Voters in Taiwan delivered a crushing blow to President Tsai Ing-wen and her independence-leaning ruling party during the weekend's local elections, leaving China with the upper hand, analysts say. Tsai's Democratic Progressive Party (DPP) lost mayoral elections in key cities to the opposition Kuomintang (KMT), or Nationalist Party. The DPP lost its stronghold of Kaohsiung, the southern port city where it had held power for more than 20 years, during the nationwide vote Saturday for local posts. "It was a huge defeat," Sean King, senior vice president at Park Strategies, told CNBC's Akiko Fujita on Monday on "Squawk Box." While the vote was largely focused on economic concerns rather than the long-simmering issue of Taiwan's political status, China came out in a strong position, according to King. "I think it was issues like labor and pension reform, a lackluster economy, that did her in. But China's definitely going to claim victory here."

Supporters from the opposition Kuomintang party attend a campaign rally in Taipei on November 11, 2018. Chris STowers | AFP | Getty Images

Relations across the Taiwan Strait ebb and flow depending on who holds power in Taipei — and tensions with Beijing have risen since the DPP swept to power two years ago. China prefers the Kuomintang, which avoids talk of going it alone and stresses economic ties with the mainland, from which KMT troops fled in 1949 after defeat in the Chinese Civil War. Taiwan-China relations flourished when the KMT ruled Taiwan from 2008 to 2016. Leaders from both sides – Chinese President Xi Jinping and Taiwan's then-president Ma Ying-jeou – met in Singapore for a historic summit in 2015.

'Major comeback'

Analysts say that China is widely seen as having tried to influence the local elections through economic pressure on the self-governing island, including by discouraging tourism. King said he expects China to reach out to KMT politicians ahead of Taiwan's next presidential vote in early 2020. The election results left Tsai reeling, prompting her to resign as head of the DPP to take responsibility, even though she remains as Taiwan's president. Analysts, however, were divided on her political future. "I still think she'll be the candidate (for the ruling DPP) but there is going to be challenge from within," King said. "It's an uphill battle." The Kuomintang will now be hoping the local polls will pave the way for success in the 2020 presidential elections. "The results were a major comeback for the KMT party, which began a process of intra-party reformation after losing the presidential election in 2016," the Eurasia Group risk consultancy said in an analysis dated Sunday. "Beijing will view the results of this election as a solid endorsement of its pressure campaign against the DPP." Eurasia Group added that it sees Tsai — who was technically not on the ballot — as the biggest political loser of the weekend elections, with the DPP unlikely to back her for a second term in hopes that voters will accept someone else.

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