(CNSNews.com) - Taiwan's independence-leaning ruling party suffered a major setback in local elections at the weekend. That has a resurgent pro-China opposition scenting victory in the next presidential poll.

The opposition Nationalist (Kuomintang or KMT) party and its allies won 16 of 23 county magistrate and city mayoral positions, while President Chen Shui-bian's Democratic Progressive Party (DPP) took six. In the last local government election, in 2001, the KMT and DPP took nine each.

The most serious loss to the DPP was in Taipei County, lost to the opposition for the first time in 16 years. It is Taiwan's most heavily-populated county and an area considered crucial in the next presidential election.

DPP party chairman Su Tseng-chang publicly apologized and offered his resignation over the poor showing.

The KMT's new leader, Taipei mayor Ma Ying-jeou, called the result a show of no-confidence in the DPP, and said his party was "determined to win back Taiwan."

The self-governing island holds legislative elections in 2007 and chooses its next president when Chen's second and final term ends the following year.

The local poll is being widely interpreted as a referendum on the policies of the president and his DPP.

Chen has been promoting a more assertive and self-sufficient Taiwan, while the KMT seeks closer ties with communist China and eventual unification with the mainland. Polls indicate that most Taiwanese favor the "status-quo" option -- neither unification nor formal independence.

Under its "one China" policy, Beijing considers the island of 23 million people a rebel province whose eventual return to its control is inevitable. It passed a controversial "anti-secession" law this year allowing the use of force if necessary to prevent any formal breakaway move by Taiwan.

U.S. government policy "does not support" Taiwanese independence but also it committed by law to help the island to defend itself against unprovoked outside aggression. Beijing routinely cites Taiwan as the biggest single issue in China-U.S. ties.

Taiwan's robust democracy -- held up by President Bush in a recent speech as an example to China -- witnessed a campaign marked by rhetoric that went beyond local concerns usually dominating local polls.

Chen charged shortly before the vote that the KMT wanted to enact "surrender" legislation -- a reference to an opposition initiative to pass a law setting up a commission responsible for holding talks with the mainland.

"Taiwan will have to accept the 'one-China' principle and become a part of China," Chen warned, echoing critics' concerns that the proposed KMT legislation would legalize Beijing's policy.

"[Taiwan] will become a local government, a special administration district, just like Hong Kong and Macau."

The two territories, formerly European colonies, returned to Chinese control in 1997 and 1999. The extent to which Beijing has allowed them autonomy -- not nearly enough, say critics -- is closely watched and vigorously debated in Taiwan.

China, which reviles Chen and the DPP, has not been averse to intervening in Taiwan's affairs and this year invited KMT and other opposition leaders for visits to the mainland, accompanied by economic sweeteners.

The results of the weekend election suggested the tactic is paying off and may intensify as the 2008 election approaches.

Other issues featuring in the campaign included economic woes -- attributed by Chen's opponents in part to his resistance to investment in China -- and corruption.

The DPP ended half a century of KMT rule by promising a new broom and end to corruption.

But Chen's party has faced its own scandals, most recently the indictment of a former presidential aide accused of corruption relating to the hiring of foreign workers for a subway project in Taiwan's second city, Kaohsiung.

Chen's vice-president Annette Lu, said Sunday that despite the setback for the DPP the election as a whole was another victory for Taiwanese democracy.

Lu said the party shouldn't lose hope, pointing to although Chen failed to win re-election as Taipei mayor in 1998 -- he lost the position to Ma, now the KMT leader -- he succeeded just two years later to win the national presidency.

Weighing up the election result, the Taipei Times said the ruling party still had time to reform and "remedy the problems" before the 2008 election

The China Post agreed that the DPP had time to regain voters' trust, but nonetheless saw the result as "paving the way for the Kuomintang's full comeback in the coming three years."

In an editorial published before the result was known, the Taiwan News predicted that if the KMT was successful China's interference would continue, resulting in "the subordination of our democratic political system to the whims of the rulers of Beijing rather than the will of our own people."

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