All sorts of different countries hold elections, even ones that our government pretends don’t really exist. Hence Saturday’s presidential election in Taiwan, claimed by China as a renegade province but in reality an independent nation with a population roughly the size of Australia’s.

Incumbent Ma Ying-jeou of the Kuomintang (KMT) or Chinese Nationalist Party, in power since 2008, was re-elected fairly comfortably with 51.6% of the vote, against 45.6% for the opposition Democratic Progressive Party’s Tsai Ing-wen. An independent, James Soong, who it had been feared would take votes from the KMT, managed only 2.8%.

The key issue in Taiwan is the nature of the relationship with China.

The DPP, which held the presidency from 2000 to 2008, stresses Taiwan’s independent identity, and that raises hackles in Beijing. Ma was elected on a promise to improve relations by skirting around such difficult issues, and he has been strikingly successful: economic and cultural ties with the mainland have boomed and Taiwan has enjoyed strong growth and increased participation in international institutions.

The turnaround in China’s attitude has been remarkable. In return for the ability to share in Taiwan’s wealth it has dropped its hostile rhetoric and extended de facto recognition to the Taiwanese government in a host of ways. The fact that a restaurant in Shanghai was able to offer live broadcast of the election results on Saturday night shows how much has changed. Although Beijing still asserts its right to use force to retake Taiwan, the prospect of that seems more remote than ever.

Critics of Ma’s approach describe this trade-off as “appeasement” and accuse him of having sold out Taiwanese aspirations. But it’s very difficult to see just what he has given up. Taiwan never claimed legal independence, and the lack of it isn’t impairing its ability to function. The threat to Taiwan’s freedom and prosperity comes not from, for example, its lack of a seat in the UN (which of course China would veto in any case), but from Chinese interference, and the more closely the two countries are entwined the less likely that becomes.

It seems that what we’ve had in Taiwan is pretty close to a laboratory experiment on the effect of two different policies. The DPP’s assertiveness, however noble and well-meaning, didn’t work; Ma’s conciliatory approach has. It’s not surprising that, despite some fallout from the global financial crisis, Taiwanese voters were willing to give him another four years.

For many believers in democracy, supporting the KMT does not come easily. For more than 30 years it ran Taiwan as a dictatorship, and only in the 1990s was a genuine multi-party system permitted to develop. The DPP, whose founders were dissidents and martyrs for democracy, is more admirable in many ways, but in the light of the last four years of progress it needs to rethink its policy towards the mainland.

There are broader lessons here as well. The BBC’s election report points out the question of how to deal with China “is one that many nations face”, and Australia of course is prominent among them. As I said back in 2009, Taiwan’s experience shows “that China’s rulers, although authoritarians, are not ideologues”; they care much more about practical advantage than abstract principle. That makes them ruthless and unscrupulous, but it also means they are always willing to cut a deal if the terms are right.

Closer relations with Taiwan also mean that more and more Chinese are exposed to democracy, and to one that spectacularly falsifies the claim that it is an alien system unsuited to Chinese conditions. In the long run, the recipe for better cross-strait relations and a better atmosphere in the region all round is democratisation in China, and contact with Taiwan is one thing that could help that happen sooner and more peacefully.

In the meantime, the path of pragmatism is looking a better bet than the path of confrontation.