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China’s Cash Diplomacy: How China Isolates Taiwan Globally?

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Taiwan’s global diplomatic presence has dwindled to just 12 formal allies, primarily small island nations in the South Pacific and Caribbean, due to intense Chinese economic and diplomatic pressure.

China’s Strategy to Isolate Taiwan

China regards Taiwan as a breakaway province and has pursued a relentless campaign to reduce Taiwan’s international recognition. Beijing’s goal is to persuade nations to sever ties with Taipei and align with its “One China” policy, which asserts that Taiwan is an indivisible part of China. According to Taiwan’s Foreign Minister Lin Chia-lung, China employs economic inducements—such as funding for stadiums, railways, and other infrastructure projects—to sway developing nations.

For example, the Solomon Islands switched diplomatic recognition from Taiwan to China in 2019, followed by a secretive security pact with Beijing. Similarly, the Cook Islands signed a deal with China in February 2025 to cooperate on seabed mineral mining, sparking tensions with New Zealand, its primary benefactor. These moves highlight China’s use of economic leverage to gain diplomatic favor, often at Taiwan’s expense.

The Role of the 1971 UN Resolution

A cornerstone of China’s argument is the 1971 UN Resolution 2758, which transferred China’s UN Security Council seat from Chiang Kai-shek’s government in Taiwan to the People’s Republic of China. While the resolution does not explicitly address Taiwan’s status, Beijing and its allies interpret it as proof that Taiwan is part of China. This interpretation has been used to exclude Taiwan from international forums, including the United Nations, World Health Organization, and other global bodies.

Taiwan’s Foreign Minister has accused China of engaging in “legal warfare” to frame Taiwan’s status as a domestic issue, further isolating it on the global stage. This strategy has been effective in reducing Taiwan’s formal diplomatic allies, particularly in regions like Central America, where countries like Honduras and Nicaragua have recently switched allegiance to Beijing.

Economic Inducements: China’s Soft Power Play

China’s economic diplomacy often involves offering developing nations infrastructure projects at low costs, a tactic Lin Chia-lung described as “cheap construction.” These projects, ranging from stadiums to railway lines, are designed to win favor and secure diplomatic loyalty. However, such deals are not without controversy. In the Solomon Islands, the shift to China sparked domestic protests and opposition, while the Cook Islands’ agreement with Beijing drew criticism from New Zealand and local communities.

These examples illustrate the broader implications of China’s Belt and Road Initiative and similar programs, which extend Beijing’s influence while sidelining Taiwan. By offering financial aid and infrastructure, China creates dependencies that make it difficult for smaller nations to maintain ties with Taipei.

Taiwan’s Response: Building Unofficial Alliances

Despite losing formal diplomatic allies, Taiwan is actively countering China’s pressure by strengthening ties with unofficial partners, particularly the United States and the European Union. The U.S., while maintaining only unofficial relations with Taipei due to its deference to Beijing, remains Taiwan’s primary economic backer and supplier of defensive weaponry. This support is critical in the face of China’s repeated threats to invade the island.

Taiwan is also working to deepen ties with democratic nations in Europe and Asia. Lin Chia-lung emphasized the importance of harnessing international support to defy Beijing’s isolation tactics. For instance, Taiwan has sought to participate in international forums through alternative channels, such as observer status or partnerships with like-minded countries.

Case Studies: Shifting Alliances

South Pacific and Caribbean

Taiwan’s remaining 12 diplomatic allies are primarily small island nations in the South Pacific (e.g., Palau, Tuvalu) and the Caribbean (e.g., Saint Lucia, Belize). These nations are often economically vulnerable, making them prime targets for China’s inducements. The loss of the Solomon Islands and the Cook Islands’ recent alignment with China underscore the challenges Taiwan faces in maintaining these relationships.

Central America

Central America has been another battleground for Taiwan-China diplomatic competition. Countries like Honduras (2023) and Nicaragua (2021) have severed ties with Taiwan in favor of China, often following promises of economic aid. These shifts reflect China’s growing influence in the region and Taiwan’s struggle to compete with Beijing’s financial resources.

Other Regions

Beyond the South Pacific and Caribbean, China’s pressure extends to Africa and beyond. South Africa, for instance, recently demanded that Taiwan relocate its unofficial representative office from Pretoria to Cape Town, signaling deference to Beijing. Similarly, Somalia’s decision to stop accepting Taiwanese passports for visitors or transit passengers further illustrates China’s global reach.

Implications for Global Geopolitics

China’s campaign to isolate Taiwan has broader implications for global geopolitics. By reducing Taiwan’s diplomatic allies, Beijing strengthens its narrative of Taiwan as a domestic issue, potentially paving the way for more aggressive actions, including military threats. This strategy also challenges the international rules-based order, as it sidelines a democratic nation with a robust economy and strategic significance.

For Taiwan, maintaining even a small number of formal allies is crucial for asserting its sovereignty and international legitimacy. The support of unofficial partners like the U.S. and EU is equally vital, as it provides economic, military, and diplomatic backing to counter China’s pressure.

Taiwan’s Path Forward

To resist China’s economic and diplomatic offensive, Taiwan must continue to diversify its international partnerships and promote its value as a democratic, technologically advanced nation. Initiatives like the Taiwan Semiconductor Manufacturing Company (TSMC) and its global supply chain role enhance Taiwan’s economic leverage. Additionally, public diplomacy efforts, such as cultural exchanges and humanitarian aid, can strengthen ties with both formal and informal allies.

Taiwan’s Foreign Minister has called for a united front with democratic nations to challenge China’s “legal warfare” and economic inducements. By aligning with countries that share its values, Taiwan can mitigate the impact of losing formal diplomatic allies and maintain its global presence.

China’s economic pressure

China’s economic pressure has significantly reduced Taiwan’s diplomatic allies to just 12, primarily through inducements like infrastructure projects and financial aid. While Beijing leverages the 1971 UN resolution and “legal warfare” to isolate Taiwan, Taipei is countering with unofficial alliances and a focus on democratic values. The ongoing Taiwan-China diplomatic struggle highlights the complexities of global geopolitics, with implications for sovereignty, economic influence, and international cooperation.

Muhammad Arshad
Muhammad Arshadhttp://thinktank.pk
Mr Arshad is is an experienced journalist who currently holds the position of Deputy Editor (Editorial) at The Think Tank Journal.

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