Xi says Taiwan's unification "will certainly be realised". Two weeks out, the ruling DPP is the one gaining ground
Future Times4 min read
In 30 seconds
Beijing's latest pledge barely registered on the odds of conflict, which stay close to zero. What has moved is the 28 November local vote, where opposition infighting and tightening polls have cut the KMT's lead sharply in a week.
- The KMT is still favoured to win the most local races, but its lead has shrunk by 17 points in a week
- Xi's speech changed nothing in conflict pricing: a clash, blockade or invasion all sit below 4%
- New Taipei and Taipei are the races to watch; a DPP win in either would reshape the 2028 map
What it means
- PoliticsA closer contest weakens the KMT chair's position before the 2028 presidential race.
- GeopoliticsA stronger DPP result would hand Beijing a less receptive Taiwan just as Xi and Trump meet.
- StocksNear-zero conflict pricing is consistent with a calm risk premium on Taiwanese assets, including TSMC, the most exposed…
- Energy and businessThe PNG rupture shows diplomatic fights now reach supply contracts.
What to watch
- 28 NovLate polls in New Taipei and turnout on 28 November will decide whether the DPP's surge holds
The odds
Polymarket · live, 08:29 GMTDPP wins the most Taiwan mayor and magistrate races
up 7 points over 7dfrom 25% a week ago37% when this was published
Signals to watch
- A move in the conflict markets above 5% would be the first sign that traders think Beijing's response to the vote could go beyond words.
Now · 32%
Think the market's wrong? Add your forecast and see who's closer.
- 2026 Taiwanese Local Elections: Party Winner: Kuomintang (KMT)68%down 6 points
- Taipei Mayor Election Winner: Chiang Wan-an66%down 2 points
- Taipei Mayor Election Winner: Puma Shen35%up 2 points
Standing in the Great Hall of the People on Thursday to mark the 160th anniversary of Sun Yat-sen's birth, Xi Jinping told his audience that "the complete reunification of the motherland must be realised, and it will certainly be realised". "The tide of history cannot be stopped," he added, restating Beijing's offer of "peaceful reunification" under "one country, two systems". He did not mention force.
Taipei's answer was a shrug. Liang Wen-chieh, spokesperson for the Mainland Affairs Council, said the wording "isn't much different from the past", and the council noted that "the PRC has never ruled Taiwan for a single day". The same day, Taiwan's defence ministry reported 29 Chinese military aircraft, including J-16 fighters and drones, on a "joint combat readiness patrol" with warships around the island.
The speech landed 16 days before Taiwan elects mayors and county magistrates on 28 November, and the market evidence points to a clear split. Traders see almost no chance that Beijing's words turn into military action. Yet the domestic contest has moved sharply in the past week, toward President Lai Ching-te's governing Democratic Progressive Party (DPP).
A rout that is turning into a race
The scale of the DPP's task is set by the last vote. In 2022 the Kuomintang (KMT) took 14 of the 22 mayoral and magistrate posts and the DPP just five. Party insiders say the DPP aims to hold its southern strongholds, including Kaohsiung and Tainan, and break through in Keelung, Yilan, Hsinchu County, Changhua and Chiayi City.
Traders now take that ambition seriously. As of 12 November, they give the DPP a 37% chance of winning at least as many of the 22 head-of-government races as the KMT, up from 22% a week ago. The KMT's chance of finishing first has fallen from 78% to 61% over the same week, including a 5.5-point drop in the past day. Those prices rest on only about $450,000 of trading, so they are a sensitive signal rather than a settled one, but the direction is unmistakable.
Why the opposition's lead is shrinking
The clearest trigger is New Taipei, a KMT city since 2005 and Taiwan's most populous municipality. A poll published by the United Daily News on 9 November, a paper usually seen as sympathetic to the KMT, put the DPP's Su Chiao-hui on 42% against 39% for Lee Shu-chuan, the joint KMT-Taiwan People's Party (TPP) candidate. Lee had led by 13 points in October.
The second is opposition disarray. Storm Media reported on 11 November that KMT candidates have kept party chair Cheng Li-wun at arm's length, citing insiders who say her ratings trail the party's, and that a nomination row in Hsinchu County had cooled KMT-TPP cooperation nationwide. It named Changhua, Hsinchu County, Chiayi City and Yilan as at serious risk for the KMT.
In Taipei the picture is murkier. A poll released on 2 November gave the DPP's Puma Shen 52.6% to 35.3% for the incumbent Chiang Wan-an, but surveys by TVBS and ETtoday taken after the 31 October debate both put Chiang ahead. Traders side with the incumbent, giving Chiang a 66% chance of re-election against 35% for Shen. Shen has gained 4 points in a week, but the market does not see the upset coming in the capital.
Beijing's words, and the market's silence
If Xi's speech were read as a threat, the security markets would show it. They do not. As of 12 November, traders give a 2.2% chance of an armed clash between Chinese and Taiwanese forces before 2027, a 1.7% chance of a Chinese blockade of Taiwan this year and 3.4% for an invasion by 30 June 2027. All three are lower than a week ago; the invasion figure has fallen from 5.5%.
The calendar helps explain the calm. Xi is due to meet Donald Trump at the APEC summit in Shenzhen next week, after a state visit to Washington in September, and the US paused a $14bn Taiwan weapons purchase in May. Traders also see little danger to Lai himself: a 3.2% chance he leaves office before the end of the year.
The same pattern runs through Taiwan's dispute with Papua New Guinea. Taipei said on 6 November that it would close its office in Port Moresby and sign no new spot contracts for PNG gas, blaming Chinese pressure, while saying alternative supplies were secured. Markets read such pressure as attrition, not a prelude to force.
Why the KMT could still hold on
The KMT remains the favourite. It defends 14 seats, deep local networks that DPP staff say they are watching, and a Taipei incumbent whom traders still back. Polls disagree, nearly one in five New Taipei voters is undecided, and the DPP's own leadership has warned that "overconfidence leads to defeat". KMT holds in New Taipei and the contested counties would erase the DPP's gains.
What it means for markets, politics and security
Politics A closer contest weakens the KMT chair's position before the 2028 presidential race. Even a narrow KMT win with losses in New Taipei or the swing counties would revive questions over its leadership and its alliance with the TPP.
Geopolitics A stronger DPP result would hand Beijing a less receptive Taiwan just as Xi and Trump meet. Market pricing implies Beijing would respond with pressure on Taiwan's diplomatic space rather than force.
Stocks Near-zero conflict pricing is consistent with a calm risk premium on Taiwanese assets, including TSMC, the most exposed large stock. Traders treat the vote as a political event, not a security one.
TSMEnergy and business The PNG rupture shows diplomatic fights now reach supply contracts. Taiwan, which buys about a third of PNG's LNG exports, has a slightly narrower set of sellers; PNG loses a major customer.
What to watch
The APEC summit in Shenzhen next week will show whether Taiwan features in the Xi-Trump meeting. Late polls in New Taipei and turnout on 28 November will decide whether the DPP's surge holds. A move in the conflict markets above 5% would be the first sign that traders think Beijing's response to the vote could go beyond words.
For now, Xi's history is moving on a slower clock than Taiwan's voters.