Taiwan faces an unrelenting challenge to its ability to retain control over its future as Xi Jinping’s China continues pressuring other states to drop diplomatic relations with the island. Taiwan had a mere 20 formal diplomatic allies as 2018 dawned but then two states, the Dominican Republic and Burkino Faso, transferred their formal links from Taipei to Beijing. While Taiwan attempts valiantly to retain its links with the precious few countries still ignoring Beijing’s will, the People’s Republic of China (PRC) is showing a powerful set of tools with which to convince the holdouts that ties with the People’s Republic are an inevitable move to their benefit. This piece considers which instruments China has available in its interactions with Latin America where five countries—Paraguay, Guatemala, Nicaragua, El Salvador, and Honduras—still send their diplomats to Taiwan rather than the PRC, a cruel irony for the islanders who see states ignoring its democracy in favor of the mounting authoritarianism of the Chinese Communist Party (CCP) under Xi.
The five nations in Latin America (not including the Caribbean) that maintain ties to Taiwan are all small states with relatively poor economies and populations. They each also have had conservative authoritarian rule at some points in their history, although Nicaragua’s current leadership also produced the Sandinista Revolution of 1979, a leftist regime that fought US-funded contrarevolucionarios during the decade of the 1980s. Noteworthy for Taiwan, these states all appear dependent on foreign assistance to ameliorate their poor trade relations resulting from primary monoculture export products that are highly vulnerable to fluctuations in the global economy.
The Republic of China (Taiwan) established diplomatic ties with these states during the Cold War, as Chiang Kai-shek’s regime represented a strong anti-communist stand that aligned with the anti-communism of the landowning elites in these states. Additionally, if not more importantly, Taiwan’s close links with Washington—the primary assistance provider to all of the Central American nations—was a reason that these states retained their relations with Taiwan.
Beijing began picking off Taiwan’s allies in the 1970s, yet the anti-communist cant of these states remained a bulwark of the island’s leaders to point to as a solid area for support, albeit offering a weak set of economies who could not stand up to much international pressure. Taiwan’s ability to convince many Latin American states, particularly in South America, where greater ties to the shifting overall international economic regime reign, markedly decreased during this decade. Many recognized and reacted to China’s emergence as an increasing trade partner.
This development was not, however, a particular problem for Central America and Paraguay, because Taiwan had distinct advantages over China in two fields. Taipei shared two specific forms of expertise needed by the Central American states: earthquake and typhoon disaster relief. Both Taiwan and the small, mountainous nations of the isthmus regularly face natural disasters that created a bond between these nations and Taiwan, resulting from the latter’s rapid and generous response to problems such as Hurricane Mitch in 1997. (Guilloux, 2016)
As Taiwan’s rapid economic growth of the 1970s, 80s, and 90s slowed, however, this instrument proved far less important to the Central American countries than Beijing’s growing economic assistance. After the turn of the millennium, both Costa Rica (2007) and Panama (2017) left Taiwan’s “camp” for relations with the People’s Republic.
More importantly, China continues extremely willing to use any and all possible instruments to achieve its goals of terminating any sense of Taiwan possessing the sovereignty status that allows it formal ties with other states. Beijing’s use of a wide array of the instruments of statecraft to achieve its goals is demonstrable and persistent. Especially visible was Beijing’s 2017 activity in response to the South Korean choice to deploy a Terminal High Altitude Area Defense (THAAD) system. China undermined South Korean convenience store sales, undercut tourist trips, and harshly criticized the newly-minted Moon government for seeking the defense system, despite increasingly threatening North Korean nuclear activities. Beijing clearly was warning against those regimes contemplating similar defensive actions that would align with US interests, which Beijing viewed as part of a “containment” policy against China. Similarly, retaliation against Norway for awarding the 2010 Nobel Peace Prize to Liu Xiaobo that China viewed as a humiliation was public and prolonged. Beijing remains committed to inflicting disproportionately potent responses to those states it believes are “hurting the feelings” of millions of Chinese to deter further actions it rejects.
Taiwan, on the other hand, has a shrinking arsenal of responsive techniques to Beijing’s constant tightening of a noose around the island’s activities. Taipei historically could offer foreign assistance, since the island had the wherewithal to bounce back at the time when China had a smaller economy relative to Taiwan than today. Taiwan’s relative economic (and virtually any other measure of relative size) posture is significantly less today viz-a-viz the PRC than it was in the early 1970s. Taiwan’s annual gross domestic product (GDP) is $530,608 million USD (2016) versus the the PRC’s GDP of US $11,281,000.  While successive governments in Taiwan understandably seek to retain the highest standard of living possible for its citizens, Beijing’s relative advantage over Taiwan in terms of economic instruments is clear, unavoidable, and a major reason the island’s regimes have not been able to maintain the previous international economic status.
Taiwan, for example, had the opportunity during its period of significant export-led growth during the 1960s through the early 1990s to offer economic assistance to states around the world, receiving diplomatic recognition in return. Taiwan’s economy slowed by the 1990s, leaving fewer resources for the regime—whether The Nationalist Party (Kuomintang, KMT) or Democratic Progressive Party (DPP)—to use as an enticement for other states to retain diplomatic relations with Taiwan.
Additionally, Taipei’s moves in the late 1980s from a strictly authoritarian government with limited transparency towards a flourishing democracy, with strong demands for public accountability, left the island’s leaders far less able to offer under-the-table deals to encourage countries to retain their Taiwan affiliations. An irony of Taiwan’s diplomatic decline relative to China’s is that transformation of the island’s political culture featuring more democratic institutions meant that the flexibility for interactions with other states became more constrained. 
Taiwan today thrives on an exceptionally healthy democracy that forced one president to prison for corruption issues by the end of his second term in 2008. Many other political figures have had to confront public condemnation over allegations of disreputable actions inconsistent with democratic principles. Yet, Taiwan today has merely 18 allies around the world as opposed to the 30it had at the beginning of the 21st century, when the DPP first had the opportunity to govern the island. In short, the more democratic Taiwan has become, the less secure it stands in the international community.
The CCP, however, is far more powerful in the global system today, as its policies at home appear less transparent than at the beginning of the twenty-first century under the rule of Jiang Zemin. Both presidents Hu Jintao in his 2004 “Rock Star” visit to Latin America, along with subsequent visits by Party heavyweights, have attracted international attention and facilitated many deeper links with Latin American regimes, although they are overwhelmingly democratic in nature. Beijing cares little for the nature of the governments it deems important; it has developed some of its strongest ties with the increasingly authoritarian Hugo Chavez Frias, then his successor Nicolas Maduro, both of whom have been dependent on a petroleum-based lifeline of bank loans from Beijing.
The message for Taiwan (and the United States) in Latin America is a counterintuitive one: it seems the more democratic the regime became, the weaker its ability to survive in world politics. This does not mean a cause and effect results from Taiwan’s democracy; China’s growing array of instruments of statecraft, fueled by on-going if slowing economic prowess, offers the CCP many options Taiwan simply cannot match.
The challenges of democratic government with the requirement for accountability and openness to respond to the press and voters’ concerns, confronts leaders in Taipei who also encounter shrinking options around the region and the globe. Taiwan neither has the financial resources to compete with the CCP, nor can it count on similarly elected regimes around Latin America to put the linkages between democratic governments above the benefits of possible access to the Communist-led economy of the mainland.
Instead, the Latin American democracies such as Chile, Costa Rica, and Panama, among others, choose to put their diplomatic ties in the hands of Beijing rather than Taiwan because the former offers them a tremendous economic and trade link for the foreseeable future as China appears virtually insatiable in requiring natural resources and energy. The veil behind which so many deals are now done in China, despite Xi Jinping’s crackdown on both “corruption” and methods of scrutinizing the Party’s activities continues dropping; the decreasing transparency eases sweetheart deals that are inherently corrupt. China’s leaders may also pursue links in Latin America because they set the stage for longer term sway as the United States withdraws into its own sphere. Conditions do not bode well for Taiwan as its five Latin American allies seem extremely likely to feel pressure from the CCP to abandon the island in favor of some sort of benefit that Taiwan cannot match, but will be relatively easy for the PRC to use.
Chiang Ching-kuo chose to push Taiwan towards democracy for a variety of reasons but this was not likely a correlation that he or the democrats in Taiwan ever expected to see. US supporters of Taiwan see this as a frustrating trend that only makes the island’s future more uncertain. Those supporters seek to protect the island’s current fragile status but this irony makes clear how difficult that will remain in the face of Beijing’s status and its desirability as a partner for many regional states, regardless of Taiwan’s adherence to a more desirable form of government.
The main point: Taiwan’s vulnerability in the world political system supersedes its embrace of a democratic ethos. The decision to choose democracy, the system touted by so many desired partners, did not assist Taiwan’s long-term efforts to retain formal recognition even as Beijing proves ever more authoritarian in its ways at home and abroad. This is yet a further bitter pill for those on the island aspiring to a unique posture that would offer a beacon of representational government from the east side of the Taiwan Strait. Beijing’s draw simply overwhelms that aspiration.
- Countryeconomy.com accessed on 29 May 2018 for relative data on the two economies.
- Discussions with government officials in Taiwan in October 2003 raised the question of political accountability.