Taiwan’s ‘Dollar Diplomacy’ Faces Increasing Challenge

By Jim YU, CND, 20 June 2001

[CND, 06/20/01] The recent switch of loyalty by the Macedonian government from Taipei to Beijing is just the newest example that Taiwan is losing ground in the diplomatic battles to Beijing, the Hong Kong iMail reported.

The current economic slowdown has created an even greater challenge for Taipei, on top of the fact that the Beijing government, being one of five permanent UN members, is much more powerful politically on the international stage.

In the past, Taiwan has spent billions of dollars trying to woo countries to recognize Taipei instead of Beijing, and it was somewhat successful among poor and small countries in Africa, the Pacific and Latin America. But as mainland China began to have a deeper pocket of itself, an increasing number of Taiwan people started to doubt if such a strategy would work for them for very long.

While mainland China now ranks second in the world in foreign currency reserves, Taiwan, which used to rank third, just lost its place to Hong Kong due to the economic slowdown on the island. This means that it would cost Taipei even more if it is to continue the dollar diplomacy.