PRESIDENT Chen Shui-bian of Taiwan has seen many difficult days in a career that has weathered personal tragedy and political danger. But few moments can have been more difficult for this charismatic son of peasants than his decision to try to end an insider-trading scandal by handing over many of his powers to the island’s Prime Minister.

The first popularly elected President of Taiwan, Mr Chen saw his popularity ratings plunge to new lows this week with more than 80 per cent of the island’s 22 million residents saying that they had lost confidence in their leader.

Mr Chen has battled to recover his credibility since officials detained his son-in-law on May 25 in the insider-trading scandal.

He faced pressure from the opposition Kuomintang, or Nationalists, and his own Democratic Progressive Party (DPP). On Wednesday the leader who has made it almost a point of pride to enrage China with his policies to edge the island towards formal independence, announced that Su Tseng-chang, the Prime Minister, would take charge of setting government policy.

David Lee, Mr Chen’s spokesman, said: “The scandal is unstoppable. In this society, if there’s a scandal about a member of your family it’s a shame to the whole family.”

Mr Chen, who wields executive powers, will retain the diplomatic and military portfolios and have a say in the issue of ties with China, which claims sovereignty over the island.

Taiwan has managed its own affairs since Chiang Kai-shek fled the mainland after losing a civil war to Mao Zedong’s communist armies in 1949 but has remained, at least in name, part of China.

But Mr Chen has edged the island towards a separate identity while stopping short of declaring independence. That would be tantamount to a declaration of war as Beijing says it will use force in case of a formal split.

The decision by the President to cede many of his powers reduces sharply the likelihood that Taiwan will take decisive action and could even help to take the chill off ties with the mainland that have been effectively frozen since he swept to power six years ago.

Emile Sheng, a political scientist at Soochow University in Taipei, said that the move signalled the effective end of Mr Chen’s authority. “Chen Shui-bian is definitely a lame duck. He can no longer enact any substantive policy in the next two years.”

Times Recommends

• Should Knox’s trial even have reached the courtroom?
• 'Was it real?' The US bailout nightmare
• Iranian opposition plays the long game