Taiwan faces political, not economic, hit after Panama switches ties to Beijing
Trade with the central American nation makes up a very small part of the island’s economy, but the impact on the mandate of President Tsai Ing-wen could be considerable
Beijing’s move to establish ties with Panama, part of its push to woo Taiwan’s remaining friends, matters more to the political prospects of the island’s president, Tsai Ing-wen, than to its economy.
The long-anticipated defection, which Chinese and Panamanian officials celebrated with champagne on Tuesday, left Taiwan with just 20 diplomatic partners and underscored how far relations between Beijing and Taipei have deteriorated since Tsai’s election last year.
The financial impact was expected to be limited, however, as Panama represented just 0.03 per cent of the island’s total trade in 2016.
“While highly symbolic and a genuine hit, the Panama break is unlikely to make a huge difference,” said Jonathan Sullivan, director of the University of Nottingham’s China Policy Institute, who is currently conducting research in Taiwan. “It may bring pressure to bear on Tsai’s China policy. Certainly, that is Beijing’s short-term motivation for going after Taiwan’s allies.”
China has been ramping up pressure on Taiwan in recent months over Tsai’s refusal to accept that both sides belong to one country – the framework that underpinned talks with her predecessor. In addition to taking away three diplomatic allies, China has curbed tourist trips to Taiwan, pushed foreign countries to deport Taiwanese criminal suspects to the mainland and blocked the island from participating in international bodies.
