What Taiwan Can Learn from Honduras’s Switch to China

On March 26, Honduras officially established diplomatic ties with China—bringing the number of diplomatic allies that Taiwan has to just 13. Honduran President Xiomara Castro had pledged to swap relations during her 2021 campaign to boost her country’s economy and security and to combat climate change. But after her inauguration, talk of China seemed to subside as Castro prioritized her domestic agenda.

In January, however, Honduran Foreign Minister Enrique Reina met with Chinese Vice Minister of Foreign Affairs Xie Feng on the sidelines of Brazilian President Luiz Inácio Lula da Silva’s inauguration. At that point, the writing for Tegucigalpa’s impending diplomatic switch to Beijing was already on the wall.

The day Honduras officially broke off relations with Taiwan, Taiwanese Foreign Minister Joseph Wu said in a press conference that Castro’s government in 2022 had requested that Taiwan pay $2.5 billion in aid to Honduras—a demand Wu compared to bribery. Reina denied Taipei’s claim, saying instead that Tegucigalpa asked for $2.5 billion in debt refinancing, “not a donation.”

Taiwan’s loss of yet another ally is part of a global and regional trend. Over the past two decades, China has steadily displaced the United States as the No. 1 trading partner of many Latin American countries—with devastating effects for Taiwan’s diplomatic stature. Since mid-2017, Panama, the Dominican Republic, El Salvador, and Nicaragua have all switched their alliances from Taipei to Beijing. (The Solomon Islands have done the same in the Asia Pacific.)

Diplomatic recognition of China is always followed by an accretion of Chinese influence in affected nations, especially in the form of development and security assistance. Twenty-one countries in the Americas are now members of China’s Belt and Road Initiative (BRI), through which they gain access to concessional loans for key infrastructure projects that can be hard to get from Western financial institutions. But BRI projects have also been criticized for leaving local countries with billions of dollars in debt and infrastructure projects that are sometimes of dubious quality. China’s projects in the Americas have also provided it with a footing that could be used for commercial, espionage, or even military purposes—such as deep-water ports, telecommunication systems, surveillance technology, and space observatories.

In Honduras, China will most likely finance a hydroelectric dam, and Honduran farmers will now be able to export commodities such as coffee, bananas, and seafood to the Chinese market. Beijing may also donate equipment and offer law enforcement training to Honduras’s national police, as it has done in Nicaragua and elsewhere.

Taiwan still maintains relations with one-fifth of all countries in the Americas; seven of Taiwan’s 13 remaining diplomatic allies are in the region. This means the region will likely remain at the epicenter of China-Taiwan competition as Beijing seeks to squeeze the island’s last few allies and tensions between the United States and China escalate.

The fallout from Honduras’s decision will reverberate beyond the Americas. Taiwan’s allies help boost its international legitimacy, promoting the island’s inclusion in important international bodies such as the World Health Organization and speaking on its behalf at the United Nations.

For decades, China has waged a patient campaign of persuasion and coercion against Taiwan, which includes offering countries economic deals that seem too sweet to refuse. Beijing’s message to the world is simple: Taiwan’s eventual reunification with China is the island’s ineluctable fate. The final aim of China’s policy is to further isolate Taiwan, weaken its resistance against the Chinese Communist Party, and convince the world that Taipei’s allies and partners don’t have the resolve to stand by it.

To a certain extent, this is a numbers game. The fewer global allies Taiwan has, the more easily Beijing can paint reunification as a fait accompli. But a strict focus on the number of countries that diplomatically recognize Taiwan has obscured an important fact: Taiwan—and its most important partner, the United States—shouldn’t focus just on defending the island’s existing alliances but also on getting countries that recognize China to continue engaging Taiwan in some capacity. For instance, several countries around the world that recognize China still host Taipei Economic and Cultural Offices, which are de facto Taiwanese consulates. Taiwan’s best strategy may be to reject China’s “it’s us or them” game.

Nations that have already made the switch to Beijing but still want to maintain economic relations with Taiwan should work together to protect themselves from possible Chinese economic coercion. Lithuania, for instance, opened a Taiwanese representative office in its capital of Vilnius despite coercion from Beijing because it received economic support from the European Union and the United States.

Taiwan will only retain its diplomatic relevance in the Americas if the United States develops a strategy to actively help the island preserve its diplomatic alliances. Because Taiwan will never be able to compete dollar-for-dollar with China in terms of trade, investment, and foreign aid, the United States should consider matching aid, loans, and assistance sent from Taiwan to its allies. The United States is a trusted provider of humanitarian assistance and disaster relief in the Western Hemisphere and could partner with Taiwan to provide humanitarian assistance and relief to disaster-stricken countries.

Last year, the U.S. Agency for International Development and Taiwan’s development agency, the International Cooperation and Development Fund (ICDF), signed a memorandum of understanding on foreign assistance cooperation that should allow Taiwan to burnish its technical expertise in agriculture, climate resilience, and disaster relief while also increasing the size and scope of its global assistance projects. For countries that still recognize Taiwan, these kinds of agreements increase the economic importance of remaining allied with Taiwan and reduce the burden felt by political leaders to switch recognition for financial resources.

Taiwan must also do its part by increasing the ICDF’s budget and better selling its global narrative. Taiwan-led development projects in the Americas pale in comparison to China’s in overall dollar terms, but they feature stronger partner country inputs and high environmental, social, and governance standards. Taiwan is a leader in rural agriculture projects and digitization efforts in places such as Paraguay and St. Lucia as well as in climate resilience projects in St. Kitts and Nevis and St. Vincent and the Grenadines.

Taiwan has provided foreign assistance to the Americas for over 60 years; in some cases, such as in the Caribbean, these relations extend back to before countries declared independence from colonial powers. But the case of Honduras should be a wake-up call that these relationships cannot be taken for granted.

As Taiwanese President Tsai Ing-wen begins a 10-day visit to Guatemala and Belize, with a stopover in the United States, she must work to help Taiwan forge ties across the political spectrum in its remaining allied countries. This is especially critical as opposition parties in countries with upcoming elections—such as Paraguay and Guatemala—are campaigning to switch recognition to China.

The Americas may well be where Taiwan gears up for its last stand diplomatically. The island’s relationships in the Western Hemisphere will determine how long its global diplomatic clout endures. A concerted effort from Washington and Taipei can shore up the latter’s position and prolong its role in the international system.