Taiwan Premier Jiang Yi-huah bows during a news conference after the ruling Kuomintang (KMT) party was defeated in the local elections in Taipei November 29, 2014. Taiwan's premier announced his resignation on Saturday after the ruling Kuomintang (KMT) party's trouncing in local elections. REUTERS/Minshen Lin (TAIWAN - Tags: POLITICS ELECTIONS)

Taiwan’s premier has resigned after the opposition party swept local elections that were viewed as a litmus test for the ruling party’s China-friendly policies ahead of presidential elections in early 2016.

The Nationalist party, the Kuomintang, lost power in two of the island’s major cities: the capital Taipei and Taichung, in the centre of the island. Premier Jiang Yi-huah stepped down on Saturday evening, saying he took responsibility for the loss.

Young Taiwanese have seen incomes stagnate as jobs move to mainland China, while housing prices and energy costs rise. Earlier this year in what came to be known as the Sunflower movement, student activists stormed the legislature to block the passage of a pact that would have freed up trade in services with the mainland, for fear it would increase the island’s economic dependence on its much larger rival.

“This election shows there are some concerns and we need to address them,” KMT spokesman Charles I-hsin Chen told the FT. “We need the people’s support before moving forward on relations with the mainland.”

A prolonged stand-off between pro-democracy protesters in Hong Kong and the ruling Communist Party in Beijing has alarmed many in Taiwan. China’s top leader Xi Jinping has stated that the “one country, two systems” governing Hong Kong, a former British colony, would also work for Taiwan if Beijing were to regain control, sparking a rare public rebuttal from Taiwan’s president Ma Ying-jeou.

Beijing views Taiwan, which has been independently governed since 1949, as a breakaway province to be recovered by force if necessary.

Relations between the two sides had warmed considerably under President Ma and China’s previous leader, Hu Jintao, and the island’s economy has become much more closely integrated with the mainland. Meanwhile mainland influence has grown among Taiwan’s businesspeople as well as media.

The loss of Taipei is a particular blow to the KMT. Independent candidate Ko Wen-Je beat Sean Lien Sheng-wen, the son of Lien Chan a former chairman of the KMT and former vice-president of Taiwan. The elder Mr Lien led a series of trips to mainland China that helped break the political ice between the two sides, and is closely associated with the KMT’s policies towards the mainland.

Tsai Ing-wen, chairwoman of the opposition Democratic Progressive Party, urged her party to be humble and govern well to maintain its momentum through the upcoming year. “After tonight the real work begins,” she said.

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