South American Paraguay dumps China for Taiwan, Why?

Paraguay appears to have chosen Taiwan over China to later’s influence counter for strengthening diplomatic ties. Top among the reasons is rise in pork exports to Taiwan. News reports suggested that Island’s pork exports to Taiwan multiplied as much as six times in the first six months of this year.

After Taiwan opened its market last year to Paraguayan produce, Paraguay ‘s sales went up from 2,480 tons to 14,880 tons between January and June 2023. Elated by the rise in pork exports, Paraguay president electhas shortlisted Chile as next destination country for exports.

Besides trade, political parties are divided over Taiwan for China in Paraguay.

Paraguay’s president electSantiago Pena has shown preference for Taiwan whereas farmers want trade with China. Despite intense pressure from the farmers, Paraguay’s Pena has made known his preference for Taiwan than China when he was on tour to Taipei. Pena said that Paraguay “would love” to do more trade with China, but Taiwan offers the best bet for moving the largely agricultural economy up the value chain. Pena did not make this statement to annoy China…

Throughout the campaign the Colorado Party candidate had vowed to extend Paraguay’s decades-long diplomatic relations with Taiwan, despite pressures to open up to China and its huge consumer demand for soybeans and beef. Unlike him, his rival candidate EfraomAlegre had in January openly said that Paraguay would cut diplomatic ties with Taiwan and open relations with China if the opposition wins the election in April. , Efrain Alegre told a news agency that he would hope to boost soy and beef exports that are its main economic engines.

The ruling party candidate, meanwhile, said that he would maintain ties with Taiwan, a self-governed island that China considers one of its provinces and not a county, making the geopolitical question a center-piece of the election race.

As far as Paraguay’s trade with China is concerned, it sells soybeans to China, only it is not registered as Paraguayan exports to China because it goes through Argentina or, mainly, through Uruguay. This is because the Chinese market beckons for Paraguay’s powerful farming lobby.

According to news reports,Big companies in Paraguay and the main opposition candidate had urged a change during the election campaign so that the country can get access to China’s vast market.The ruling party leaders and a section of economic experts have reservations about trade with China because of huge disparity in trade practices  According to  Statista Research Department,In 2022, Paraguay’s imports from China amounted to more than 4.6 billion U.S. dollars, an increase of over 600 million U.S. dollars in comparison to 2021. In contrast, in 2022, the South American country’s exports to China reached around 21.8 million U.S. dollars, down from 30.56 million dollars a year earlier. The disparity is not a recent phenomenon.

Background:

In 1957, Paraguay’s installed right-wing dictator Alfredo Stroessner recognized Taiwan–an island that politically split from the mainland following China’s 1945–49 civil war, but which Beijing considers a breakaway province–as the “one true China.” In response, China kept limit on trade and diplomacy with Paraguay, just as it does with any country that recognizes Taiwan. It’s a political thing. Taiwan helps Paraguay a lot, sending donations and financing, but it doesn’t serve them at a great scale.In April 2020, as COVID-19 began to tear through Latin America, the leftist bloc in the Paraguayan Senate introduced a bill to open relations with Beijing–which would inevitably mean ending recognition of Taiwan. The Senators argued that the pandemic would make Chinese support–in the form of masks and ventilators, but also investment, trade and possibly a vaccine–crucial in the coming years. In the end, the proposal was voted down, 25 to 16, in a Senate still controlled by the right-wing party Stroessner founded. Still, opposition lawmakers have forged ahead in deepening their institutional ties with China, eliciting what they described as the first-ever Chinese humanitarian aid to Paraguay in June, and vowing to recognize the country if the balance of power in Congress shifts.

What is bothersome in this case is that China has offered huge commercial incentives to other countries that have switched relations. Honduras ended decades of ties in favour of Beijing this year, and only 13 countries now recognise Taiwan.

China has so far maintained silence. It will interesting to watch how China reacts in near future?