Latin Analysis: Will China Beat Taiwan in The Fight For Latin America?
Resource Database/engin akyurt
Conducting international relations and creating bilateral links with allies has never been straightforward for Taiwan. This island, separated from China by the Taiwan Strait, has found itself in a long, protracted conflict since 1949, when China was split into the People’s Republic of China and the Republic of China (Taiwan). Although Taipei argues that the island has a long history of independence, Beijing insist that it is nothing more than a “breakaway province”, which will soon again come under the mainland’s control.
Despite tense relations with China, Taiwan has historically found strong allies across Latin America. However, over the last decade, many countries on the continent have begun to turn away from Taipei. For example, during the presidency of ex-leader President Tsai Ing-Wen between 2016-2024, “Taiwan lost five official diplomatic allies in Latin America: Panama, the Dominican Republic, El Salvador, Nicaragua and Honduras.” Currently, only four countries in Latin America maintain relations with the island state, namely Belize, Guatemala, Haiti, and Paraguay, as well as some Caribbean countries.
Many attribute this shift to the astronomical rise of China in the region since the turn of the century, and the increased influence of Beijing that has accompanied this. In 2000, for example, less than 2 per cent of Latin America’s exports went to China. However, in the eight years that followed, trade between the region and Beijing increased by around 31 per cent a year. It is predicted that the value of these exchanges cost exceeds $700 billion by 2035. Unsurprisingly perhaps, “China currently ranks as South America’s top trading partner and the second largest for Latin America as a whole, after the United States.”
Total Trade Flows Between China & Latin America (in billions)
Increased efforts by China to foster closer links with the Americas is thought to be part of a broader strategy to expand Chinese economic interests globally. Experts conclude that the Chinese Communist Party’s (CCP) interest in Latin America largely involves “resource-hungry China” taking advantage of the commodity-rich countries of the region for their minerals and food, while providing Chinese manufactured goods in return. To solidify these flows, China has “bankrolled nearly 2,500 development projects in Latin America worth $300 billion” in the last twenty years, functioning as ‘rewards’ for countries coming into closer alignment with China regarding their strategic interests. Despite the debt accumulation that often comes with China’s investment in these large-scale projects, this does not seem to put countries off. On the contrary, “two-thirds of countries in Latin America and the Caribbean have signed onto the BRI”.
Often, the price to pay for these vital infrastructure projects includes supporting China’s ‘one China’ principle and cutting relations with Taiwan, which can help explain the numerous instances of countries in the region moving away from Taipei and closer to Beijing. Taiwan is not able to compete with China in the race to consolidate its position in Latin America through economic means. Taiwan’s extremely successful economy is dwarfed when compared to that of China, with the People’s Republic’s GDP thought to be ten times greater than that of the small island state. The situation is very similar regarding the countries’ respective aid budgets; although Taiwan is well-regarded as a development partner, its budget looks pitiful compared to the economic greatness of its rival.
The increase of China’s soft power in the region has also helped to consolidate Latin America’s shift towards Beijing. The establishment of educational institutions teaching Chinese languages and the celebration of Chinese cultural events across the region, as well as increased efforts to get Latin Americans to study abroad in China, has brought these two parts of the world closer together, although geographically they could not be further apart.
A clear example of a country which have reneged on its historical relationship with Taiwan in favor of closer ties with China is Panama, who broke diplomatic relations with Taipei in June 2017. Despite the country always enjoying a close relationship based on longstanding loyalty with Taiwan, this decision to cut ties was justified by the President of Panama as putting an end to a situation that no responsible leader could continue to allow. Undeniably, the decision to forge diplomatic ties with China and abandon Panama’s historic bond with Taiwan was largely informed by economic factors, as reflected in the president’s speech at the time. Varela emphasized that China is the second most important user of the Panama Canal, and the biggest supplier of goods to the Colón Free Trade Zone. The Panama Canal is of vital importance to global trade, but is also a significant part of Panama’s domestic economy, given that “23.6 per cent of the government's annual income is explained by the total contribution of the Canal's activity”. Given this, it is understandable that Panama has taken steps to shore up China’s use of and support for the Canal, even if it meant turning their back on a historical ally.
However, all is not lost for Taiwan in Latin America. Some countries like Brazil and Chile, are currently still succeeding in ‘sitting on the fence’. Additionally, a few countries across the continent have managed to stave off attempts by China to undermine their links with Taiwan. A key example of this is Paraguay, who recently celebrated 68 years of diplomatic ties with Taiwan. Rather than witnessing a weakening in bilateral relations between the two states, there has been a renewed commitment to protecting and expanding their relationship, as well as Taiwan’s support for vital sectors across Paraguay. In terms of aid, Taiwan has aimed to “provide an average of USD $150 million every 5 years to Paraguay for projects in target areas such as public health, agriculture and education.”
Although a vital contribution, it is thought that this aid pales in comparison to the amount provided by mainland China to Paraguay’s neighbors. However, this does not seem to have severely undermined Paraguay’s position on Taiwan, with the establishment of the Taiwan-Paraguay Polytechnic University (UPTP) confirming their ongoing joint commitment to innovation and development. Additionally, the upcoming elimination of visa requirements is set to further facilitate cooperation between the two countries. Although the allure of Chinese finance may prove difficult for Paraguay to resist in the future- especially if Taiwan continues to refuse further investment requests as an alternative to that offered by the PRC- it seems that the relationship between the two countries is currently seen as a long-term arrangement. Paraguay does not appear to have any plans to turn its back on its “eternal brother” any time soon.
It is undeniable that China has become a key influence across Latin America, either through its infrastructure projects, or penchant for working with authoritarian leaders across the continent. This has understandably led to many countries distancing themselves from Taiwan despite historical links with the island, with the allure of significant cash injections proving to be irresistible for many Latin American countries. However, all hope is not lost, with Taiwan still holding on tight to its remaining allies across the region. Only time will tell if China continues to expand its influence, and whether this will eventually eradicate all traces of Taiwan from Latin America altogether.
