, with Taiwan companies investing up to $100 billion in the mainland over that time, according to various estimates.

Polls give Ma Ying-jeou, candidate for the Nationalist Party (KMT), leads of six to 32 percentage points over Frank Hsieh of the ruling Democratic Progressive Party (DPP) going into the March 22 election.

The KMT is more friendly towards China, while the pro-independence DPP distrusts Beijing and its intentions.

But elections in Taiwan can be unpredictable because of lack of reliable polling and last-minute voter turnout drives.

"I think Hsieh will come a lot closer than some people think," said Shelley Rigger, East Asian politics expert at Davidson College in the United States.

"No matter who wins, I think things will settle down," she said. "People are just so tired of the constant churning."

Ma, known for his clean image and sharp looks, has focused most of his campaign on economic issues, proposing a common market with China and strengthening other China links to shore up an economy that suffers from inflation and wage stagnation.

Hsieh has tackled economic concerns too, in a break with previous elections that focused more on hot-button issues centered on Taiwan's identity and political ties with China, though in recent days he has rounded on Beijing over violence in Tibet.

Hsieh and Ma support an increase in direct flights between China and Taiwan. Such flights, non-existent for most of the post-1949 period, are now limited to charters on several major holidays and must all pass through Hong Kong airspace.

A victory by Ma would consolidate power for the KMT, which swept legislative elections in January riding on public fatigue over some those contentious issues as the economy sagged.

The KMT controls nearly three quarters of parliament.

"TWO WINGS OF THE SAME BIRD"

Many predict Ma would move quickly to boost economic ties with China if he wins.

"If you let the KMT win both the legislature and the presidency, that's like two wings of the same bird," Taiwan parliament speaker and KMT member Wang Jin-pyng said in a recent interview. "If Ma is elected, we'll definitely do everything to help matters change with China."

Money-strapped voters have increasingly tired of President Chen Shui-bian 's anti-China rhetoric and a series of corruption scandals involving Chen's aides and family members, including his wife.

A government prosecutor previously said Chen himself was guilty of corruption and would be charged when he leaves office in May, losing his presidential immunity.

In the election, Taiwan's 17 million eligible voters will also vote on two referenda asking whether the government should seek United Nations membership, despite China's opposition.

A referendum backed by Chen that would authorize seeking U.N. membership as "Taiwan" rather than under the island's legal name, Republic of China, has irked Beijing and Taiwan's biggest ally the United States by pushing the DPP's non-Chinese identity agenda.

To boost its image and raise Hsieh's chances, the DPP has taken several steps in recent weeks to ease restrictions on Taiwan businesses in China, including giving local banks the green light to invest in mainland lenders.

Hsieh, a native Taiwanese, is drawing on his party's traditional support base among other Taiwanese who can trace their ancestry back several generations, as opposed to more recent arrivals who came around 1949. Ma was born in Hong Kong.

"I feel down south that people are changing back to the DPP," said Steve Chen, director of the Conflict Study and Research Centre at Chang Jung University in Taiwan.

(Editing by Ben Blanchard and David Fogarty)