China has plucked out another country from among Taiwan's steadily dwindling pool of diplomatic partners. The Dominican Republic announced May 1 that it had severed diplomatic ties with Taiwan and will establish them with China instead. This statement is the culmination of a long process; reports of Beijing reaching out to the Dominican Republic go back to late 2016. But the switch comes at a time when the U.S. administration appears intent on disrupting the status quo in cross-strait relations by expanding its official diplomatic interactions with Taiwan. In that sense, Taipei and Beijing's contest for diplomatic partners is just one small piece of the mounting great power competition between the United States and China.
In our 2018 Second-Quarter Forecast, we said that the increasing U.S. outreach to Taiwan would prompt Beijing to isolate Taipei further. Pulling the Dominican Republic away from Taiwan is part of this isolation strategy, which will only escalate as the United States uses Taiwan as part of its broader efforts to counter China.
Both mainland China and Taiwan uphold the idea that there is one China, with each claiming that their own seat of government is the legitimate one. Because of this, countries cannot maintain official ties with both of them. (Many nations do still engage unofficially with both Taiwan and China). Beijing's eventual goal is reunification, and in order to achieve that goal it is working to both isolate Taiwan and draw it closer into mainland China's orbit. In 2016, Taiwan's pro-independence Democratic Progressive Party (DPP) came to power, and China has since been signaling its displeasure with the administration by attempting to siphon away Taiwan's cohort of partners. Shortly before the DPP took power, Gambia and Sao Tome/Principe chose diplomatic ties with Beijing over Taiwan, and Panama switched sides in 2017. Today, only 19 capitals maintain full diplomatic relations with Taipei, 10 of which are located in Latin America.
As it watched Beijing's outreach to the Dominican Republic — and later coped with losing ties to Panama in 2017 — Taiwan proposed numerous ways to sweeten its own bilateral relationship to the Dominican Republic. In 2016, Taiwan agreed to donate $33.7 million in military vehicles to the country; the first 50 of these arrived in February 2018. Now that the Dominican Republic has chosen to forge ties with China, Taiwanese Foreign Minister Joseph Wu has said that Taiwan will stop all joint projects and development assistance, which may include demanding the return of these vehicles.
Even as China seeks to erode Taiwan's circle of friends, Taipei can rely on one powerful benefactor in particular — the United States.
However, for the Dominican Republic, the choice was relatively easy: China is the island nation's second largest source of imports (13.1 percent) and a potential boon to its tourism industry. Taiwan, by contrast, has minimal trade with the Dominican Republic. Ties with China also have the potential to pan out in the longer term; the world power's presence in the Caribbean will only increase as it attempts to access growing markets there and in Central America to enhance its soft power close to U.S. shores.
China will amp up these efforts as the U.S.-Taiwan relationship gets stronger: It is rumored that U.S. National Security Adviser John Bolton could visit Taiwan in June, a trip that would cap off a year that brought legislation authorizing naval visits, high-level official trips and support for Taiwan participating in the World Health Organization. Of Taiwan's current partners, Beijing is likely to target the Vatican next, building on ongoing outreach that brought rumors of a looming deal in early April. The Vatican is the last European state to maintain ties with Taiwan, and its switch to allying with China would be hugely symbolic for Beijing. However, though China is well on its way to amassing more bilateral partners, it still has much to work out with the Vatican, such as the thorny question of what entity will appoint Chinese bishops.