The Price of Severing the Guatemala-Taiwan Relationship

Chinese Trade Pact Is Prelude to Geopolitical Dominance

As a deep blow to US hegemony and any semblance of the Monroe Doctrine, the CCP intends to pacify Guatemala. (Sebastián Díaz)

Lea en español. 

Guatemala has been a loyal ally to Taiwan, officially known as the Republic of China, since 1960—recognizing Taiwan as a sovereign state and maintaining robust diplomatic relations. 

This historic alliance, however, is on the ropes. Leftist Bernardo Arévalo appears to be captivated by the rewards the Chinese Communist Party (CCP) has offered in exchange for official recognition. The new Guatemalan president is on the verge of giving the cold shoulder to and further ostracizing free China.

Under the “One China” narrative, dictator Xi Jinping has sought to sever diplomatic ties between Taiwan and the rest of the world. In 2021, for instance, the Nicaraguan regime, following CCP orders, cut diplomatic relations with the island and motioned for Taiwan’s removal as an international observer from the Central American Parliament. The latter occurred in 2023 when the People’s Republic of China became an international observer instead. To achieve a deep blow to US hegemony and any semblance of the Monroe Doctrine, the CCP now intends to pacify Guatemala. 

China’s Wolfish Appetite for Central America

In less than a decade, China has become a dominant trade partner for Central America. Since 2017, countries have followed Costa Rica’s lead and fallen like dominoes: Panama, the Dominican Republic, El Salvador, Nicaragua, and Honduras have succumbed to Beijing—abandoning ties with Taipei and expanding commercial relations with the dictatorship. 

At present, only 12 countries worldwide recognize Taiwan as a sovereign state. Guatemala is the most relevant one due to the size of its economy and population.

Arévalo has pledged to maintain and enhance diplomatic relations with Taiwan. However, at the same time he has shown interest in expanding commercial relations with continental China. He either does not see or does not care that the CCP uses such relations for political leverage.

Taiwanese civil-society organization Doublethink Lab has released the China Index to explain how the CCP influences other countries in different sectors, including the economy, politics, military, telecommunications, and technology. The authors collected information from 82 countries, including Panama, Costa Rica, and Nicaragua. The Central American countries were ranked 23rd, 39th, and 76th, respectively. In other words, Panama is the most compromised by the CCP of the three Central American nations measured.

In Panama, the CCP has funded the media, think tanks, and politicians in exchange for injecting CCP political propaganda into public opinion. Some politicians, such as Julio Yao Villalaz, have even denied systematic human-rights violations in China. In 2018, Panama joined the New Silk Road project, which is the CCP’s flagship initiative to expand its geopolitical influence through infrastructure developments. Since then, Panama’s trade with China has soared, with China becoming Panama’s largest export destination.

Notably, the Chinese influence in telecommunications and the Panama Canal has increased. For example, the Panamanian government has awarded the construction of the Fourth Bridge over the canal to a Chinese consortium. In addition, Chinese companies own two of the five ports adjacent to the canal.

Growing authoritarianism in El Salvador and Honduras, alongside the consolidation of the dictatorship in Nicaragua, has provoked tensions between these countries and the United States, their largest commercial partner. Therefore, Chinese ties offer an escape valve against any pressure from Washington, DC. While El Salvador and Honduras have started negotiations for a free-trade agreement (FTA) with the Asian giant, an FTA between Nicaragua and China entered into force on January 1, 2024.

Costa Rica strengthened commercial and diplomatic relations with China in 2007, long before its neighboring countries. As a result, Costa Rica is now the Central American nation with the largest debt to China. By March 2023, the reported debt was $435 million. 

Once a Loyal, Strategic US Ally

Despite lacking official recognition from Guatemala, China is already one of its largest trade partners. In 2022, China had the second greatest exports to Guatemala. The lack of official recognition has not stopped Guatemala from trading with China, but it has impeded the CCP from interfering with Guatemalan politics.

Guatemala is a strategic country for Washington, DC, due to its location at the border of Central and North America. According to the International Organization for Migration, in 2023 more than 400,000 people from multiple nationalities illegally crossed the border between Guatemala and Mexico to arrive in the United States. 

Allowing the CCP to take control of Guatemala would be like offering a weapon to China and hoping it would not use it against the United States. Facts prove the opposite. In 2023, the US Treasury Department sanctioned Chinese companies for providing chemical precursors to Mexican cartels producing fentanyl traded in the United States. The Centers for Disease Control and Prevention estimates 110,000 US citizens have died due to fentanyl overdoses.  

China has a long record of delivering corrosive capital to the region and financing colossal projects with a thinly veiled political agenda, such as the new library and national stadium in El Salvador. Although Taiwan has offered similar support, delivering financial and technical aid to Guatemala, the island nation of 24 million people cannot rival China’s enormous pocket.

Arévalo has argued that Guatemala “cannot disregard China’s strength and power,” and that is why he is contemplating a bilateral trade office. CCP spokesman Wang Wenbin, however, has firmly asserted that the One China principle is the foundation for any cooperation. He hopes Arévalo “makes the right decision as soon as possible.” Reading between the lines: Guatemala would succumb to dollar diplomacy, paid for with renminbi. 

Guatemala has been able to trade with China without suffering from strong ties with Taiwan and the United States. However, China perhaps sees in Arévalo a Trojan horse to enter the country. His socialist affinities also suggest he is more than happy to promote the interests of autocrats.

After the violent takeover of Hong Kong in 2020, an invasion of Taiwan is drawing ever nearer. According to US Indo-Pacific Force Commander John Aquilino, China will be ready to conquer the island in 2027. That would be deathly for Pax Americana hegemony and chaotic for international trade. The Taiwan Strait hosts the busiest and most influential shipping route in the world, and the island contributes 63 percent of global semiconductor production.

The loss of Taiwan’s allies to China is an iconic defeat for US foreign policy, particularly when it occurs in the US backyard. Although the United States recognizes Communist China, the 1979 Taiwan Relations Act has ensured a legal framework to trade and even provide arms to the island, despite adamant opposition from the CCP. Declining international support for Taiwan weakens the United States’ ability to maintain this awkward inconsistency.

Recognizing Taiwan as a sovereign nation is a matter of republican and democratic principles, something Guatemala can be proud of. On the other hand, cornering Taiwan and depriving it of diplomatic recognition would assist the CCP in conquering the island. Guatemala’s stance, if maintained, could serve as a bulwark against CCP expansion.

Andrés Sebastián Díaz Ponce

Andrés Sebastián holds a bachelor’s degree in political science and international relations from the University of the Americas, Ecuador. He founded Libertario, a Spanish-speaking community that promotes the ideas of liberty in Latin America, and he collaborates with the Ecuadorian liberal think tank Libre Razón. Follow @asdp250.

More Posts

Join us in our mission to foster positive relations between the United States and Latin America through independent journalism.

As we improve our quality and deepen our coverage, we wish to make the Impunity Observer financially sustainable and reader-oriented. In return, we ask that you show your support in the form of subscriptions.

Non-subscribers can read up to six articles per month. Subscribe here.

Leave a Reply