Will Taiwan lose another diplomatic ally to China?

Only 14 nations worldwide currently have formal ties with self-governing democratic Taiwan

Paraguay is one of only a few countries that still officially recognize Taiwan. However, worries are increasing in light of Taipei’s recent request for $1 billion in investment from Paraguay’s president.

Mario Abdo Benitez, the president of Paraguay, encouraged Taipei to spend $1 billion (€1.02 billion) in his nation in a statement that startled many Taiwanese citizens as he defies local pressure to change diplomatic recognition to the People’s Republic of China (PRC).

Abdo claimed that in light of declining meat prices, agricultural producers in the South American country had been pleading with the government to open up access to the Chinese market in an interview with the Financial Times newspaper last week.

During a visit to the US, he told the Financial Times, “We are working with the president of Taiwan so that the Paraguayan people feel the actual benefits of the strategic alliance. “We want $1 billion of the $6 billion in Taiwanese investments in nations without diplomatic ties with Taiwan to go to Paraguay,” they said.

The remarks of Abdo cause Taiwanese citizens to worry that China may win another ally in international relations. Four regional nations have transferred their diplomatic recognition from Taiwan to China since 2016, leaving Taipei with only 14 diplomatic allies worldwide.

When it comes to finance, Paraguay denies doing so.
Taiwan is a democratic, self-governing portion of China, and if necessary, China will use force to seize it. Taiwan’s administration maintains that it is already a de facto sovereign country, rejecting Beijing’s assertion.

Only 14 countries now have formal diplomatic relations with Taiwan since China has made great efforts to prevent any international recognition of the island.

By offering expanded commerce, loans, and investment, Beijing frequently snatches up Taipei’s diplomatic allies. Losing Paraguay would result in Taiwan losing its diplomatic friends in South America because it is the largest country by area that still recognizes Taiwan as a sovereign state.

The Foreign Ministry of Paraguay immediately issued a statement after the president’s remarks to reaffirm the country’s diplomatic ties with Taiwan, claiming that “at no point during the interview did the president refer to conditioning the relationship with Taiwan, much less subjecting it to some amount.”

According to Taiwan’s Foreign Ministry, issues had been resolved by officials on both sides and there were no restrictions on the connection.

The president of Paraguay may have been hinting at other options with his comments, according to Francisco Urdinez, a political scientist at the Pontifical Catholic University of Chile.

“I think Paraguay is trying to show ambivalence and they want to show that Paraguay is not 100% committed to maintaining ties with Taiwan,” he told DW.

“We have been expecting Paraguay’s agricultural businesses to start lobbying in favor of a diplomatic switch. The reason is quite obvious, as it has to do with the comparative advantages and how much the businesses can benefit from having a larger market to sell their products,” he added.

According to Urdinez and co-author Tom Long’s article from the journal Foreign Policy Analysis last year, Paraguay’s diplomatic ties with Taiwan may have cost the South American nation help and investments from China equal to 1% of its GDP between 2005 and 2014. The report stated, “Paraguay received nothing from China.” “Flows from Taiwan did not offset this.”

Taiwan’s dilemma

Although Taiwan has dispatched two investment delegations to Paraguay in 2022, Urdinez emphasized that Taipei faces significant difficulties as a result of the Paraguayan president’s call for increased investment.

“Compared to China, the Taiwanese government doesn’t have the leverage over private sector to force Taiwanese companies to invest $1 billion in Paraguay,” the expert said.

“Beijing does have leverage over their state-owned enterprises and through government-to-government deals, they can make sure that some capital may flow. For Taiwan, it’s a tricky situation that they can’t guarantee that investment may flow to Paraguay. That depends on the business environment and opportunities,” he added. 

RELATED: Taiwan’s foreign minister says China is ‘preparing for war.’


Despite reaching a record $196 million in commerce in 2021, fewer than 1% of Paraguay’s overall trade that year, according to Bloomberg, was with Taiwan.

With a GDP of roughly $39 billion, Paraguay is heavily dependent on agriculture, particularly the sale of beef and soybeans.

Some experts claim that there isn’t much opportunity for bilateral trade to grow further because the nation is already one of Taiwan’s top beef exporters.

“On the contrary, Paraguay always has the desire to gain access to the Chinese market, since it’s one of the largest markets in the world and the beef consumption in China is also high,” said Kung Kwo-Wei, director of the Graduate Institute of Latin American Studies at Tamkang University in Taiwan.

Although Taiwan continues to send trade delegations to Paraguay and makes a concerted effort to buy more goods there, Kung said the range of goods it may purchase is constrained. He told DW, “I think the Paraguayan president should reconsider what areas of Paraguay other nations can invest in or what prospects there are between Taiwan and Paraguay.

In addition to the economic factors, Urdinez claimed that Paraguay’s difficulty in obtaining sufficient COVID-19 vaccinations had affected popular perception of its diplomatic ties with Taiwan.

The percentage of completely immunized Paraguayans is currently at around 50%, which is less than the 63.5% global average. He noted that because they were unable to access Chinese vaccines, they were forced to purchase Chinese doses from other sources. The number of COVID-related deaths made it a crucial problem.

RELATED: Taiwan ex-military chief urges combat preparedness amid rising China threats


What’s Taiwan’s diplomatic strategy moving forward?

Despite claims to the contrary from both governments, Urdinez thinks the issue of switching diplomatic recognition will come up again if there is a change of leadership in Paraguay following the presidential election of the next year.

“The left-wing coalition in Paraguay is very clear about their intention of switching diplomatic recognition to China, even though Taiwan has been doing its best to stop that from happening,” he said.

More diplomatic allies falling out with Taiwan might be a setback, according to Sana Hashmi, a fellow at the Taiwan-Asia Exchange Foundation in Taipei. She also emphasized the need for the democratic island to think about future diplomatic strategies that would be advantageous for it.

“I believe relationship with diplomatic allies should be on the basis of mutual benefits,” she said.

“We also have to see the tangible benefits. I believe that Taiwan needs to reach out to countries that have more say and think about highlighting its strength and motivate them to collaborate with Taiwan. For example, when the US, Japan or India mentions Taiwan, it becomes a bigger news and it has impact and weight,” she argued.

However, Kung from Tamkang University thinks Taiwan should make every effort to keep its ties with its current partners in the diplomatic sphere. “You need help to participate in the world community,” he remarked.

“While the US, EU and Japan support Taiwan now, there is a big difference between having 20 to 30 diplomatic allies helping you make your voice heard in the United Nations versus having only 10 or 8 allies speaking up for you.”


By: Miss Cherry May Timbol – Independent Reporter

You can support my work directly on Patreon or Paypal
Contact by mail: cherrymtimbol@newscats.org
Contact by mail: timbolcherrymay@gmail.com


100% Data Tampering