Quotes of the Day

Ma Ying-jeou is weary. The presidential candidate for the Kuomintang, or KMT, slumps into an economy-class seat on a high-speed train bound for central Taiwan. It's 8 p.m. on a Tuesday night and he has already endured a grueling 12-hour schedule of campaign events — seminars, speeches, and a ceremony launching his latest book, Silent Courage. Yet with a crucial presidential election only days away, Ma, 57, can't afford to waste a single second. Minutes after his train arrives in the city of Taichung, Ma is whisked from the tracks into a waiting car and driven at top speed to Caotun township in Nantou county. Once there, Ma, casually clad in a pinstriped shirt and blue jeans, takes questions informally from an excited group of villagers at the home of a local antique collector. At 10:30, Ma is still telling jokes and talking politics. One giddy, curly-haired woman asks him to autograph her Coach handbag.

Most of all, Ma regales the packed room with his vision of Taiwan's future — one based on a radically altered relationship with Taiwan's rival, China. Taiwan, he tells one inquisitive villager, needs to strengthen its ties to China for the benefit of its economy and society. Chinese tourists, he says, would visit Taiwan in the millions and lavishly spend their newly earned wealth. "But we don't want to just make money off the Chinese," Ma says. "We want to make friends with them. Then there will be less likelihood of war."

Such sentiments are the reason Taiwan's March 22 presidential election is potentially one of the most important East Asia has seen in recent memory. A Ma victory could usher in a sea change in the tense relationship between China and Taiwan. In 1949 Mao Zedong's communists chased Chiang Kai-shek's KMT from the mainland after a brutal civil war, and ever since the two have glared icily at each other across the narrow but heavily armed strait that separates them. Beijing considers Taiwan to be no more than a wayward province destined to be reunified under communist rule. The disagreement has on occasion inched close to war and remains one of Asia's potential flash points. Neither side formally recognizes the existence of the other, so nearly 60 years after their separation, Taiwan residents still cannot send a letter or take a regularly scheduled flight directly to China.

Forging a New Identity
Ma believes the time for change has come. Squished into his train seat, the Harvard-educated lawyer outlined to TIME a detailed program that he hopes will broaden Taiwan's relations with China and eventually lead to real peace. He talks of reaching a "comprehensive economic cooperation agreement" with China that would boost trade and investment across the strait. He even broaches the idea of negotiating a peace treaty with Beijing and putting in place "confidence-building measures" to scale back the military buildup on either side of the strait. "We can make cross-strait relations work for both" Taiwan and China, Ma says. "It is going to be a win-win situation."

Ma's attitude is a major turnaround from that of Taiwan's outgoing President, Chen Shui-bian of the rival Democratic Progressive Party, or DPP. In 2000 Chen made history by becoming the first non-KMT President of Taiwan. He won by tapping into and championing a rising spirit of Taiwanese nationalism. Many people in Taiwan no longer consider their island a part of China; instead, they see Taiwan as a de facto independent state and desire an identity of their own. The search for Taiwan identity also had a sharp anti-KMT edge. The KMT has historically been the party of the mainlanders who came to Taiwan with Chiang and who still hold attachments to China. Local Taiwanese islanders resented the intrusion, as well as the KMT's long dominance of the island's politics. Those Taiwanese turned to the DPP.

Today, school curriculums that had focused on Chinese history and geography center on Taiwan. Learning a local dialect such as Taiwanese, Hakka or aborigine — languages the KMT once banned in the classrooms — is now compulsory in elementary school. Today's youth and pop artists have also sparked a movement that embraces local culture. An ethnic slur, taike — which Taiwan's mainlanders used decades ago to describe the uncultured locals they found on the island — has become something cool. Taike now means a "Taiwanese character" (as in "that guy's a real character"). In his hit rap song I Love TW [Taiwan] Girls, taike icon MC Hotdog even snubs a supermodel for the down-to-earth Taiwanese gal.

Formally at least, Taiwan's independence has proven an impossible dream. Beijing, highly sensitive to any threat to its claims to the island, has successfully thwarted Taiwan's efforts to get international recognition. Taiwan isn't even a member of the U.N. Under Chen, issues of Taiwan sovereignty and identity rose to the forefront, and he pursued a series of policies aimed at bolstering Taiwan's sense of independence. For example, on the same day as the election, Chen's government has scheduled a controversial referendum that will ask the public whether the island should apply to join the U.N. under the name Taiwan instead of its official title, the Republic of China.

The strategy, however, has backfired. Chen's actions irked Beijing, and relations between the two have been more or less frozen for eight years. In early March, Chinese President Hu Jintao called Taiwan's independence efforts "the biggest threat to peace and stability in the Taiwan Strait." Chen also annoyed Washington, Taiwan's chief ally, which came to see him as a troublemaker bent on escalating tensions with China. At the same time, Chen brought Taiwan no closer to true independence. Instead, the island got further isolated within an Asia that is more tightly linked around an expanding China. "We tried to help our sense of Taiwan identity, but it resulted in self-marginalization in the region," says Philip Yang, a political scientist at National Taiwan University in Taipei. As a result, "we believe Taiwan is losing its edge, losing its advantages and losing its chance at long-term prosperity."

Ma's solution is simple: Don't rock the boat. His policy is enshrined in what are called the "three nos": no unilateral moves toward formal independence, no talks with the mainland on unification and no use of military force. The idea is to ditch the ideological hang-ups of the Chen years, stop irritating Beijing and pursue a new, pragmatic approach that focuses on improving relations with China wherever possible. "We have to find a way to manage the sovereignty issue without solving it," says Ma. "The idea is not that each side recognize each other. It is not that each side deny each other. We ignore the sovereignty issue and concentrate instead on more urgent matters."

It's the Economy, Stupid
The most urgent matter concerns Taiwan's faltering economy. One of the original high-powered Asian tigers, Taiwan's economy at first glance seems no less vibrant today. GDP growth clocked in at 5.7% in 2007 while unemployment stood at only 3.9%. Yet dig deeper, and some disconcerting trends reveal themselves. The economy isn't generating a higher standard of living for the regular citizen. The average family income grew a total of only 1% between 2000 and 2006. Nor is it creating enough well-paying jobs. Unemployment among university graduates is the highest among any education category. While most of Asia has roared ahead in recent years, Taiwan has been falling behind. South Korea's main stock market index has surged 140% since the beginning of 2000; Taiwan's hasn't budged. In 2000, Taiwan's GDP per capita was higher than South Korea's; today, the two tigers have traded places. "All of the economies [in Asia] are developing and getting closer, but Taiwan is getting left out," complains Chang Pen-tsao, chairman of the Taiwan Chamber of Commerce in Taipei. "Taiwan has been isolated politically, and if we become weaker economically, then we have nothing."

The business community believes the problems stem from Taiwan's stunted economic relationship with China. In some ways, business ties are already quite strong. Taiwan firms have opened factories in China in pursuit of lower costs than can be found on their more developed home island and, according to government statistics, have invested some $65 billion on the mainland since 1991. (Other estimates run to $100 billion or more.) Some one million Taiwan citizens live in China — a hefty chunk of the country's population of 23 million. However, Taiwan businesspeople still face a myriad of confusing restrictions. For example, Taipei restricts the amount a Taiwan firm can invest in China. Banks are banned from operating there altogether. The objective is to ensure Taiwan's wealth doesn't drain out of the island and into its hostile neighbor; in practice, business leaders say, these measures have cut off opportunities for growth and hampered them when competing with firms from South Korea and elsewhere. Wayne Lee, the secretary general of the Kaohsiung Chamber of Industry, simply labels Taiwan's restrictions "stupid." "There's a big piece of meat there," he says, "and we won't take a bite."

Ma couldn't agree more. He wants to begin direct transportation and trade links across the strait, open Taiwan to Chinese tourists and investors, and reduce restrictions on Taiwan companies operating in China. Taiwan, Ma believes, can't ignore the powerful forces of globalization by continuing to keep its distance from China. "There is an economic reality people have to accept," Ma says. "If we keep the current situation, that will hurt our competitiveness, hurt our efficiency. If you ignore the global trend you will eventually become a loser."

Ma's opponent, 61-year-old DPP candidate Frank Hsieh, agrees — to a point. At times, Hsieh, a highly respected democracy activist and former Premier, can sound almost Ma-like in his policy toward China. Like Ma, Hsieh favors increased economic ties such as direct transportation links; if he wins the presidency, relations with China would improve from where they stand today. But he isn't willing to go as far as Ma; Hsieh and the DPP believe it is in Taiwan's interests to avoid negotiations with Beijing in which their country isn't treated as an equal partner.

Take, for example, the issue of direct passenger flights to China. Currently, Taiwan businesspeople must travel to China via a third city, usually Hong Kong, which wastes time and money. Taiwan's disputed political status has presented a hurdle to starting direct flights. Beijing would prefer to call them "domestic," an unacceptable slight to Taiwan. Ma argues that the two sides can work around this problem by using some simple turn of phrase that both parties accept — such as "cross-strait flights." Hsieh is more wary. In a February debate between the candidates, Hsieh favored an expansion of charter flights only. The difficulty of negotiating and characterizing regularly scheduled flights, he said, would get in the way of any further steps. "We have to stand for the interests of Taiwan," Hsieh said.

Does Separate Equal Free?
Hsieh's thinking resonates among a significant portion of Taiwan's population. The DPP's political base — mainly the longtime Taiwanese residents of the island — completely rejects the idea that Taiwan has any connection to China. The party sees itself as the true champion of this spirit of independence, compared to the KMT, with its old ties to the mainland. The DPP is "much more committed to defending Taiwan's de facto independence and Taiwan's democracy," says Hsiao Bi-khim, the international-affairs director for Hsieh's campaign. "We are not at all willing to compromise that for whatever economic gains that can be achieved with China." The DPP thus paints Ma's more accommodating policies as a route toward effective absorption. "We are worried that Ma's position would be pushing Taiwan into a scenario of de facto unification," says Hsiao. Ma, she believes, doesn't possess "the commitment or the ability" to stop that from happening.

This theme is one that Hsieh is pounding home on the campaign trail. At a late-February rally of 100,000 people at a Taipei stadium, Hsieh painted Ma's position toward China as a sure way of undermining Taiwan's economy and squashing its democratic ideals and hopes for independence. If Ma has his way, "in the end we will give up our sovereignty," Hsieh blasted. "If this happens, we will not have the dignity of being our own masters." (TIME requested an interview with Hsieh but it wasn't granted.)

The KMT used to be equally fearful of its giant neighbor. The party has historically been one of the great bastions of anticommunism and the restrictions on Taiwan's contact with the mainland date primarily from the long period when the KMT was in power. But in recent years, the KMT has gone through a transformation in its outlook. The KMT's turnaround was caused, indirectly, by the DPP. Kicked out of power eight years ago, the KMT had grown out of touch with Taiwan's increasingly vibrant democratic environment. After ruling for so many decades, most of the time through authoritarian regimes, the KMT was corrupt, imperial and slow to adapt to the rising spirit of Taiwanese identity. Since its landmark 2000 electoral loss, however, the KMT has learned to be more democratic and open to public sentiment, and it found a new message, oddly enough, in its historical ties to China. As Lin Chong-pin, president of the Foundation on International and Cross-Strait Studies, puts it, the KMT "had no stage in Taiwan but found a stage in China." In 2005, then KMT chairman Lien Chan made a breakthrough visit to Beijing, during which he buried the hatchet with the party's communist foes. The DPP "perceives the mainland as a threat. We should and do," says Ma. However, he adds, "we also perceive the mainland as an opportunity."

Ma's message is so far winning out. Polls show him ahead of Hsieh by double digits. A big reason is Ma himself. The former Taipei mayor and triathlon competitor has become the new face of the new KMT. Born in Hong Kong, Ma arrived in Taiwan as a 1-year-old and, after studying in the U.S., held a long list of posts in KMT governments, including Justice Minister. While campaigning, Ma is often received more like a touring pop star than a politician. "Look at how the ladies react," comments one aide as Ma departs from a rally to greet a line of giggling female office workers waiting to shake his hand.

Ma's biggest asset, however, is the DPP's outgoing Chen. His administration has been so tarnished by corruption scandals that public confidence in the DPP has soured. Even First Lady Wu Shu-chen was indicted on charges of graft and forgery in 2006; she pled not guilty and a verdict has yet to be delivered. Fed-up voters carried the KMT to a landslide victory in legislative elections in January. (Ma was also indicted last year for misappropriating public funds but was cleared of wrongdoing by the courts. An appeal by prosecutors to the Supreme Court is now pending.)

Historical Baggage
The presidential election, though, is far from over. Ma has a potential Achilles heel — the mere fact that he's KMT. Hsieh can count on a full third of the electorate to vote against the KMT under almost any circumstances. Ma has tried to counter by appearing more sensitive to issues of Taiwanese identity. He has spent long stretches in the island's south — DPP territory — where he often bypasses hotels to stay in the homes of ordinary folk. At one rally of labor unionists in Taipei, Ma made sure to lead the crowd in cheers of "Taiwan will win!" in both Mandarin, the language of the mainlanders, and the local Taiwanese dialect. "I eat Taiwan rice, drink Taiwan water," he recently proclaimed. "I will die and be buried here as Taiwanese."

Even if Ma overcomes Hsieh and wins the presidency, he could face serious hurdles in realizing his vision of improved cross-strait relations. Much of his success will depend on the attitude of Beijing. On the surface, the interests of Ma and Hu Jintao appear to be dovetailing. Under Hu, whom Ma compliments as "sophisticated," China has dramatically softened its stance toward Taipei, and Hu these days sounds ready to compromise. In his speech opening the Chinese People's Political Consultative Congress in early March, Hu reiterated his offer to sign a peace treaty. "Status in negotiations would be equal," Hu promised, "and any issue can be discussed."

But there's a catch. Hu insisted that any negotiating party had to accept Beijing's view of "one China," a prerequisite even the KMT might have trouble swallowing. An overtly friendly Taipei will also force Hu to make sensitive decisions on Taiwan policy he has so far been able to avoid, and it is uncertain how far he's willing to go. "Taiwan's leadership will be looking for concessions and will almost certainly be willing to make concessions of its own." says Shelley Rigger, a Taiwan expert at Davidson College in North Carolina. "That will force Beijing to decide: Where do we draw the line?"

Yet Ma's biggest stumbling block might well be the ambivalent feelings of his own people toward China. Fear of domination by China is still widespread among Taiwan's population and Ma might have to tread carefully or risk a backlash. Even those in favor of closer relations, like Kaohsiung's Wayne Lee, harbor lingering fears of the consequences. "We have to ask ourselves if it is worth making a lot of money for 10 years and trading away our sovereignty," he says.

Ma believes Taiwan can have it all. "We could accomplish a lot of things across the Taiwan Strait without damaging Taiwanese interests, Taiwanese dignity or Taiwanese security," he says. If he's right, the political map of Asia would be changed forever.

• Michael Schuman/Nantou County