Under the theme ‘Weaving Taiwan’s story and advancing democracy’, Lai Ching-te was inaugurated as the new president of Taiwan on May 20, closing the era of his predecessor, Tsai Ing-wen. The incoming administration will build on Tsai’s legacy, but the international community will need to adjust to a new and less disciplined political tone will arise from internal party politics, a new legislature and domestic policy concerns.

Lai and Vice President Hsiao Bi-khim were elected in January with 40 percent of the vote, well clear of rival candidates in a three-way race. But Lai’s party, the Democratic Progressive Party (DPP), lost its legislative majority, falling to 51 seats in the 113-seat legislature. The main opposition party, the Kuomintang (KMT), has 52, the Taiwan People’s Party (TPP) eight, and there are two KMT-aligned independents.

Although Lai campaigned on absolute continuity with Tsai’s governance, the result can be read as expressing voter satisfaction with the DPP’s handing of Taiwan’s security and foreign relations but discontent with various domestic issues, especially housing affordability and wage growth.

Lai’s choices for members of his government are responses to voter sentiment and internal DPP politics.

A key appointment is Cho Jung-tai as premier. Cho will head the cabinet and manage relations between the executive and legislature. Since the DPP lacks a majority, his performance will be particularly important for implementing Lai’s legislative agenda. Cho is up against the KMT’s new speaker of the legislature, Han Kuo-yu, a populist political warrior who decisively lost to Tsai when running against her for president in 2020.

Days before the inauguration, a violent scuffle broke out in the legislature over an attempt by the opposition parties to push through contentious legislature reforms without debate. The incident points to four challenging years ahead.

Domestic policy is in the hands of new interior minister Liu Shyh-fang, from the southern city of Kaohsiung, and Chuang Tsui-yun, who is retaining the finance portfolio. Liu is one of the DPP’s leading women from the south, while Chuang has no party membership. High-profile minister for digital affairs Audrey Tang, who came out of Taiwan’s anarchic hacker scene, has been replaced by Huang Yen-nun, a semiconductor researcher and industry veteran.

The new ministers have extensive government experience, benefiting from the party’s incumbency and its professionalisation since its beginnings as an anti-authoritarian democracy movement in the 1970s.

But Lai is also drawing on his southern Taiwan powerbase. While Liu has come from Kaohsiung, Chen Shu-tzu, known as a tough administrator, has been brought up from the city government of nearby Tainan to head the Directorate General of Budgeting, Accounting and Statistics. She was a Lai ally when he was mayor of Tainan in the 2010s. Lai reinforced the message by holding his official inauguration dinner in Tainan, not Taipei.

Tsai also dealt with internal party dynamics as president, but her path to power, unusually, did not include a city mayorship, which helped her develop a role in the party as a leader above the fray.

For Australia’s relationship with Taiwan, the most important appointment is that of Lin Chia-lung as foreign minister. A DPP heavyweight, he has been in a wide range of roles at the city and national levels, including a stint as transport minister under Tsai. He will benefit from outgoing minister Joseph Wu’s work to develop a a more open and dynamic culture in the Ministry of Foreign Affairs. The new defence minister is Koo Li-hsiung, a civilian. He is not the first civilian in the job, but his appointment still signals a continuing commitment to defence reform.

Also important for Australia is the new minister for economic affairs, Kuo Chi-hui, who covers trade policy. His career has been in business, not politics, and he is taking over from Wang Mei-hua, with whom Canberra has had an excellent relationship.

The two other figures of importance for the incoming government are Vice President Hsiao Bi-khim and Tsai. Hsiao is one of the government’s strongest assets, with a formidable and hard-won skillset in both domestic politics and foreign affairs, but the role of vice president has always been somewhat undefined in the Taiwanese system. How Hsiao exercises her experience in foreign affairs and her own political vision within the government may prove important for Lai’s presidency. Tsai meanwhile has yet to declare a post-politics role, but Lai will have to reckon with her power in the party and her presidential legacy.

For its part, Beijing has seemed non-plussed by the election result, continuing its military activity, including encroaching on the island of Kinmen, and furthering a new program to connect with the Taiwanese through what it imagines are shared southern Chinese cultural traditions. It has also hosted visits of leading KMT figures to China.

These are familiar tactics, but intensity ratchets ever higher, and Beijing will recalibrate its threat level against Taiwan again to respond to the start of the Lai era.

The world is focused on Gaza, but Beijing and the international community will still have to adjust to Lai’s leadership, as well as a noisier domestic political dynamic within the parties and especially within the legislature, which can be easy to misinterpret without a substantive understanding of the Taiwan story.