Paraguay, Taiwan’s only remaining ally in South America, is also one of its oldest, having established diplomatic relations in 1957. But those ties are under threat as Communist China seeks to entice Paraguay with profits and other benefits.
There are only 12 countries in the world today that recognize diplomatic ties with Taiwan, officially known as the Republic of China (ROC), over the People’s Republic of China (PRC).
Concerns over China’s expanding influence intensified after Paraguayan opposition figure Leidy Galeano traveled on a Chinese-sponsored trip to six cities in late 2025. As reported by Reuters, Galeano said: “Everything I saw there, I wanted for my country.”
Galeano is a member of the newly formed Yo Creo party (meaning “I Believe”), an anti-establishment movement founded in 2023 by Miguel Prieto. The party has shown openness toward closer ties with Beijing, in contrast to the ruling Colorado Party under President Santiago Peña, a strong supporter of Taiwan and a close partner of the United States.
According to a Reuters analysis, Galeano’s visit is part of a broader trend. Since late 2023, at least 19 Paraguayan lawmakers and five journalists have traveled to China on similar trips, often featuring official invitations, banquets, and high-level exposure to Chinese development projects.
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Though Galeano’s social media posts omit mention of her China trip, she did share a news report on her Facebook about the PRC inaugurating the world’s longest continuous highway tunnel, the over 22-kilometer long Shengli Tunnel in the Tianshan mountain range in Xinjiang. Her post was linked to a report in the Paraguayan media, Ultima Hora.
A test for US foreign policy
The PRC’s deepening engagement with Paraguayan politicians is occurring as the United States faces mounting pressure to step up its support for Taiwan.
While Peña Palacios has openly endorsed diplomatic ties with Taipei, factional politics within the ruling party could greatly strengthen the opposition parties’ case in the next elections.
This could make things only difficult for the US and Taiwan, favoring Beijing’s efforts in Paraguay, according to The Rio Times, a Swiss-owned independent English-language publication focused on Brazil and Latin America news.
If the opposition parties come to power in the next national congress, Paraguay could see a shift in its foreign policy vis-a-vis mainland China and Taiwan. Peña’s government has over two more years in power and within this period the PRC is certainly making its moves for the country’s next elections.
In 2024, Xu Wei, a senior PRC diplomat to Latin America, who was in Paraguay for an annual UNESCO meeting skipped that session and instead made a surprise appearance at the Paraguay Congress in the capital city of Asunción and urged the country’s lawmakers to shift their alliance from Taiwan to PRC.
“It is either China or Taiwan,” he told the Paraguayan lawmakers, according to CNN. “I recommend that the government of Paraguay make a correct decision as soon as possible.” Xu talked about the trade benefits of making the diplomatic shift including “thousands of other advantages.”
Paraguay cancelled his visa the next day and gave him 24 hours to leave after declaring him persona non grata. “This gentleman had a parallel agenda. He came to do internal politics that were not appropriate,” said Juan Baiardi, the deputy minister of administration and technical affairs for Paraguay’s Foreign Ministry.
The Latin American country’s support for Taiwan, however, is also not unconditional. In 2022, then-Paraguayan President Mario Abdo Benítez had asked Taiwan for an investment of US$1 billion to help it resist the pressure to switch diplomatic ties.
“There is Taiwanese investment of more than $6bn in countries which don’t have diplomatic relations with Taiwan, we want from that $1bn to be put in Paraguay,” Benítez had told Financial Times in an interview. “That will help us to build the argument about the importance of this strategic alliance with Taiwan.”
Taiwanese foreign direct investment into Paraguay was US$4 million annually from 2005-2014 and this did increase after 2019, but it was no match for the PRC’s investment in the neighboring Latin American nations, according to a brief by Global Taiwan.
Chinese exports to Asunción have increased to US$6 billion in 2025, according to the Rio Times, compared with just US$69 million in Taiwanese exports to the country. That year, Paraguay exported products worth US$229 to Taiwan.
China’s increasing focus in Paraguay is happening due to its interest in the strategic Paraguay-Paraná river basin where it is involved in major river dredging projects–the Paraguay-Paraná river basin is shared between five countries, Brazil, Bolivia, Paraguay, Argentina, and Uruguay.
The Paraguay river creates a strategic shipping corridor for the land-locked Paraguay providing vital access to the Atlantic Ocean and it is also a ground for competition between U.S. and Chinese investments.
How the US responds to Chinese interference in Paraguay will likely determine the nation’s diplomatic choice between Taiwan and the PRC in the future.
“As the United States seeks to find ways to support Taiwan internationally, Paraguay is a worthy country for mutual cooperation,” said the Global Taiwan’s brief by Uma Baron.
