Lai -- branded by Beijing as a threat to peace in the flashpoint region -- secured an unprecedented third consecutive term for the Democratic Progressive Party (DPP) in Saturday's poll after a raucous campaign in which he pitched himself as a defender of Taiwan's democratic way of life.
Communist China claims democratic Taiwan, separated from the mainland by a 180-kilometre (110-mile) strait, as its own and refuses to rule out using force to bring about "unification", even if conflict does not appear imminent.
Beijing, which before the poll called Lai a "severe danger" and urged voters to shun him, said Saturday the result would not stop "the inevitable trend of China's reunification".
In his victory speech, Lai said he would maintain peace and stability in the Taiwan Strait, but pledged to defend the island from Chinese belligerence.
"We are determined to safeguard Taiwan from continuing threats and intimidation from China," he told supporters.
With votes from all polling stations counted, the Central Election Commission said Lai won 40.1 percent of votes, ahead of Hou Yu-ih of the opposition Kuomintang (KMT) with 33.5 percent.
The election was watched closely by both Beijing and Washington, Taiwan's main military partner, as the two superpowers tussle for influence in the strategically vital region.
Lai thanked the Taiwanese people for "writing a new chapter in our democracy" by defying one-party-state China's threats and warnings.
"We are telling the international community that between democracy and authoritarianism, we will stand on the side of democracy," he said, adding that he will also try to pursue exchanges with China.
- 'Super, world-class happy' -
Before Saturday's poll, authorities repeatedly warned of interference from China, pointing to paid trips to the mainland for voters and flagging disinformation that painted Lai in a negative light.
After his win, Lai said the island had "successfully resisted efforts from external forces to influence this election".
The victory extends DPP's rule after eight years under outgoing President Tsai Ing-wen, who had served the maximum two four-year terms.
Supporters wearing the party's green colours celebrated at DPP headquarters.
"We are very, super, world-class happy," said first-time voter Grace, 21, a student who gave only one name.
"I am confident the new leaders will stick to Tsai's road and I hope they can safeguard Taiwan's democracy."
- Unity plea -
Conceding defeat, KMT's Hou, who had argued for warmer ties with China and accused the DPP of antagonising Beijing with its stance that Taiwan is "already independent", urged the country to unite.
"When the people have made their decision, we face them and we listen to the voices of the people," he told supporters.
Ko Wen-je -- who took 26.5 percent of the vote with an anti-establishment offer of a "third way" -- said the results put his Taiwan People's Party (TPP) on the map as a "key opposition force".
During the campaign, the KMT and TPP tried to strike a deal to join forces against the DPP, but the partnership collapsed in acrimony over who would lead the presidential ticket.
Despite his win, Lai faces a headache already -- in legislative elections held alongside the presidential ballot, the DPP lost its majority in parliament.
According to Taiwan's Central Election Commission, KMT took 52 seats, with DPP on 51, TPP eight and two independents.
- Chinese threats -
Located on a key maritime gateway linking the South China Sea to the Pacific Ocean, Taiwan is home to a powerhouse semiconductor industry producing precious microchips -- the lifeblood of the global economy, powering everything from smartphones and cars to missiles.
Many countries engage with Taiwan through unofficial or nongovernmental channels, though without recognising it diplomatically -- instead recognising only China, in line with Beijing's "one-China" policy.
US Secretary of State Antony Blinken congratulated Lai on his election and hailed Taiwan's "robust democratic system," while President Joe Biden said that "we do not support independence."
Japanese Foreign Minister Yoko Kamikawa praised Lai's victory while vowing to deepen Tokyo's nongovernmental cooperation with Taiwan.
Calling for the "two sides of the Taiwan Strait" to "resolve differences peacefully", British Foreign Secretary David Cameron also congratulated Lai.
The European Union's foreign policy chief praised Taiwan on the election in a statement which did not mention Lai's victory.
China has stepped up military pressure on Taiwan in recent years, periodically stoking worries about a potential invasion.
The Chinese military said the night before the polls that it would "take all necessary measures to firmly crush 'Taiwan independence' attempts of all forms".
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