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Taiwan
Intelligence for Better Decision Making
Taiwan Prepares for High-Stakes Recall Election Threatening Legislative Balance
July 16, 2025 | PoliticsTaiwan’s upcoming large-scale recall election will test public sentiment toward the ruling party and reshape legislative control.
**Taiwan will hold a large-scale recall election on July 26, 2025, targeting 24 Kuomintang legislators and the suspended Hsinchu City Mayor, Kao Hung-an.**
Both the ruling Democratic Progressive Party and the KMT-led blue camp have mounted extensive campaigns, viewing the outcome as pivotal for legislative control and as a gauge of public opinion on President Lai Ching-te’s administration. The green camp reports turnout intentions above 70 percent, outpacing the blue camp, while internal polls indicate a 10-point lead for those opposing the recall.
**The blue camp faces two electoral thresholds to block the recall: recall supporters must secure votes equal to at least 25 percent of eligible voters, and recall opponents must outnumber supporters.**
KMT Chairman Eric Chu has emphasized that only active “disagree” votes will defeat the recall, countering the misconception that abstentions count as opposition. With DPP loyalists demonstrating strong resolve, blue strategists now focus on direct, vote-to-vote contests in tightly divided districts.
**KMT legislators and local leaders have launched intense ground operations.**
Luo Ting-wei’s “Little Bee Street-sweeping Team” tracks daily voter reactions, while legislator Tu Chuan-chi holds regular briefings in Taichung and Hualien. Deputy Speaker Chiang Chi-chen and legislator Luo Chih-chiang make frequent public appeals. Outreach efforts extend to farmers in Taitung, and in Taipei’s urban markets, figures known as the “Three Beauties” and Mayor Chiang Wan-an personally counter recall advocates and rally support.
**Regional dynamics vary across the island.**
In Hualien, thousands rallied against the recall amid tense activity that included a police search of the KMT county headquarters. In Taitung, legislator Huang Jian-bin has engaged farmers on grassroots concerns, warning of potential losses if the recall succeeds. Taipei City’s districts remain competitive, with anti-recall support holding a narrow lead and making turnout strategies in urban centers crucial.
**A July 7–9 survey of 1,083 adults by the Taiwan Public Opinion Foundation found 36.9 percent support for the recalls and 47.7 percent oppose them.**
In New Taipei, Taoyuan, and Taichung, opposition exceeds support by about 15 points; in Taipei City, the gap stands below five points. Psychiatrist Shen Cheng-nan predicts a low chance of removing six or more KMT legislators, noting that failing to defend Taipei’s five seats would likely doom the nationwide effort even if some legislators are recalled.
**Growing polarization has surfaced in campaign incidents.**
Supporters of the pro-recall “Blue Birds” verbally and physically harassed KMT legislator Ye Yuanzhi, illustrating heightened tensions. Legislative debates over the universal NT$10,000 cash payout, which DPP Secretary-General Lin Youchang criticized as vote-buying, have fueled mutual accusations of leveraging public funds or procedural irregularities to sway the recall outcome.
**The Central Election Commission has released its schedule for official televised recall explanation meetings under its Implementation Guidelines.**
Sessions will begin July 16 in New Taipei City, Hsinchu City, Hualien County, and Yunlin County; July 18 in Taipei City; July 20 in Taichung City; and July 21 in Taoyuan and Keelung. Each meeting allocates 24 minutes per side, split into two 12-minute segments, and will stream on local cable channels and YouTube to present both positions to voters.
### IMPACT ANALYSIS
**From this Development, various impacts could cascade through the system, to a lesser or greater extent, depending on the severity and criticality of the shocks.**
| Domain | Causal Chain | Possible Outcome |
|---|---|---|
| Politics | (Referendum/initiative provisions ↑ → Protest frequency & size (pre-election) ↑ → Protest & unrest escalation post-election ↑ → Political-risk sovereign spread ↑) | Escalating pre- and post-election unrest will raise sovereign spreads as investors seek larger risk premiums. |
| Politics | (Electoral-system design ↑ → Legislative gridlock index ↑ → Legislative throughput rate ↓ → Policy-uncertainty index deviation ↑) | Heightened legislative gridlock and delayed lawmaking will amplify policy uncertainty and economic volatility. |
| Politics | (District-drawing rules/gerrymander intensity ↑ → Opposition-seat share & checks ↓ → Coalition majority margin ↓ → Government-formation time ↑) | More aggressive gerrymandering will erode opposition checks and prolong government formation, delaying policy action. |
| Politics | (Voter-registration regime complexity ↑ → Voter turnout ↓ → Incumbent turnover rate ↑ → Policy-swing magnitude after elections ↑) | Procedural complexity reducing turnout and increasing turnover will magnify policy swings post-election. |
| Social Cohesion | (Partisan ideological-polarisation score ↑ → Intergroup violence incident frequency ↑ → Social-trust composite swing ↓ → Community self-defence militia mobilisation ↑) | Deepening polarization and rising violence will erode social trust and spur community militia mobilization. |
| Governance & Law | (Campaign-finance transparency framework weakness ↑ → Disinformation-campaign volume ↑ → Misinformation-belief rate ↑ → Public-trust index in national institutions ↓) | Weaker finance transparency and rising disinformation will undermine public trust in national institutions. |
| Information Dynamics | (Political-advertising regulation gaps ↑ → Algorithmic-amplification of extremist content ↑ → Echo-chamber exposure index ↑ → Misinformation-belief prevalence ↑) | Gaps in ad regulation will let extremist content be amplified algorithmically, increasing misinformation beliefs. |
| Social Cohesion | (Policing-practice & accountability framework erosion ↑ → Police-community complaint resolution time ↑ → Protest-to-riot escalation share ↑ → Political-violence incident rate ↑) | Eroded policing accountability and slower complaint resolution will raise protest-to-riot escalation and political violence. |
| Macroeconomics & Growth | (Policy-uncertainty index deviation ↑ → FDI project postponement count ↑ → FDI net inflow (% GDP) ↓ → Potential GDP growth revision ↓) | Wider policy uncertainty will trigger FDI postponements, reduce net inflows, and prompt downward GDP growth revisions. |
### BOTTOM LINE
- Taiwan’s first-ever mass recall of 24 legislators and a mayor could trigger frequent pre-election rallies and tense post-vote demonstrations, driving up perceptions of domestic instability and pushing sovereign borrowing costs higher.
- The recall’s dual-threshold rule may fracture legislative coalitions, stall committee votes, and deepen gridlock, leading to pronounced policy uncertainty and erratic law-making schedules.
- Heightened ground operations and redistricting maneuvers risk producing razor-thin majorities, extending coalition talks and government-formation timelines, and delaying budget approvals and reforms.
- Procedural confusion over voter eligibility and the misconception that abstentions count as opposition may depress turnout among moderates, elevate incumbent turnover, and magnify swings in cross-strait, energy, and social-welfare policies.
- Intensified partisan rhetoric and harassment incidents have the potential to erode social trust, spark intergroup clashes, and even prompt informal community defense mobilization in rural areas.
- Opaque campaign-finance channels are likely to fuel a surge in targeted falsehoods and rumor mills, undercutting confidence in the Central Election Commission, the legislature, and broader national institutions.
- Gaps in regulation of recall-related social-media advertising, combined with algorithmic amplification of emotionally charged content, may deepen echo-chamber effects and boost the spread of extremist claims.
- Perceptions of policing bias and slow complaint resolutions could accelerate the conversion of protests into riots, straining law-enforcement resources and raising the frequency of violent episodes.
- Heightened legislative and electoral uncertainty is poised to spook foreign investors, prompt delays or cancellations of FDI projects, reduce net inflows relative to GDP, and force downward revisions of Taiwan’s growth outlook.
Taiwan Conducts Largest-Ever Joint Military and Civil Defense Drills to Test Wartime Readiness
July 16, 2025 | Geopolitics & DefenseTaiwan is conducting a comprehensive series of joint military and civil defense exercises to test wartime procedures, urban evacuation plans, and air defense capabilities.
**From July 15 to 18, Taiwan is executing an integrated program that merges the Ministry of National Defense’s Han Kuang 41 live-fire drill with the 2025 Urban Resilience (Air Defense) Exercise, also known as the Town Resilience Drill.**
These coordinated multi-domain operations evaluate wartime transition procedures, joint counter-landing defenses, coastal combat, air defense, deep-area resistance, and sustained operations. Han Kuang 41 marks the longest live-fire drill in Taiwan’s history, while the Town Resilience Drill incorporates air raid alerts, public evacuation maneuvers, civil disaster rescue operations, and municipal-level wargaming scenarios.
**Civil defense activities begin with a 30-minute alarm transmission marked by a coded sequence of long and short tones, followed by a 60-minute war disaster rescue exercise.**
Upon hearing the alarm, individuals and vehicles must proceed to the nearest designated evacuation shelters under the guidance of police and civil defense personnel, complying with traffic controls. Shelter facility owners and managers are legally required to open access doors immediately. Workplaces, schools, factories, and businesses secure their premises by closing doors and windows and restrict movements that could impede sheltering. While aircraft, ships, railways, MRT trains, and highway vehicles maintain normal operations, all disembarking passengers must evacuate to nearby shelters. Light rail services will suspend operations, requiring drivers and passengers to disembark and seek shelter.
**Han Kuang 41’s live-fire component has featured coordinated beachhead annihilation drills led by the Kinmen Defense Command and supported by garrison battalions on Dadan, Erdan, Dongding, Shiyu, and other islands.**
Tanks (M60A3, M41D), armored vehicles (CM21, CM22), howitzers (240 mm, 105 mm), mortars (120 mm, 82 mm), machine guns (20 mm), rocket launchers (66 types), and other artillery systems simulated blocking and destroying invading amphibious forces. Units fired over 30,000 rounds of live ammunition, emphasizing night combat capabilities, realistic terrain use, and validation of command and communication procedures across multiple formations.
**Beyond beachhead training, naval units conducted defensive mine-laying operations and live-fire drills to counter amphibious intrusions, which President Lai Ching-te inspected as he observed mine preparation, deployment, and coastal defense special operations.**
The Military Police Command demonstrated troop and material redeployment via Taipei’s MRT system, and the US-supplied FIM-92 Stinger air defense system made its public debut. Anti-airborne operations in Penghu, counter-assault drills at the Danshui River estuary to protect Taipei’s core military and political infrastructure, and the Air Force’s 1st Tactical Fighter Wing night runway rapid-repair drill to simulate post-attack restoration further expanded the exercise’s scope.
**Under the Civil Defense Act, individuals or institutions that fail to comply with evacuation orders or ignore official guidance face fines ranging from NT$30,000 to NT$150,000.**
Facility owners must open shelters immediately upon alarm, and companies, schools, and public venues must cooperate fully with civil defense and traffic control directives. The public can access shelter locations and drill information via the Police Service App, the Kaohsiung City Police Bureau website, the Kaohsiung Great Police Butler LINE account, and the Fire and Disaster Prevention e-Point Access portal.
**The Town Resilience Drill schedule assigns the central region to July 15 from 13:30 to 14:00, the southern region (including Kaohsiung) on July 16 from 13:30 to 14:00, the northern region on July 17 from 13:30 to 14:00, eastern Taiwan and outlying islands on July 17 from 10:00 to 10:30, and the southern outlying islands on a similar timeline.**
Practical evacuation exercises and traffic stop drills will take place at key locations such as Formosa Boulevard MRT Station, the Xinxing Police Precinct in Kaohsiung, the Nantou City Office, Changhua bus stations, and other designated relief and emergency stations.
### IMPACT ANALYSIS
**From this Development, various impacts could cascade through the system, to a lesser or greater extent, depending on the severity and criticality of the shocks.**
| Domain | Causal Chain | Possible Outcome |
|---|---|---|
| Geopolitics & Defense | (Military-expenditure share of GDP ↑ → Defense-spending burden on fiscal balance ↑ → Government-bond term-premium ↑ → Sovereign spread over risk-free rate ↑) | Higher defense spending will widen Taiwan’s sovereign bond spreads, raising borrowing costs and constraining fiscal flexibility. |
| Geopolitics & Defense | (Defense R&D expenditure share ↑ → Domestic defense-industrial base self-sufficiency ↑ → Defense-procurement backlog ratio ↓ → Weapon system fielding speed ↑) | Augmented defense R&D spending will strengthen local industry self-sufficiency and accelerate weapon system fielding. |
| Geopolitics & Defense | (Alliance interoperability score ↑ → Alliance cohesion score ↑ → Escalation probability estimate ↓ → Geopolitical risk index ↓) | Improved interoperability with allies will deepen cohesion, deter escalation, and lower Taiwan’s geopolitical risk index. |
| Infrastructure & Urbanization | (Integrated transport master-plan quality ↑ → Urban building-permit issuance velocity ↑ → Public-transit modal share ↑ → Average door-to-door commute time ↓) | Upgraded transport master plans will speed permit approvals, boost transit usage, and shorten average commute times. |
| Transportation & Logistics | (Disaster-resilient transport design codes ↑ → Infrastructure-resilience score ↑ → Supply-chain disruption days per year ↓ → On-time final-mile delivery swing ↑) | Stricter resilience codes will reduce supply-chain disruptions and stabilize on-time final-mile delivery performance. |
| Societal Resilience | (Disaster-preparedness governance ↑ → Essential-service outage frequency ↓ → Post-disaster service-restoration time ↓ → Well-being bounce-back score ↑) | Enhanced disaster governance will cut service outages, speed restoration, and boost community well-being recovery. |
| Geopolitics & Defense | (Gray-zone tactics capacity ↑ → Cyber-intrusion severity score ↑ → Social-trust composite swing ↓ → Domestic-violence incident rate ↑) | Expanded gray-zone capabilities will provoke harsher cyber intrusions, erode social trust, and potentially raise domestic violence rates. |
| Societal Resilience | (Civil-defense & societal-resilience funding ↑ → Community-volunteer participation rate ↑ → Crisis-compliance behavior ↑ → Protest-to-riot escalation share ↓) | Increased civil-defense funding will bolster volunteer engagement and compliance, reducing protest-to-riot escalation. |
### BOTTOM LINE
- The unprecedented integration of live-fire and civilian defense exercises will drive up defense outlays as a share of GDP, squeezing fiscal space and leading Taipei to issue more sovereign debt at higher spreads, which may crowd out other budget priorities.
- Firing over 30,000 rounds across island outposts and conducting night-time operations will galvanize defense R&D investment, strengthening Taiwan’s domestic industrial base and accelerating the accession of new weapons into frontline service.
- The public unveiling of the US-supplied FIM-92 Stinger system alongside allied training will enhance tactical interoperability, reinforce collective deterrence, and lower the estimated chance of unintended escalation in the Taiwan Strait.
- Rehearsals of military redeployment through Taipei’s MRT reveal the need for dual-use transport planning, prompting updates to integrated master plans, boosting mass-transit infrastructure approvals, and ultimately shortening average commute times while preserving surge capacity.
- Nationwide evacuation alerts and civil-disaster drills will trigger revisions to disaster-preparedness governance, enforcing clearer agency roles and response protocols that reduce essential-service outages and expedite post-event recovery.
- Expanded emphasis on gray-zone tactics such as defensive mine-laying and covert redeployment is likely to provoke sharper cyber-intrusions against government and infrastructure networks, undermining public confidence and potentially fueling local unrest.
- Mandatory shelter activation rules and legally enforced compliance during the Town Resilience Drill will encourage sustained growth in civil-defense volunteer recruitment and training, fostering higher crisis-compliance behavior that dampens the risk of peaceful protests spiraling into mass disorder.
- The suspension of light-rail services and enforced traffic controls at key transit hubs have highlighted existing infrastructure gaps, leading to stricter resilience design codes for roads, bridges, and rail that will reduce supply-chain interruptions and stabilize final-mile deliveries during emergency situations.
Monitored Intelligence for Taiwan - July 16, 2025
News
Media
491
Government
Releases
35
City/State
Releases
72
Embassy
Releases
2
Foreign
Service
Advisories
0
Service
Advisories
0
Academic/
Think
Tank
1
Think
Tank
1
Podcasts
0
Videos
0
Social
Media
0
Business
Releases
3
Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.
The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.
Risk Categories Reported on Today
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Items Reported On
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30
Man-made Environmental Disasters
7
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9
Geopolitical Conflict and Disputes
15
Extreme Weather Events
11
Accidents
16
Corporate Corruption or Fraud
5
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14
Critical Infrastructure Failure
5
Pollution
6
Protest, Demonstration, Dissent
1
Supply Chain Issues
5
Political Scandal or Corruption
6
Regulatory Enforcement Actions
2
Epidemics and Pandemics
2
Shifting Geopolitical Alliances
2
Erudite Risk also includes operations categories so you can monitor the environment for better decision making. Everything is tied together--what happens in risk affects operations and what happens in the market impacts risk profiles.
We categorize key intelligence into one of 30 different operations intelligence categories.
Different roles and functions within the organization can monitor different key issue areas. HR may monitor employment, wages, regulations, labor and management relations, etc., while P&L leaders may monitor overall developing trends.
Operations Categories Reported on Today
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Items Reported On
Investor Sentiment
13
Real Estate
9
Tech Development/Adoption
6
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3
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10
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8
Operating Results
10
Trade Issues and Numbers
4
Asset Price Change
24
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2
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4
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2
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1
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1
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2
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2
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1
打擊炒匯禿鷹！FT曝央行警告外資勿違反規定
Cracking Down on Currency Speculation Vultures! FT Reveals Central Bank Warns Foreign Investors Not to Violate Regulations
Liberty Times Net | Local Language | News | July 16, 2025 | Regulation
Taiwan’s central bank has issued warnings to foreign investors to prevent violations of regulations related to currency speculation on the New Taiwan Dollar (NTD). The central bank strengthened communication with selected foreign investors after discovering that capital inflows were not being invested in domestic securities as required, but it did not disclose the identities of these investors. The move aims to curb speculative short-term capital inflows that contribute to the sharp appreciation of the NTD.
Since the beginning of 2025, the NTD has appreciated over 10% against the U.S. dollar, threatening Taiwan’s export-driven economy. Taiwan is currently on the U.S. Treasury’s currency manipulation watchlist, and the central bank is trying to manage currency pressures without direct intervention to avoid being labeled a manipulator. Measures include closing regulatory loopholes and urging compliance with rules that require foreign capital converted into NTD to be invested substantively in Taiwan.
According to analysts and strategists cited, violating these regulations could lead to difficulties for foreign investors in operating within Taiwan, giving the central bank an indirect method to influence the exchange rate. Experts emphasize that few investors are willing to openly defy the central bank given the potential operational repercussions.
躲雙反制裁 美查中2產品「反規避」
Avoiding Double Anti-Sanctions US Investigates Two Chinese Products for Evasion
Liberty Times Net | Local Language | News | July 16, 2025 | Regulation
On July 11, 2025, the U.S. Department of Commerce initiated anti-circumvention investigations on anti-dumping and countervailing duty cases related to Chinese disposable aluminum tableware and certain vertical engines and their components with displacements between 99cc and 225cc. These probes investigate whether products imported from Thailand and Vietnam using Chinese materials, or certain Chinese exports themselves, are evading existing U.S. trade remedies.
These investigations target circumvention of measures already in place, as the U.S. had previously imposed anti-dumping and countervailing duties on these products, with final rulings issued for aluminum tableware in March 2025 and for vertical engines in March 2021. If evasion is confirmed, the U.S. may strengthen restrictions by expanding tariff scopes or intensifying existing duties to maintain the effectiveness of trade measures.
The investigations come amid a U.S.-China trade war ceasefire agreement reached in Geneva on May 12, which included a temporary 90-day reduction of tariffs by 115 percentage points, set to expire on August 12, 2025. The anti-circumvention probes reflect ongoing efforts by the U.S. to enforce trade rules even during this ceasefire period.
房市最冷夏天》各項限貸壓力齊來 小建商受災第一排
The Coldest Summer in the Housing Market: Lending Restrictions Pressure All Around, Small Developers Hit First
Liberty Times Net | Local Language | News | July 16, 2025 | Regulation
Recent lending restrictions imposed by central banks on construction loans and mortgages are significantly affecting Taiwan’s housing market, with small developers bearing the greatest impact. These smaller developers face difficulties due to limited resources and stricter financing conditions, making them the first casualties in the market downturn. Larger developers benefit from advantages such as brand equity, capital increase, bond issuance, and asset disposal, which small and medium-sized developers generally lack. Additionally, the current imperfect performance bond system increases consumer risks amid this tightening credit environment.
Taiwan produces over 100,000 housing units annually, with abandoned buildings remaining very rare—averaging fewer than 100 units per year over the past decade, representing a probability below 0.1%. Despite the overall low incidence of abandoned projects, the financial pressures are particularly acute for small developers, who have historically been more prone to defaults and bankruptcies during market slumps. Homebuyers who choose reputable developers remain largely insulated from these risks.
Industry experts report that the current tight liquidity situation is unprecedented over the past 20 years, with banks exercising greater caution in lending, especially to new or financially weaker developers. This has led to the withdrawal of more than a hundred urban renewal projects in Taipei, as builders become reluctant to continue amid rising construction costs and financing challenges. Preventing financial crises among small developers is identified as a critical concern moving forward.
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