Because of his political views, Chen was put on a blacklist by the Kuomintang government during this time, and was unable to return to Taiwan.

After Frank Hsieh resigned his Premiership and a subsequent cabinet shuffle, Chen became the Secretary of the Presidential Office.

In 2004, Chen gained international attention and prompted substantial criticism worldwide after he commented that Singapore is a "booger-size country" that "holding China's ball sacks" with both hands, known as the "LP incident".

[9] Subsequently, the Singaporean Foreign Ministry has issued a statement warning Taiwan authorities to "not belittle Singapore, and avoid using “vulgar words to hurt others".

On September 21, 2007, Chen faced charges of using false receipts to write off expenses from a special governmental account; the alleged misuse involved NT$368,199 (approximately US$12,454) during his time as foreign minister and presidential secretary general between July 2004 and June 2006.

Vice President Annette Lu and DPP chairperson Yu Shyi-kun were also indicted on special fund abuse charges on the same day.