Using Aid and Investment Diplomacy to Isolate Taiwan

  • John F. Copper


The People’s Republic of China has allocated a substantial amount of its foreign aid and investments to deal with the “Taiwan issue.” Specifically, China has given economic help to a host of developing countries in order to reduce Taipei’s formal diplomatic ties, diminish its status as a nation-state, isolate Taiwan from the international community, and compel Taiwan’s government to negotiate with China for the island’s reunification.


Democratic Progressive Party Chinese Leader United Nations Security Council Diplomatic Relation Taiwan Issue 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    For a synopsis of China’s views and policy toward Taiwan, see Robert G. Sutter, Chinese Foreign Relations: Power and Policy since the Cold War (Lanham, MD: Rowman and Littlefield, 2010), chapter 7.Google Scholar
  2. 3.
    Ibid. The more popular view is that the United States changed its position when Mao’s forces defeated Chiang Kai-shek’s armies and established the People’s Republic of China See John W. Garver, Foreign Relations of the Peoples Republic of China (Englewood Cliffs, NJ: Prentice Hall, 1993), p. 50 for a discussion of this.Google Scholar
  3. 6.
    A. Doak Barnett, Communist China and Asia: A Challenge to the United States (New York: Vintage Books, 1960), p. 77. Barnett says that fostering revolution throughout Asia, which some others said was his first objective, was a lower priority.Google Scholar
  4. 7.
    Kuo-kang Shao, Zhou Enlai and the Foundations of Chinese Foreign Policy (New York: St. Martin’s Press, 1966), pp. 180–81.Google Scholar
  5. 8.
    Samuel S. Kim, “Taiwan and the International System: The Challenge of Legitimation,” in Robert G. Sutter and William R. Johnson (eds.), Taiwan in World Affairs (Boulder, CO: Westview Press, 1994), p. 149. Kim calls the context a zero-sum one.Google Scholar
  6. 9.
    Some writers suggest that Mao had other motives, mainly testing US-Taiwan relations. See Thomas E. Stolper, China, Taiwan and the Offshore Islands (Armonk, NY: M. E. Sharpe, 1985), p. 35. The author suggests that the United States was put in the awkward position of having to risk a costly and unpopular war without clear objectives or breaking with Chiang Kai-shek and sacrificing Nationalist troops on the islands. Carver notes that China was aware that Washington and Taipei were in the process of concluding a mutual defense treaty and China acted for that reason. See Foreign Relations of the People’s Republic of China, p. 47. A Chinese scholar notes that the recovery of Taiwan was too closely related to the legitimacy of the Chinese Communist Party, calling it its “historical curse.” SeeGoogle Scholar
  7. Wang Shuzhong, “The Post-War International System,” in Harish Kapur (ed.), As China Sees the World (New York: St. Martin’s Press, 1987), p. 36.Google Scholar
  8. 10.
    Alice Langley Hsieh, Communist China’s Strategy in the Nuclear Era (Englewood Cliffs, NJ: Prentice-Hall, 1962), pp. 17–18.Google Scholar
  9. 12.
    According to one author, China had two major motives in giving aid: competing with Taiwan and obtaining sources of raw materials. See Carol Lancaster, “Foreign Aid in the Twenty-First Century: What Purposes?” in Louis A. Picard, Robert Groelsema, and Terry F. Buss (eds.), Foreign Aid and Foreign Policy: Lessons for the Next Half Century (Armonk, NY: M. E. Sharpe, 2008), p. 47.Google Scholar
  10. 13.
    See Robert C. North, The Foreign Relations of China (North Scituate, MA: Duxbury Press, 1978), p. 133. Also see Carver, Foreign Relations of the People’s Republic of China, p. 55.Google Scholar
  11. 14.
    According to one writer, Mao indicated a willingness to renounce the use of force to liberate Taiwan in exchange for Washington engaging in talks at the ministerial level with China. Carver, Foreign Relations of the People’s Republic of China, p. 55. Carver suggests China may have been willing to agree to the de facto separation of Taiwan from China. This view, however, is contradicted by the fact the Soviet Union called for the avoidance of hostilities in the Taiwan Strait area, no matter by whom—requiring China to pledge not to use military force against Taiwan. In any event, China refused. See John Gittings, The World and China: 1922–1972 (New York: Harper and Row, 1974), p. 199.Google Scholar
  12. 16.
    Mao may have calculated that improved Sino-American ties would undercut Chiang Kai-shek’s regime, which would “fall into China’s hands.” See George McT. Kahin, The Afro-Asian Conference (New York: Cornell University Press, 1956), pp. 28–29.Google Scholar
  13. 19.
    R. G. Boyd, Communist China’s Foreign Policy (New York: Praeger, 1962), p. 34.Google Scholar
  14. 25.
    James Mann, About Face: A History of America’s Curious Relationship with China, from Nixon to Clinton (New York: Knopf, 1999). Also seeGoogle Scholar
  15. Michael Pillsbury, The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower (New York: Henry Holt, 2015), p. 85. The author argues that Mao was influenced by the advice of Chen Yi, one of his generals, to so act.Google Scholar
  16. 26.
    See John F. Copper, China Diplomacy: The Washington-Taipei-Beijing Triangle (Boulder, CO: Westview Press, 1992), pp. 31–39.Google Scholar
  17. 28.
    See David Bonavia, Deng (Hong Kong: Longman, 1989), p. 222. The author notes that Deng understood that the conflict over Taiwan might set back relations with the United States by ten years. Also, seeGoogle Scholar
  18. Michael D. Swaine, “Chinese Decision-Making Regarding Taiwan,” in David M. Lampton (ed.), The Making of Chinese Foreign and Security Policy in the Era of Reform, 1978–2000 (Stanford, CA: Stanford University Press, 2001), p. 289.Google Scholar
  19. 29.
    Thus, Beijing turned to less aggressive means of dealing with Taiwan— including giving more economic aid to underdeveloped nations to help Beijing in the diplomatic war against Taipei and in the fight for the UN seat. See Robert G. Sutter, Chinese Foreign Policy: Developments Afier Mao (New York: Praeger, 1986), pp. 98–99.Google Scholar
  20. 31.
    See Maria Hsia Chang, Return of the Dragon: China’s Wounded Nationalism (Boulder, CO: Westview Press, 2001), chapter 9.Google Scholar
  21. 32.
    Yong Deng, China’s Struggle for Status: The Realignment of International Relations (Cambridge: Cambridge University Press, 2008), p. 19.CrossRefGoogle Scholar
  22. 33.
    Michael Yahuda, Towards the End of Isolationism: China’s Foreign Policy after Mao (New York: St. Martin’s Press, 1983), p. 210. Another writer, a Chinese scholar, put it this way: “Any person or political group that maintains Chinese unification and territorial integrity wins the people’s support and the appreciation of historians. Any person or political group that tries to divide China, to surrender the territory of our motherland to others and, thus, to harm the integrity of our motherland, will be cast aside by the people and condemned from generation to generation.”CrossRefGoogle Scholar
  23. Liu Ji, “Making the Right Choices in Twenty-First Century Sino-American Relations,” in Suisheng Zhao (ed.), Chinese Foreign Policy: Pragmatism and Strategic Behavior (Armonk, NY: M. E. Sharpe, 2004), p. 249.Google Scholar
  24. 34.
    See Ross Terrill, The New Chinese Empire and What It Means to the United States (New York: Basic Books, 2003), pp. 210–12.Google Scholar
  25. 36.
    Barry Naughton, The Chinese Economy: Transitions and Growth (Cambridge: MIT Press, 2007), p. 416.Google Scholar
  26. 37.
    Willem Van Kemenade, China, Hong Kong, Taiwan, Inc. (New York: Doubleday, 1997), p. 193.Google Scholar
  27. 38.
    Sheng Lijun, China’s Dilemma: The Taiwan Issue (Singapore: Institute of Southeast Asian Studies, 2001), p. 92.Google Scholar
  28. 39.
    For details on the talks and the significance of the agreements, see Hungdah Chiu, Koo-Wang Talks and the Prospect of Building Constructive and Stable Relations across the Taiwan Straits (Baltimore: University of Maryland School of Law, 1993).Google Scholar
  29. 40.
    Sutter, Chinese Foreign Relations, p. 153; Joshua Kurlantzick, Charm Offensive: How China’s Soft Power Is Transforming the World (New Haven, CT: Yale University Press, 2007), p. 42.Google Scholar
  30. 41.
    Chih-cheng Lo, “New Leadership Team, New Approaches toward Taiwan?” in Tun-jen Cheng, Jacques deLisle, and Deborah Brown (eds.), China under Hu Jintao: Opportunities, Dangers and Dilemmas (Singapore: World Scientific, 2006), p. 255.Google Scholar
  31. 42.
    For details, see John F. Copper, Playing with Fire: The Looming War with China over Taiwan (Westport, CT: Praeger, 2006), chapters 1, 5 and 6.Google Scholar
  32. 43.
    John F. Copper, Taiwan’s 2000 Presidential and Vice Presidential Election: Consolidating Democracy and Creating a New Era of Politics (Baltimore: University of Maryland School of Law, 2000), pp. 40–41.Google Scholar
  33. 44.
    China adopted what some called a “wait and see” strategy. See Willy Wo-Lap Lam, “Will Cross-Strait Tensions Ease?” China Brief, January 31, 2002 (online at Also seeGoogle Scholar
  34. Evan S. Medeiros and M. Taylor Fravel, “China’s New Diplomacy,” Foreign Affairs, November-December 2003.Google Scholar
  35. 45.
    John F. Copper, “Taiwan in Gridlock: Thoughts on the Chen Shui-bian Administration’s First Eighteen Months,” in John F. Copper (ed.), Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency (Singapore: World Scientific, 2002), pp. 27–28.Google Scholar
  36. 46.
    Richard Bush, “Taiwan Faces China,” in David Shambaugh (ed.), Power Shift: China and Asia’s New Dynamics (Berkeley: University of California Press, 2005), pp. 173–74.Google Scholar
  37. 49.
    See Jing Huang, “China’s Taiwan Policy: Past and Present,” in Uk Heo and Shale A. Horowitz (eds.), Conflict in Asia—Korea, China-Taiwan, and India-Pakistan (Westport, CT: Praeger, 2003), pp. 25–41.Google Scholar
  38. 54.
    David Mozingo, Chinese Policy toward Indonesia, 1949–1967 (Ithaca, NY: Cornell University Press, 1976), pp. 90–92.Google Scholar
  39. 58.
    For the dates when China established diplomatic relations with African countries, see Bruce D. Larkin, China and Africa, 1949–1970: The Foreign Policy of the People’s Republic of China (Berkeley: University of California Press, 1971), pp. 66–67. Formal relations were decided between China and Guinea in 1959, though ambassadors arrived in early 1960.Google Scholar
  40. 65.
    Bih-jaw Lin, “The Republic of China and Africa: A Case of Positive Adaptation,” in Yu San Wang (ed.), The Foreign Policy of the Republic of China on Taiwan: An Unorthodox Approach (New York: Praeger, 1990), p. 146.Google Scholar
  41. 69.
    Samuel S. Kim, China, the United Nations, and World Order (Princeton, NJ: Princeton University Press, 1979), pp. 102–3.Google Scholar
  42. 75.
    See Wei-chin Lee, “Taiwan’s Foreign Aid,” Asian Affairs, Spring 1993, p. 44. Taiwan’s foreign aid at first was agricultural products some of which was extra or leftover American aid.Google Scholar
  43. 76.
    For details, see Alice Langley Hsieh, Communist China’s Strategy in the Nuclear Era (Englewood Cliffs, NJ: Prentice-Hall, 1962), chapter 5.Google Scholar
  44. 77.
    By 1970, Taiwan had $624 million in foreign exchange reserves, which stabilized the exchange rate and established its creditworthiness throughout the world. See Ralph N. Clough, Island China (Cambridge: Harvard University Press, 1978), p. 79. Taiwan thereafter accumulated foreign exchange at a very rapid rate. By early 1994, Taiwan possessed 86.8 billion by early 1994 based on a high savings rate and a favorable foreign trade balance. SeeCrossRefGoogle Scholar
  45. Fredrick F. Chien, Opportunity and Challenge (Tempe: Arizona Historical Foundation, 1995), p. 164.Google Scholar
  46. 78.
    See Gary D. Rawnsley, Taiwan’s Informal Diplomacy and Propaganda (New York: St. Martin’s Press, 2000), p. 32. It is also worth noting that Taiwan’s constitution cites “the promotion of international cooperation and performing international duties” as national objectives. Finally, Taiwan was grateful for the large amount of aid it received from the United States between 1950 and 1965 (US$1.5 billion in economic and technical and 2.4 billion in military aid) which it, unlike most aid recipient countries, utilized very effectively and could pass on its experience to others.CrossRefGoogle Scholar
  47. 79.
    See Lin Bih-jaw, “The Republic of China and Africa: A Case of Positive Adaptation,” in Wang Yu San (ed.), Foreign Policy of the Republic of China on Taiwan: An Unorthodox Approach (New York: Praeger, 1990), p. 152.Google Scholar
  48. 82.
    Hung-mao Tien, The Great Transition: Political and Social Change in the Republic of China (Stanford, CA: Hoover Institution Press, 1989), p. 223.Google Scholar
  49. 87.
    David H. Shin and Joshua Eisenman, China and Africa: A Century of Engagement (Philadelphia: University of Pennsylvania Press, 2012), p. 301.Google Scholar
  50. 96.
    Ian Taylor, “Taiwan’s Foreign Policy and Africa: The Limitations of Dollar Diplomacy,” Journal of Contemporary China, No. 30, 2002, p. 126.Google Scholar
  51. 97.
    Samuel S. Kim, “Taiwan and the International System: The Challenge of Legitimation,” in Robert G. Sutter and William R. Johnson (eds.), Taiwan in World Affairs (Boulder, CO: Westview Press, 1994), p. 168.Google Scholar
  52. 99.
    Joshua Eisenman, “China’s Post-Cold War Strategy in Africa: Examining Beijing’s Methods and Objectives,” in Joshua Eisenman, Eric Heginbotham, and Derek Mitchell (eds.), China and the Developing World: Beijing’s Strategy for the Twenty-First Century (Armonk, NY: M. E. Sharpe, 2997), p. 37.Google Scholar
  53. 102.
    Gerald Chan, “Taiwan as an Emerging Foreign Aid Donor: Developments, Problems and Prospects,” Pacific Affairs, Spring 1997, pp. 51. Gambia reportedly received $30 million over three years, a considerable sum in view of its GDP was $45 million. See Taylor, “Taiwan’s Foreign Policy and Africa,” p. 130.Google Scholar
  54. 116.
    The Star, December 2, 1994, cited in Ian Taylor, China and Africa: Engagement and Compromise (London: Routledge, 2006), p. 143.Google Scholar
  55. 118.
    Cris Alden, China in Africa (London: Zed Books, 2007), p. 33; Taylor, China and Africa, p. 143. Alden cites the former figure; Taylor cites the latter one.Google Scholar
  56. 130.
    Chen Jie, Foreign Policy of the New Taiwan (Cheltenham, UK: Edward Edgar, 2002), p. 107.Google Scholar
  57. 131.
    Michael Field, “Tongan Princess Switches to China in the Name of God and Money,” (online at The piece was written in January 1999.Google Scholar
  58. 136.
    See Alexander Casella, “Macedonia: Taiwan’s Lost Gambit,” Asia Times, July 11, 2001 (online at Scholar
  59. 139.
    For Zhu’s exact statement and the reaction in Taiwan, see John F. Copper, Taiwan’s 2000 Presidential and Vice Presidential Election: Consolidating Taiwan’s Democracy and Creating a New Era of Politics (Baltimore: University of Maryland School of Law, 2000).Google Scholar
  60. 141.
    T. Y. Wang, “Taiwan’s Bid for UN Membership,” in Edward Friedman (ed.), China’s Rise, Taiwan’s Dilemmas and International Peace (London: Routledge, 2006), p. 185.Google Scholar
  61. 142.
    Czeslaw Tubilewicz, “Taiwan’s Macedonian Project,’ 1999–2001,” China Quarterly, September 2004, p. 784.Google Scholar
  62. 144.
    Dennis V. Hickey, Foreign Policy Makingin Taiwan: From Principle to Pragmagism (London: Routldge, 2013), p. 15.Google Scholar
  63. 147.
    Craig S. Smith, “China Issues New Warning to Taiwan, Just in English,” New York Times, August 8, 2002 (online at The amount of the aid pledge was not reported by China, but was confirmed in “Background Note: Nauru,” U.S. Department of State, Bureau of East Asian and Pacific Affairs, October 2007 (online at Another source puts the offer at $60 million in aid and $77 million in immediate debt relief. SeeGoogle Scholar
  64. Anthony Van Fossen, “The Struggle for Recognition: Diplomatic Competition between China and Taiwan in Oceania,” Journal of Chinese Political Science, Vol. 12, No. 2, 2007, p. 135.Google Scholar
  65. 150.
    Chien-min Chao and Chih-chia Hsu, “China Isolates Taiwan,” in Edward Friedman (ed.), China’s Rise, Taiwan’s Dilemmas and International Peace (London: Routledge, 2006), p. 53.Google Scholar
  66. 152.
    See Richard C. Bush, Untying the Knot: Making Peace in the Taiwan Strait (Washingon, DC: Brookings, 2005), pp. 226–27 for further details. In May 2005, reportedly in return for Taiwan promising to bail out Air Nauru by paying the outstanding debt of $13.5 million on its only jet, Nauru re-recognized Taipei. See Van Fossen, “The Struggle for Recognition,” p. 136.Google Scholar
  67. 159.
    R. Evan Ellis, China in Latin America: The Whats & Wherefores (Boulder, CO: Lynne Rienner, 2009), p. 15.Google Scholar
  68. 165.
    Melody Chen, “Taiwan, Grenada Set to Cut Ties,” Taipei Times, January 27, 2005 (online at The writer cites the paper The Grenada. Reportedly China’s aid to Grenada amounted to $1,500 per capita. See National Review, May 5, 2007, p. 10. Later it was reported in Taiwan that China promised Grenada $250 million at this time. See “Taiwan Accuses China of Buying Former Ally Senegal,” China Post, May 20, 2007, p. 1.Google Scholar
  69. 170.
    Caitlin Fitzsimmons, “A Troubled Frontier,” South China Morning Post, January 17, 2008, cited inGoogle Scholar
  70. Stefan Halper, The Beijing Consensus: How China’s Authoritarian Model Will Dominate the Twenty-First Century (New York: Basic Books, 2010), p. 109.Google Scholar
  71. 172.
    C. Fred Bergsten, Bates Gill, Nicholas R. Lardy and Derek Mitchell, China: The Balance Sheet (New York: Public Affairs, 2006), p. 120.Google Scholar
  72. 176.
    Keith Bradsher, “Chad, Dumping Taiwan, Forges Link to China,” International Herald Tribune, August 8, 2006 (online at Scholar
  73. 180.
    Keith Bradsher, “Chad’s Switch to Beijing’s Side Draws Angry Response in Taiwan,” New York Times, August 8, 2006 (online at Scholar
  74. 183.
    Thomas Pearmain, “Chad Chooses China: Future of Chad’s Energy Sector Likely to Change Dramatically,” Global Insight Daily Analysis, August 9, 2006 (online at Scholar
  75. 186.
    For details on this matter, see Peter Kien-hong Yu, The Second Long March: Struggling against the Chinese Communists under the Republic of China (Taiwan) Constitution (New York: Continuum, 2009), p. 126. Also see Cardenal and Araujo, China’s Silent Army, p. 249. According to the latter, China pledged $430 million: $30 million in cash, $300 million through buying Costa Rican bonds, $100 million in Chinese goods (including building a stadium).Google Scholar
  76. 187.
    Dave Kopel, “The Threat from Sino-America,” TSC Daily, July 16, 2007 (online at Scholar
  77. 190.
    Ellis, China in Latin America, p. 217. It was reported elsewhere that China purchased only $150 million of $300 promised for the bonds at the time. See Jamil Anderlini, “Beijing Uses Foreign Reserves to Target Taiwan,” Financial Times, September 11, 2008 (online at Also see 2008 Report to Congress, p. 52.Google Scholar
  78. 193.
    David Chang, “Why Tiny Nations Matter to Taiwan,” China Post, June 11, 2007, p. 2.Google Scholar
  79. 194.
    Ko Shu-ling, “Presidential Office Defends Aid Policy,” Taipei Times, August 24, 2007 (online at Scholar
  80. 200.
    In May 2008, Foreign Minister Huang resigned under pressure amid talk of the Chen administration’s use of foreign aid, in particular its attempt to establish relations with Papua New Guinea using aid. See Jonathan Adams, “Taiwan Foreign Minister Resigns over Diplomatic Blunder,” International Herald Tribune, May 6, 2008 (online at Scholar
  81. 201.
    Joe Hung, “Time to Stop Checkbook Diplomacy,” China Post, June 11, 2007, p. 2.Google Scholar
  82. 204.
    One writer even states that China’s rise and its “use of its new wealth and power to isolate Taiwan… the Republic of China might become legally nonexistent.” Chien-min Chao and Chih-chia Hsu, “China Isolates Taiwan,” in Edward Friedman (ed.), China’s Rise, Taiwan’s Dilemmas and International Peace (London: Routledge, 2006), p. 58.Google Scholar
  83. 205.
    See Bates Gill, Rising Star: China’s New Security Diplomacy (Washington, DC: Brookings Institution, 2007), pp. 142–43.Google Scholar
  84. 219.
    See Jenny W. Hsu, “Ties between Taiwan and Paraguay Still Strong: Ma,” Taipei Times, February 21, 2009, p. 3.Google Scholar
  85. 222.
    Xi Jinping, The Governance of China (Beijing: Foreign Languages Press, 2014), pp. 260–65.Google Scholar

Copyright information

© John F. Copper 2016

Authors and Affiliations

  • John F. Copper

There are no affiliations available

Personalised recommendations