From a nadir following the 2020 national elections, two successive chairs of the Chinese Nationalist Party (KMT), Johnny Chiang (江啟臣) and Eric Chu (朱立倫), tried to reform and reinvigorate the old-fashioned Leninist-structured party to revive their fortunes electorally. As examined in “Donovan’s Deep Dives: How Eric Chu revived the KMT,” Chu in particular made some savvy moves that made the party viable electorally again, if not to their full powerhouse status prior to the 2014 Sunflower movement.
However, while Chu has made some progress, there remain two truly enormous problems facing the KMT: the party is in financial ruin and an aging voter base. Though he may make more progress by the next party chair election in September next year, these problems will likely still remain challenges for whoever wins, regardless of whether Chu runs again and wins or a challenger steps up and wins.
‘WORLD’S RICHEST POLITICAL PARTY’
Photo: Tien Yu-hua, Taipei Times
The international press used to bill the KMT as the “world’s richest political party.” There is doubt that the KMT party-state brought over considerable wealth from China, and then proceeded to confiscate assets left behind by the Japanese colonial government and the hundreds of thousands of Japanese residents evicted and deported to Japan at the end of World War II. They also confiscated assets from Taiwanese as well.
Since the KMT and the government were essentially the same thing, some assets and income sources were given to the party, and others to the state. Only when Taiwan transitioned to democracy did these ill-gotten gains become an issue.
The KMT used this vast wealth to outspend and in many cases buy votes on their way to victory over the Democratic Progressive Party (DPP), something I often witnessed in the late 1980s, as my employers were local KMT patronage faction politicians.
The first time I saw the mountain of cash they had prepared I jokingly asked “is that for me?” They replied casually, with no sense of shame or doubt, “This is to buy votes.”
The DPP used this unfair and corrupt practice to attack the KMT, and the public largely agreed that these assets should not have belonged to a political party in the first place. Multiple KMT party chairs, including Chu in his first stint in the post in 2015, publicly agreed and pledged to properly deal with these assets, but never got around to it. The KMT had a lock on the legislature, so aside from some grumbling from voters who were likely to vote DPP anyway, there was nothing compelling them to act.
NOT IN A FORGIVING MOOD
The DPP’s landslide victory in national elections in 2016 saw the party not only win back the presidency, but also for the first time a majority in the legislature. Within two months of Tsai Ing-wen’s (蔡英文) inauguration, the party passed the Act Governing the Handling of Ill-gotten Properties by Political Parties and Their Affiliate Organizations (政黨及其附隨組織不當取得財產處理條例) to deal with the KMT’s ill-gotten assets.
The KMT no doubt regrets not having handled the issue as the party might have been able to keep enough money to pay off expenses such as severance and pensions. It has repeatedly appealed to the government to release enough assets to cover just those sorts of expenditures. The DPP, following decades of being massively outspent, was not in a forgiving mood.
Previously having been so rich the party had handed out party jobs to aging loyalists to be, as it was memorably put by political scientist Nathan Batto, “professional tea drinkers and cigarette smokers.” The bill for all this was staggering, and only a couple of months after the ill-gotten gains committee came into operation, then-KMT chairwoman Hung Hsiu-chu (洪秀柱) took out two loans totaling NT$90 million (US$2.85 million) in her own name to pay overdue party staff salaries.
She took out the loan in her own name so the committee could not touch it. Half of the money came from an anonymous donor, but the other half came from Hon Hai Precision Industry Co founder Terry Gou (郭台銘) via his mother. Chu would later go on to deeply offend Gou by not choosing him as the party’s presidential candidate in the January election, which was a smart call politically but probably not financially.
RELYING ON FREE LABOR
According to the KMT’s financial statement on the Ministry of Interior’s Web site, the party was in the hole for NT$1.91 billion (roughly US$60 million) at the end of last year. That is a small improvement on the NT$1.94 billion at the end of 2022.
Importantly, the financial statement also includes NT$22.5 billion (US$705 million) in its frozen assets, which the party states as being “restricted from using” — a result of the ill-gotten gains act.
The KMT has kept these assets on the books because the issue is still being litigated. The party is likely hoping to keep it tied up in the courts until they win back the presidency and a legislative majority and overturn or change the law.
Chu has shown resolve and a willingness to try and restore the party financially in spite of opposition. Now, top party positions are filled with non-salaried volunteers and legislators. Similarly, this year the party-affiliated think tank cut their paying staff to just one person, relying on lawmakers and academics to provide their expertise and knowledge for free.
Other elements of the party have been streamlined as well, such as merging various internal youth groupings into a single KMT Studio. Many local party headquarters with no ownership ambiguity were sold off.
Perhaps the most bold and controversial move by Chu was to disband the deep-blue “party within the party” veteran’s group Huang Fu-hsing (黃復興) and replace it with a committee instead. The formerly mighty faction founded in 1956 had shrunk to something of a shadow of its former self, but still had some clout. There was some fury in the party at this move, but some powerful deep blue KMT figures came out backing Chu and agreeing that financially it was a necessary move.
Donovan’s Deep Dives is a regular column by Courtney Donovan Smith (石東文) who writes in-depth analysis on everything about Taiwan’s political scene and geopolitics. Donovan is also the central Taiwan correspondent at ICRT FM100 Radio News, co-publisher of Compass Magazine, co-founder Taiwan Report (report.tw) and former chair of the Taichung American Chamber of Commerce. Follow him on X: @donovan_smith.
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