In our 2018 Annual Forecast, Stratfor anticipated that China would continue to exert a combination of diplomatic and military pressure on current allies of Taiwan. As part of that effort, it has successfully won El Salvador's allegiance and will now focus on other countries.
Taiwan has lost another in its dwindling stable of diplomatic allies. Late Aug. 20, Salvadoran President Salvador Sanchez Ceren announced that his country has broken off diplomatic ties with the self-governing island and will turn instead to mainland China. Although the move was anticipated by all parties, China likely timed El Salvador's diplomatic shift to coincide with the completion of Taiwanese President Tsai Ing-wen's trip to the Americas. Tsai's visit was meant to shore up ties with allies Belize and Paraguay and included landmark stopovers in the United States along the way.
Why It Matters
The United States has emphasized its ties with Taiwan as part of its strategy to counter growing Chinese influence in the Asia-Pacific. China, meanwhile, has been making progress in its effort to diplomatically isolate Taiwan on the world stage. But Taiwan's largely symbolic loss of El Salvador as an ally has so far not stopped the United States from increasing its support for the island.
For El Salvador, the decision to establish a diplomatic alliance with China was likely driven in part by a desire for help in developing its port in La Union. The port is part of a broader industrial zone project in El Salvador, which Taiwan has previously balked at investing in.
Both China and Taiwan adhere to the "One China" principle, which means relations with one preclude relations with the other. After the Dominican Republic changed its loyalties to mainland China in May 2018, El Salvador was the next most likely to shift its allegiance away from Taiwan. After all, it has been fostering a plan to diversify its economy so it relies less on the United States. China, with its willingness to invest, is an ideal partner for this effort.
The loss of El Salvador brings the number of Taiwanese allies down to 17, and eight of those countries are in the Americas.
What to Watch for Next
China's next major target will be the Vatican, Taiwan's last remaining European diplomatic partner. The Roman Catholic Church has long worked to become a legally recognized religion in China, but there have been thorny issues around the appointment of bishops and the Chinese government's need to maintain control.
For Taiwan, being increasingly isolated on the world stage could accelerate domestic pressure for the government to take a harder line on China.
The tiny Pacific island nation of Palau is also in China's crosshairs. Although China has implemented a devastating ban on tourism to the island, Palau is still more likely to remain partnered with Taiwan because of their long-standing infrastructure and investment links.
For Taiwan, being increasingly isolated on the world stage could accelerate domestic pressure for the government to take a harder line on China. Beijing's recent efforts to pick off Taiwan's diplomatic allies started in 2016, when a representative of the ostensibly pro-independence Democratic Progressive Party (DPP) was elected as Taiwan's president. With November municipal elections set to be a bellwether for DPP rule, China is hoping to sway Taiwanese voters away from their current leadership — but its pressure may backfire and increase Taiwan's domestic push to resist mainland China.