China steps up pressure on Paraguayan elites over Taiwan
In recent months, Beijing has visibly intensified its diplomatic, political, and investment courtship of Paraguay, the only South American country that still maintains full diplomatic relations with Taiwan. This is an issue that goes far beyond a bilateral dispute over recognition of Beijing or Taipei. The stakes are far broader: from access to the Chinese market and infrastructure investment, through trade in beef, soybeans, and technological projects, all the way to symbolic prestige in the global contest for Taiwan’s international recognition. For China, a possible shift by Asunción would be a geopolitical victory in a region where it has systematically expanded its influence in recent years, while for Taiwan it would be yet another painful diplomatic loss.
Reuters reported last week that China is seeking to attract precisely Paraguay’s political class, offering a combination of economic promises, political influence, and indirect pressure on elites that are increasingly openly questioning the profitability of the current alliance with Taiwan. Such dynamics do not come suddenly. They build on China’s years-long effort to gradually bring countries that still recognize Taiwan over to Beijing’s side, with economic arguments almost always at the forefront.
Why Paraguay is so important in the Chinese-Taiwanese rivalry
From China’s perspective today, Paraguay is extremely important for two reasons. The first is symbolic: it is the last formal Taiwanese ally in South America. The second is practical: Paraguay is an agriculturally and energetically relevant country, with important export sectors and a position within Mercosur, so a Chinese breakthrough there would further strengthen Beijing’s influence in Latin America. On its official website, Taiwan’s Ministry of Foreign Affairs still lists Paraguay among the countries with which it maintains full diplomatic relations, and President Santiago Peña publicly stated in July 2025 that Asunción’s support for Taiwan would not be a matter of trade nor the result of external pressure.
However, political rhetoric and economic calculation are not the same thing. In Paraguay, there has long been an internal debate about whether the country is missing economic opportunities by not recognizing the People’s Republic of China. This is particularly sensitive in the meat, livestock, and agriculture sectors, where producers have warned for years that the Chinese market remains enormous and practically inaccessible in full as long as Asunción maintains official relations with Taipei. It is in this space of doubt that China builds its influence: not necessarily by immediately demanding a formal break with Taiwan, but by strengthening the belief that a change in foreign-policy direction would be economically rational.
The pressure comes through trade, but also through political contacts
China’s strategy in Paraguay is not limited to formal diplomacy alone. It also includes expanding a network of contacts within political, business, and regional elites, alongside the message that opening up to Beijing could bring greater exports, access to loans, investment in logistics, and stronger integration into Chinese economic flows. That is precisely why the Taiwan issue in Paraguay has also become a domestic political issue, and not just part of the global geopolitical puzzle.
The tension became visible at the end of 2024 as well, when Paraguay expelled Chinese envoy Xu Wei after he publicly called on Paraguayan lawmakers in Asunción to break relations with Taiwan. That move showed that the Paraguayan government is, at least for now, prepared to react firmly when it judges that Beijing is crossing the line and trying to directly influence domestic politics. At the same time, it also revealed how sensitive the issue has become: China no longer acts only through abstract messages about the “One China” policy, but also through open attempts to persuade political actors to change course.
For Beijing, such an approach is logical. After Honduras, Panama, the Dominican Republic, El Salvador, and Nicaragua changed recognition in Beijing’s favor in previous years, Paraguay remained a particularly prominent case. Every new country that leaves Taipei confirms China’s thesis that the international space for formal Taiwanese recognition is becoming ever narrower. That is precisely why a possible change in Asunción would not be just another diplomatic story, but a signal that would resonate far beyond South America.
Taiwan responds with investment, technology, and political closeness
Taiwan, meanwhile, is not sitting idly by. In recent years, Taipei has sought to prove that its alliance with Paraguay is not only ideological or symbolic, but also concretely worthwhile. In July 2025, the Paraguayan and Taiwanese authorities once again highlighted projects such as the Taiwan–Paraguay Technology Park, the digital district, and the Taiwan-Paraguay Polytechnic University. Paraguay’s Ministry of Industry and Commerce announced that joint investments in the digital economy, education, and technological infrastructure are part of a long-term plan that also includes investments estimated at around 60 million U.S. dollars.
These projects have a dual purpose. On the one hand, they are meant to offer tangible benefits to Paraguay, especially in education, new technologies, and industrial modernization. On the other hand, they are meant to respond to China’s strongest argument, namely that Taiwan cannot compensate for the size of the Chinese market. Taiwan is therefore trying to play the card of partnership quality, speed of implementation, and political reliability, counting on the idea that smaller but focused cooperation can leave a stronger mark than large but uncertain promises.
During his visit to Taiwan in 2025, President Peña stressed that relations between the two countries are based on democracy, freedom, and the right of peoples to self-determination, and that such a bond will not change because of economic interest or pressure. In Taiwan, such messages are interpreted as proof that Paraguay remains a firm ally. But at the same time, the Taiwanese side also understands that symbolism alone is not enough. That is why cooperation is increasingly shifting toward the economy, agriculture, investment, and easier movement of people and capital, including agreements that facilitate business ties.
Economic calculation: the vast Chinese market versus a narrower but open Taiwanese partnership
The key problem for Paraguay remains simple: China is a vast market, while Taiwan is a politically loyal but economically incomparably smaller partner. It is precisely because of this that demands are regularly growing within Paraguayan business circles for the state to find a way to secure broader access to Chinese buyers, especially for meat, soybeans, and other agricultural products. Reuters had already earlier recorded that Paraguayan producers and exporters see potential benefit in stronger access to the Chinese market, although official Asunción has shown no readiness to immediately break relations with Taiwan because of it.
At the same time, the Paraguayan authorities and Taiwanese partners are trying to show that there are also concrete advances within the existing framework. Paraguay’s Ministry of Industry and Commerce announced that bilateral trade with Taiwan grew from 75.7 million U.S. dollars in 2017 to 240 million dollars in 2024, while Taiwanese imports from Paraguay from January to August 2025 reached 225 million dollars, more than double compared with the same period a year earlier. Beef and pork stand out in particular in these figures, precisely the sectors in which Paraguayan interest is strongest.
Paraguay’s livestock sector nevertheless wants more. At the end of 2025, the Asociación Rural del Paraguay openly called on Taiwan to increase the volume of its purchases of Paraguayan beef. In doing so, it sent the message that existing cooperation is useful, but also that domestic producers want a greater market effect. In other words, Taiwanese aid, investments, and technological projects in Paraguay carry political weight, but they cannot fully silence the debate over how much more direct opening toward Beijing would be worth to the country.
The broader regional picture: Latin America as a space of strategic rivalry
The pressure on Paraguay is not happening in a vacuum. Over the last fifteen years, China has become a key trade and financial actor across much of Latin America, and ECLAC in its analyses of trade trends regularly warns that strategic rivalry between the United States and China is one of the main features of contemporary regional trade. In such an environment, even small states become important points in a broader geopolitical contest.
For China, Latin America is a source of food, raw materials, political support, and markets for infrastructure, energy, and technology. For the United States, it is a traditional sphere of political influence. For Taiwan, meanwhile, the region has become one of the last areas where it still has formal allies. That is why every change in diplomatic recognition in that region has multiple meanings: local, economic, security-related, and symbolic.
Paraguay is a particularly sensitive case because of its position within Mercosur as well. Although it would not automatically pull the whole bloc into a different relationship with China, a change in Asunción would strengthen the argument that China’s economic magnet is stronger than political loyalty to Taipei. In the long run, this could encourage a new debate in other Latin American countries as well about how useful it is to maintain or expand contacts with Taiwan without formal recognition.
Could Paraguay change sides
According to the information currently available, there are no indications that Paraguay will directly break relations with Taiwan on March 17, 2026. Official statements by President Peña, Paraguay’s Ministry of Foreign Affairs, and Taiwanese officials point to continuity in the alliance. At the same time, it would be wrong to conclude that the issue is closed. Quite the opposite: the fact that China is working so intensively on Paraguayan elites shows that Beijing believes there is political room for change there.
That room is opened by three factors. The first is the constant pressure from business sectors that want greater exports and broader access to the Chinese market. The second is the regional example of other states that have already broken ties with Taiwan and then opened relations with Beijing. The third is the domestic political dynamic in which opposition forces and certain interest groups can use the Taiwan issue as an argument against the current government, especially if it is judged that the economic benefits of the alliance are not visible enough to ordinary voters.
On the other hand, there are also strong reasons why Asunción is, for now, staying with Taipei. Taiwan has in Paraguay an established political network, a history of cooperation, and visible projects in education, technology, and institutional development. In addition, the Paraguayan leadership clearly does not want to give the impression that it changes foreign policy under pressure from Beijing. In diplomatic terms, that is a question of sovereignty just as much as a question of trade.
That is why the current phase can be described as a contest between two models of offer. China offers a vast market, potential investment, and the promise of greater regional integration. Taiwan offers political closeness, development projects, targeted economic cooperation, and a narrative of partnership among democracies. The outcome of that contest will depend not only on ideological preferences, but above all on who more convincingly shows that his model brings concrete benefit to the Paraguayan state, economy, and ruling elites.
For now, Paraguay remains with Taiwan, but the pressure is not easing. That is precisely why the question of Asunción’s relations with Beijing and Taipei is not just a diplomatic footnote, but one of the more important geopolitical stories in Latin America: a story in which the interests of China, Taiwan, regional economies, and the broader order that is becoming ever more openly divided along lines of power, markets, and political loyalty are refracted through one relatively small country.
Sources:- Reuters Connect – report on increased Chinese influence over Paraguay’s political class and the importance of Paraguay as Taiwan’s last ally in South America (link)
- Taiwan Ministry of Foreign Affairs – official list of states that maintain full diplomatic relations with Taiwan, including Paraguay (link)
- Taiwan Ministry of Foreign Affairs – statement by President Santiago Peña and Taiwanese officials during the investment forum that support for Taiwan will not change because of economic interests or pressure (link)
- Paraguay Ministry of Industry and Commerce – data on the growth of bilateral trade, technological projects, and joint investments by Paraguay and Taiwan (link)
- Paraguay Ministry of Industry and Commerce – overview of strategic investments in the digital economy, the Taiwan–Paraguay Technology Park, and educational projects (link)
- Paraguay Ministry of Foreign Affairs – official releases on the current state of bilateral relations between Paraguay and Taiwan (link)
- Associated Press – report on the expulsion of Chinese envoy Xu Wei after his public call for Paraguayan lawmakers to turn their backs on Taiwan (link)
- ECLAC/CEPAL – analysis of trade trends in Latin America and the broader context of strategic rivalry between the United States and China (link)
- Asociación Rural del Paraguay – producers’ demands that Taiwan increase purchases of Paraguayan beef and other products (link)
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