China Woos Paraguay's Political Class Away from Taiwan Alliance

Paraguay, a landlocked nation of 6.4 million people, has become one of the most consequential battlegrounds in the global rivalry between Beijing and Taipei. As Taiwan's last diplomatic ally in South America—and one of only 12 nations worldwide that formally recognize the Republic of China—Paraguay's allegiance carries outsized symbolic and strategic weight. Now, a sustained and accelerating Chinese influence campaign targeting the country's political class is testing the durability of a 68-year-old alliance [1].

The Junket Pipeline

Since late 2023, at least 19 Paraguayan lawmakers, five journalists, and a rising opposition presidential contender have accepted all-expenses-paid trips to China, coordinated by the Chinese consulate in São Paulo [1]. The visits have accelerated sharply, with more trips planned for March 2026.

The itineraries follow a carefully designed script. Paraguayan opposition lawmaker Leidy Galeano of the Yo Creo party toured six Chinese cities in late 2024, visiting manufacturing facilities, healthcare centers, and high-speed rail stations. She stayed at Beijing's Shangri-La hotel, dined at lavish banquets, and walked the Great Wall. "Everything I saw there, I wanted for my country," Galeano told reporters [1].

Roya Torres, another opposition lawmaker, described her October 2025 trip as a showcase of Chinese technological prowess, with officials "hinting that trade and investment could flow faster if Paraguay switched recognition to Beijing" [1]. Liberal Party Deputy Billy Vaesken, who spent 15 days in China in late 2024 alongside members of the ruling Colorado Party, offered a blunt assessment: "More people in parliament are already looking toward mainland China" [2].

These delegations have met with senior Chinese officials, including Zhou Pingjian, vice-president of the Chinese People's Institute of Foreign Affairs, and Zhang Run, director of the Department of Latin American and Caribbean Affairs at China's Foreign Ministry [3]. The messaging is consistent: Paraguay is paying a steep economic price for its Taiwan ties, and Beijing stands ready to deliver trade, investment, and infrastructure the moment Asunción switches recognition.

The Economic Squeeze

The economic argument is Beijing's most potent weapon. Paraguay is the world's sixth-largest soybean producer and a major beef exporter, but it cannot sell directly to China—the world's largest consumer of both commodities—because Beijing refuses formal trade relations with countries that recognize Taipei [4]. Instead, Paraguayan soybeans are shipped through Argentina and Brazil before reaching Chinese ports, a triangulation that cuts into profits and adds logistical costs. Roughly 80% of Paraguay's soybean exports by volume go first to Argentina, which then ships the vast majority of its soy exports to China [4].

Meanwhile, Chinese goods flood in the other direction with no such constraints. Paraguay's imports from China hit a record $6 billion in 2025 [1], and in the first quarter of that year, 37.6% of all Paraguayan imports came from Chinese suppliers [5]. Yet only 0.3% of Paraguay's exports reach China directly—a staggering trade imbalance that critics of the Taiwan alliance cite as evidence of its economic costs [5].

Source: World Bank

Data as of Feb 24, 2026CSV

The asymmetry extends to beef. China is the world's largest beef import market, yet Paraguayan cattle ranchers are locked out. Two-thirds of Paraguay's beef exports end up in Russia and Chile instead [4]. CADEP, a Paraguayan research center, found that the Taiwan relationship has delivered "only modest economic gains" for the country [1].

A Diplomat Expelled

Beijing's pressure campaign crossed a line in December 2024 when Paraguay expelled Chinese diplomat Xu Wei, declaring him persona non grata after he allegedly used a visit for a UNESCO conference to lobby lawmakers directly in the halls of Congress [6][7]. Xu reportedly told legislators they "must choose" between Taiwan and China, promising "thousands of advantages" if they switched recognition [7].

"This gentleman had a parallel agenda. He came to do internal politics that were not appropriate," said Juan Baiardi, Paraguay's deputy minister of administration and technical affairs [7]. The expulsion—giving Xu 24 hours to leave the country—was a rare direct confrontation. China's Foreign Ministry denied interference, calling the allegations "unreasonable and groundless" [7].

The incident underscored both the intensity of Beijing's campaign and the Peña government's willingness to push back. But it also revealed how deeply Chinese outreach has penetrated Paraguay's political system.

Peña's Stand

President Santiago Peña, who studied at a Taiwanese university and took office in 2023, has been unequivocal in his defense of the alliance. In a December 2025 podcast, he challenged the economic logic of switching: "All the Latin American countries that switched from Taiwan to China...every single one of them is worse off than Paraguay" [1].

At a Taiwan-Paraguay business forum, Peña framed the relationship as rooted in shared democratic values rather than transactional economics. He described it as a "strategic and values-based alliance" that Paraguay is "prepared to defend with all its strength" [8]. The president has compared defending Taiwan to Paraguay's own transition from dictatorship, casting the alliance in ideological rather than purely commercial terms.

Peña's government has also moved to diversify Paraguay's strategic partnerships. In January 2026, Paraguay signed a defense pact with the United States, joined the Trump administration's "Board of Peace," and participated in a White House critical minerals summit [1]—moves designed to demonstrate that the Taiwan relationship brings geopolitical dividends beyond bilateral trade.

Taiwan Fights Back

Taipei, acutely aware of the stakes, has ramped up its engagement. Since 2020, Taiwanese aid to Paraguay has doubled to an average of $30 million per year, funding projects in public health, infrastructure, and education [9]. Major initiatives include the Taiwan-Paraguay Polytechnic University, with a 20,000-square-meter campus expected by mid-2027, and a Smart Technology Park designed to attract electric bus manufacturing and high-performance textile production [10].

Taiwan's Health Information System is now operational in more than 1,000 Paraguayan public health centers [10]. Officials have also announced a zero-tariff pork agreement and pledged investments in artificial intelligence infrastructure [8]. Taiwan's parliament building in Asunción and a new university campus under construction stand as physical testaments to the partnership [1].

Taiwan's Ministry of Foreign Affairs increased its foreign aid to the Latin American and Caribbean region by roughly $32 million in 2026, signaling that Taipei views every remaining diplomatic ally as a frontline in its struggle for international recognition [9].

The Mercosur Factor

Paraguay's position within the Mercosur trade bloc adds another layer of strategic complexity. Mercosur—which also includes Brazil, Argentina, and Uruguay—operates by consensus, giving each founding member an effective veto over the bloc's external partnerships [11]. This means Paraguay has the power to block a China-Mercosur free trade agreement, a prospect that infuriates Beijing and gives tiny Paraguay leverage far beyond its economic weight.

Source: Wikipedia / Taiwan MOFA

Data as of Mar 14, 2026CSV

The dynamic became more salient in January 2026, when the EU and Mercosur formally signed their long-negotiated Partnership Agreement in a ceremony hosted in Asunción [12]. The agreement's signing in Paraguay's capital was symbolically significant—a reminder that the country, for all the pressure it faces, remains central to the bloc's diplomatic architecture. China has pushed to "accelerate" talks toward a China-Mercosur deal, but Paraguay's Taiwan recognition remains a structural obstacle [11].

The Erosion Pattern

Paraguay's predicament must be understood against the backdrop of Taiwan's steadily shrinking diplomatic community. In 2016, Taiwan had 22 formal allies. That number has dropped to 12, with a cascade of defections across Latin America: Panama in 2017, the Dominican Republic and El Salvador in 2018, Nicaragua in 2021, and Honduras in 2023 [13]. Each switch followed a pattern of Chinese economic promises, political lobbying, and sustained pressure remarkably similar to what Paraguay is now experiencing.

The losses have been devastating for Taiwan's international standing. Paraguay is the last country in South America to recognize Taipei, and its defection would leave Taiwan with only two allies in all of Latin America: Belize and Guatemala [14].

Washington's Stake

The United States has increasingly framed Paraguay's Taiwan recognition as a strategic asset in its own competition with China. The Heritage Foundation has argued that "a greater Paraguay-Taiwan relationship matters to America in holding back China" [15], and the CSIS has tracked PRC influence operations targeting Taiwan's remaining allies in the Western Hemisphere [16].

Washington's concern is not purely altruistic. Supporting these nations' recognition of Taiwan enables the U.S. to counterbalance China's expanding presence in the hemisphere, prevent the Chinese military from establishing footholds in the region, and maintain a network of allies aligned with democratic governance [16]. The lifting of sanctions on former Paraguayan President Horacio Cartes and the signing of the January 2026 defense pact can be read as Washington sweetening the pot for Asunción to stay the course [1].

The Pressure Mounts

Yet the trendlines are not entirely reassuring for Taiwan's supporters. A poll cited by China's Foreign Ministry in October 2025 found that 58.3% of Paraguayans consider establishing diplomatic relations with China "very important," with an additional 29.8% calling it "important" [3]—though the article presenting this data subsequently disappeared from publication, raising questions about its credibility [1].

Within Paraguay's Congress, the momentum is building. Vaesken's warning is stark: "Before long, Taiwan will end up like Hong Kong—it will become part of China" [1]. With more trips planned and an opposition increasingly receptive to Beijing's overtures, the question facing Asunción is whether values-based diplomacy and Taiwanese aid can outweigh the gravitational pull of the world's second-largest economy.

President Peña's term runs until 2028. What happens after that—and whether his successor shares his commitment to Taipei—may determine whether Paraguay remains Taiwan's last bastion in South America or becomes the next domino to fall in Beijing's relentless campaign to isolate the island democracy.