Why is China bent on winning Paraguay’s allegiance?

 Paraguay’s President Santiago Pena in an interview with Yomiuri Shimbun, a Japanese media outlet on May 2 said he is under “pressure” from domestic agricultural groups, political parties, and neighbours like Brazil to switch diplomatic ties with Taiwan to China.

Paraguay is among 12 other foreign countries from Latin America, Africa, Europe, East Asia, and Pacific which do not abide by One-China policy. From early 1990s to January 2024, China has poached 38 Taiwan’s allies. Just in more than eight years from 2016 to January 2024, it has won over Taiwan’s 10 diplomatic partners from across the world. Of them, five are from the Latin American region and they are: Panama, Dominican Republic, El Salvador, Nicaragua, and Honduras.

But Paraguay continues to have diplomatic relations with Taiwan and this arrangement has been between the two countries since 1957. It is now under pressure to sever ties with Taiwan for some gains with China. Paraguay’s Authentic Liberal Radical Party (PLRA) and Beloved Fatherland Party (PPQ)—both opposition outfits, are on the forefront of their calls for shifting away of diplomatic ties from Taiwan to China.

Last year, during the presidential election in April in the South American country, PLRA candidate Efrain Alegre promised to break off the country’s more than 60-year-old relations with Taiwan if he won the presidential polls.

Although Efrain Alegre lost the election, Paraguay’s incumbent government-led by Santiago Pena is finding it tough to tackle pressures from the country’s opposition parties on its diplomatic engagement with Taiwan. Latin American watchers say that Paraguay’s opposition parties’ insistence on shifting away diplomatic loyalty from Taiwan to China is based on multiple reasons, including their grievances that they have received fewer benefits from Taiwan in terms of material support or prestige.  

But what has surprised keen Latin American watchers is that Paraguay’s farmers too have started singing the same pro-China tune. This has been confirmed by none other than the South American country’s President Santiago Pena in his interview with Yomiuri Shimbun.

Paraguay is a major exporter of soybeans, meat, and meat products. Russia was the primary market for Paraguayan meat till before 2022 when it invaded Ukraine and later, the US and Europe imposed sanctions on it to punish it economically, South China Morning Post said. Taiwan has recently emerged as the key destination for Paraguay supplied agricultural goods and other commodities. According to Paraguay’s National Service of Quality and Animal Health, $19 million worth of pork was supplied to Taiwan last year.

In quantity terms, supply of pork to Taiwan from Paraguay increased by nearly 7.7 tons in 2023 in comparison to 2022. In 2024, from January to March, the South American country already exported 1.19 tons of pork to the self-ruling island, data from the National Service of Quality and Animal Health showed.

In March, Taiwan agreed to allow duty-free imports of pork, wheat flour, textiles, ethyl alcohol and beef burgers as well as low tariffs on honey and rice biscuits from Paraguay in order to further improve its relations with the South American country. Given this, if farmers of the country are pressuring their government to shift away diplomatic ties from Taiwan to China, experts say they are smelling a rat.

In Paraguay’s farm driven economy, farmers hold significant influence in the country. They want to switch their country’s ties to China to boost its agricultural export to the East Asian country which purchases Paraguayan soybeans and beef via a third country like Uruguay or Argentina, instead of directly sourcing them from Paraguay.

China is the world’s largest consumer of soybeans. As per Reuters, the East Asian country buys more than 60% of soybeans from across the world, which it uses for animal feed and oil for cooking. Latin America is a major source of supplies of agricultural products and other goods to China.

This can be understood from the fact that in 2021, the total trade between Latin America and China stood at $450 billion, a figure that remained largely unchanged in 2022, and some economists predict that it could exceed $700 billion by 2035, Council on Foreign Relations, a US-based think-tank, said.

It is what works as a major factor in China’s geopolitical scheme of things as it helps Beijing in leveraging its influence across many sectors in the Latin American region.  Office bearers of the Association Rural del Paraguay, an agribusiness lobbying group, told South China Morning Post recently that closer ties with China have benefitted farmers in Brazil and Peru and they want to present their analysis to President Santiago Pena. Irrefutably, it speaks of pressure tactics which are being used to bend the Paraguayan President towards China.    

In this move, Beijing appears to be tacitly involved and this reflects clearly in the Chinese Foreign Ministry Spokesperson’s statement. “I want to stress that standing up for one-China principle is the right thing to do and is where global opinion trends and the arc of history bends. We hope that the leader of the relevant country will follow the trend of history and aspiration of the people, and stand on the right side of history as early as possible,” Lin Jian, China’s Foreign Ministry Spokesperson, said during a regular press briefing on May 7.

Latin American watchers say Beijing is playing all its cards—from influencing Paraguayan opposition leaders and alluring the country’s farmers with promises of giving direct access to agricultural produce to the Chinese market to funding development of infrastructure in the country—to woo Paraguay away from Taiwan’s diplomatic influence.

Earlier, in 2020-21 when Covid-19 pandemic hit the South American country, China offered to provide vaccines in exchange for its diplomatic allegiance. But prompt action by Taiwan and like-minded countries saved Paraguay from going into Beijing’s diplomatic fold.

In fact, China knows it very well that once Paraguay severs its ties with Taipei, others will follow suit without much delay. The South American country is larger in area and bigger in population compared to the rest of other countries which have diplomatic allegiance with Taiwan. If China remains successful in its strategy over Paraguay, Beijing feels it will be comfortable in diplomatically further isolating the self-ruling island.






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