China’s Pacific charm offensive pays off as Nauru drops Taipei for Beijing

The island nation of Nauru’s shock announcement that it was severing ties with Taiwan in favour of Beijing has brought China’s charm offensive across the Pacific into sharp relief – and highlighted the limited options available to micro-states desperate for a way out of economic dead-ends.

Where most countries send congratulations to those who win presidential elections, the Pacific Island nation of Nauru sent an altogether different message to Taiwan’s President-elect Lai Ching-te. After the Democratic Progressive Party (DPP)’s win in the presidential election over the weekend, Nauru notified Taiwan on Monday that it would no longer be recognising the island as an independent nation. Instead, Nauru’s 12,000-odd inhabitants would from now on consider Taiwan “an inalienable part of China’s territory”.

The loss of Nauru’s support is just the latest blow to Taiwan’s dwindling group of diplomatic allies, a motley collection of developing nations across Latin America, the Caribbean and the Pacific that continue to recognise Taiwan – under its formal name of the Republic of China – as the sole legitimate representative of China on the international stage. This binary choice – neither Beijing nor Taipei will allow countries to recognise both claimants – is a holdover from the years following the Chinese Civil War, when Chiang Kai-shek’s defeated Kuomintang continued to represent China at the UN from its outpost on Taiwan.

Since DPP candidate Tsai Ing-wen’s 2016 election to Taiwan’s presidency ushered in the end of an eight-year “diplomatic truce” between Taipei and Beijing, the People’s Republic of China has poached nine of Taiwan’s remaining diplomatic allies through promises of economic aid and development. By shrinking the circle of countries that continue to recognise Taipei internationally, Beijing seems bent on further isolating Taiwan, incensed by what it characterises as the DPP’s dangerous separatist tendencies. Nauru makes ten.

‘Chequebook diplomacy’

Steve Tsang, director of the SOAS China Institute in London and co-author of a new book, “The Political Thought of Xi Jinping”, said that Taiwan’s unwillingness to reach deeper into its pockets was making it increasingly difficult to convince its remaining diplomatic allies – now numbering just 12 – to stay by its side.

“The first thing to bear in mind is that Nauru is a country of just less than 13,000 people, so the provision of economic or development incentives that can persuade it to switch recognition from Taipei to Beijing can be quite small,” he said. “The issue here is that Taiwan’s government has, for a few years now, decided not to go head to head with the Chinese government in chequebook diplomacy, so it will lose some of its ‘allies’ to Beijing if Beijing is determined enough to outbid Taiwan.”

Despite President Tsai Ing-wen’s declaration in 2016 that Taipei would no longer buy support through “chequebook diplomacy”, Taiwan has continued to provide humanitarian aid and concessional loans to the handful of countries that recognise it. Nauru has hosted a Taiwanese technical mission involved in agriculture, energy, scholarships and training since 2006, and has been a consistent recipient of grants and below-market-rate loans from Taipei. Alongside Australia and New Zealand, Taiwan continues to pay into Nauru’s Intergenerational Trust Fund, set up in 2015 to help replace the nation’s vanishing phosphate revenues.

Apparently, it hasn’t been enough. Nauru is now the latest Pacific Island nation to make the switch to Beijing. In 2019, Kiribati and the Solomon Islands both declared for China, with Taiwanese media alleging that the latter had been convinced to abandon Taipei in exchange for some $500 million in financial aid – a claim that has never been confirmed.

But it’s no secret that China has been stepping up its economic and diplomatic engagement with nations across the Pacific, with Beijing believed to have spent $3.9 billion in aid in the region between 2008 and 2021 to Taiwan’s $395 million over the same period. And while Taiwan’s engagement with countries with smaller populations has effectively meant that it has spent twice as much as Beijing per capita, China is also steadily abandoning the large-scale, big-budget infrastructure projects characteristic of the early years of its Belt and Road Initiative for more targeted projects in health and agriculture.

Keeping its head above water

Dr Asha Sundaramurthy, an expert on the Oceania region, said that the results of China’s charm offensive were clear.

“China’s volume of aid and increased engagement in the region has played a significant role in shifting the recognition of Taiwan in the last decade, with Kiribati and Solomon Islands reversing in 2019,” she said. “Now, only the Marshall Islands, Tuvalu and Palau remain as three Pacific Islands recognising Taiwan.”

This is not the first time that Nauru has seemingly sold its diplomatic recognition to the highest bidder. Nauru chose to recognise China in July 2002 after more than two decades of diplomatic ties with Taiwan. Taiwan’s foreign ministry accused China at the time of buying Nauru’s loyalty with $137 million in grants and debt repayments. The government reversed its decision in May 2005, recognising Taipei once again as the rightful China. The following year, the Taiwanese government funded Nauru’s purchase of a Boeing 737 jet to replace an earlier aircraft – the nation’s only one – that had been repossessed by American financiers the year before.

A few scant years later, Nauru would also become one of the only countries in the world to officially recognise the breakaway republics of Abkhazia and South Ossetia following the 2008 war between Russia and Georgia. Even Russia’s close ally Belarus baulked at acknowledging the renegade provinces, but Nauru – alongside Nicaragua and Venezuela – established relations with both self-proclaimed states. According to Russia’s Kommersant newspaper, the Kremlin rewarded the island nation for its support with some $50 million in humanitarian aid.

Although this transactional approach to international relations may seem mercenary, Nauru’s modern history makes it clear that the country has been left with few other ways to, quite literally, keep its head above water. A remote Pacific Island nation covering just 21 square kilometres, Nauru’s relationship with the vast world beyond its shores changed drastically following the discovery of high-grade phosphate reserves there on the eve of the 20th century. Built up over untold thousands of years by the fossilised droppings of the seabirds that roosted on the tiny island’s central plateau, these phosphate reserves would prove an invaluable source of fertiliser for the British Empire once the island nation was wrested from German hands after World War I.

Under the stewardship of the British Phosphate Commissioners – representatives of Australia, New Zealand and Great Britain who were given a mandate by the League of Nations to mine the nation’s phosphate to sell to the Empire’s farmers at below-market rates – more than 35 million metric tonnes of the fertiliser were stripped from the island by the time the nation won independence in 1968. By then, more than a third of the island had been strip-mined, leaving the central plateau a wasteland of sun-bleached limestone towers and shattered coral.

Nauru’s primary phosphate reserves are now all but exhausted. With little left to fall back on aside from selling off fishing rights, Nauru has become one of the countries most reliant on foreign aid to survive – and one of the low-lying island nations most vulnerable to climate crisis.

Stripped of arable land and frantic for new sources of revenue, the government has become deeply dependent on a deal with Australia to operate an offshore processing centre for asylum-seekers hoping to reach Australia by boat. The processing centre was estimated as being likely to generate more than $100 million for Nauru in 2024, on top of the $31 million given directly by Australia in development assistance in 2023. According to the US-based Migration Policy Institute, Australian payments to Nauru through the deal accounted for about two-thirds of the island’s total revenue in 2021-2022. More than 15 percent of the island’s population was employed at the centre in 2021, with many more finding work in the secondary service industries that sprung up around the operation. But with the number of detainees currently held there believed to have dwindled to a bare dozen and Australia winding down its financing of the scheme, it’s a deal that seems unlikely to keep delivering.

Beijing’s ‘punishment’ against Taiwan

Speaking to Taiwan’s semi-official news agency CNA, an unnamed Taiwanese diplomat alleged that Nauru had asked Taipei for roughly $83.23 million to help fill a financial shortfall caused by the processing centre’s temporary shutdown. The Taiwanese official told CNA that Beijing had likely offered to step in and make up the shortfall. An unnamed Australian official in Taiwan told the Australian Financial Review that the report was accurate, although the official said that the processing centre remained open despite only holding a handful of people inside. Neither Nauru nor China have publicly commented on any financial incentives for the switch in affiliation.

Tsang said that the timing of Nauru’s announcement – so soon after the DPP won a renewed mandate – was no coincidence. 

“The timing will suggest that Beijing has worked on the government of Nauru well before the Taiwanese elections, and this is one of the options Beijing has as a ‘punishment’ against Taiwan and its people for choosing a presidential candidate Beijing has said they should not support,” he said. “But among the range of options Beijing has to show its displeasure, this is one that does relatively little damage to Taiwan.”

Although losing the friendship of a tiny island nation halfway around the world may ultimately mean little to Taipei, Nauru may well be counting on China’s continued largesse to give it a way out of its economic dead-end.

“For the islands’ perspective, they seek to partake in the economic growth of the emerging Asian Century – which is spearheaded by China,” Sundaramurthy said. “The island countries are also playing a delicate game of balance between security and development while ensuring the region avoids becoming a site of power contestation.”

Despite Taipei’s shock at Nauru’s announcement, Tsang said, Taipei’s increasing diplomatic isolation – on paper, at least – may end up having unexpected benefits as Taiwan continues to re-imagine its own identity.

“When no country formally recognises Taiwan by its formal name, the Republic of China, it will just be known as Taiwan,” he said. “So it will get to a point when it will be against Beijing’s interest to reduce further small states that recognise Taiwan by its official name.”

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Taiwan’s Lai Ching-te wins presidential vote, vows to defend island from China threats

Taiwan’s ruling party, the Democratic Progressive Party (DPP), secured a historic third term on Saturday as Vice President Lai Ching-te won the country’s widely watched presidential election with 40.05 percent of the vote. 

Lai, along with his running mate Hsiao Bi-khim – Taiwan’s former representative to the United States – won a total of more than 5.5 million votes.  

Taiwan’s electoral system is based on first-past-the-post voting, awarding the victory to the presidential-VP pairing with the highest percentage of votes. 

Turnout on the self-ruled island was put at more than 70 percent with some 19.5 million Taiwanese eligible to vote. 

A favourite to succeed incumbent President Tsai Ing-wen, who is due to step down at the end of her second consecutive term in May, Lai’s win was in line with previous forecasts. 

Lai ran against the main opposition party’s – the Kuomintang – candidate Hou Yu-ih , who came in a close second with 33.5 percent of the vote and the Taiwan People’s Party’s Ko Wen-Je who trailed both candidates with only 26.5 percent. 

Speaking as last results trickled in, Lai told a press conference that the election was a victory for Taiwan’s democracy. 

“We are telling the international community that between democracy and authoritarianism, we will stand on the side of democracy,” he said. 

In an election framed as a choice between “peace and war” by China, which deems the DPP’s governance as “incompatible” with cross-strait peace, Lai’s victory comes at a crucial moment amid rising tensions between Taipei and Beijing. 


Claiming the island as part of its territory, Beijing responded to the election results by saying that “reunification” with Taiwan is still “inevitable”. 

The vote “will not impede the inevitable trend of China’s reunification”, Beijing’s Taiwan Affairs Office spokesperson Chen Binhua said in a statement carried by state news agency Xinhua.

President Joe Biden reiterated that the US is “not supporting” Taiwan’s independence, after Taiwanese voters rebuffed China and gave the ruling party a third presidential term.

Heir apparent  

Lai was sworn in as vice president in 2020 when Tsai won the presidential election.   

Labelled a separatist by Beijing, the winner in Taiwan’s presidential race has promised to stick to Tsai’s policy of maintaining the status quo, which avoids open declarations of independence while rejecting China’s sovereignty claims.   

“As president, I have an important responsibility to maintain peace and stability in the Taiwan Strait,” Lai said. 

“I will act in accordance with our democratic and free constitutional order in a manner that is balanced and maintains the cross-strait status quo under the principles of dignity and parity,” he added. 

Lai has said he hopes for a reopening of dialogue between China and Taiwan following almost eight years of Beijing’s near-complete refusal to communicate with leaders of the self-governing island. 

But he also pledged to build up the island’s military defence, indicating that he harbours no illusions.   

“At the same time, we are also determined to safeguard Taiwan from continuing threats and intimidation from China,” he said.  

Lai told the press conference that the Taiwanese people have “successfully resisted efforts from external forces to influence this election”. 

Read more‘People don’t want to talk about war’: Taiwan civil defence battles invasion risk denial

China relations 

Warning against continued DPP rule, China has upped the pressure on Taiwan ahead of elections by flying balloons in the Taiwan Strait and threatening trade measures against Taipei, which accused Bejing of “economic coercion”.  

“He [Lai] will carry on Tsai’s China approach: any dialogue with Beijing must be held with mutual respect and on an equal basis,” said Chang Chun-hao, professor of political science at Tunghai University in Taiwan.   

“The bottom line remains Taiwan’s sovereignty which they [Lai and the DPP] seek to guarantee by rejecting the 1992 consensus,” Chang said.    

The 1992 consensus refers to a tacit understanding between the Kuomintang (KMT) – which governed Taiwan at the time – and the Chinese Communist Party that both sides of the Taiwan Strait acknowledge that there is “one China”, with each side having its own interpretation of what “China” means. 

“Lai is looking to maintain the status quo … which [for the DPP] means China and Taiwan are two separate, sovereign nations,” said Chen Fang-yu, assistant professor of political science at Soochow University in Taiwan.    

Split parliament 

Meanwhile cross-strait relations would also depend on the government’s grip over parliament, which has greatly diminished with the election of numerous legislators from the KMT, Chang said. 

Taiwan’s legislative election was held simultaneously with the presidential vote with results showing a split parliament with no single majority.  

“The DPP performed quite badly in the legislative election, they’re going to meet heavy resistance from the blue party [KMT] in the next term of the Legislative Yuan,” Chang said. 

The KMT won 39 out of 113 seats in parliament compared to the DPP’s 38. 

“China, however, may find itself with new communication and exchange channels in Taiwan thanks to KMT legislators, which would help them in their goal of reunification,” he said 

“This [split parliament] also means uncertainty for domestic politics, which may increase the US’s doubts about Taiwan,” he added.  

While the tone for relations between Taiwan and China will partly be determined by Saturday’s outcome, the upcoming presidential election in the US will also play a huge role.  

“The 2024 US election is also crucial to cross-strait relations, whether it be Biden’s re-election or Trump’s return to power … this will play a big part in geopolitics between the US, China and Taiwan,” Chang said. 

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One Of These Seven People Is Likely To Win Taiwan’s High-Stakes Presidential Vote In 2024, Gallup Pollster Says

Gallup Market Research Taiwan pollster Tim Ting had a smile on his face and newspaper clippings spread across a conference room table next to his Taipei polling operation of 30 people on Friday. He predicted the Taipei mayor elections on Nov. 26 correctly; a rival Liberty Times poll was wrong on a number of counts, and the news reports prove it.

“I would quit if I had been that wrong,” the 68-year-old who has tracked Taiwan elections for three decades said in an interview. In closely watched local elections in one of the world’s top geopolitical hot spots and tech hubs, Taiwan’s ruling Democratic Progressive Party (DPP) won only five mayoral or county magistrate seats, compared with the previous seven, due to weak candidates and the wrong strategy, Ting said. The main opposition Chinese Nationalist Party, or Kuomintang (KMT), by contrast won 13 of 21 races.

Next up: Presidential elections in January 2024. Incumbent President Tsai Ing-wen, who ranked No. 17 on the latest Forbes list of the World’s 100 Most Powerful Women unveiled this month, can’t run again due to rules that limit her to two four-year terms.

What will likely be the big issues? China — though the differences among the candidates could be more perceived than real, Ting said. The DPP will play up its willingness to stand up against maland bullying; its economic policies would create more business distance between the two sides, Ting said. The KMT, though founded on the mainland in 1919, isn’t likely to promote a change in the status quo in the self-governing democracy of 24 million that Beijing claims sovereignty over. The KMT is strong in northern Taiwan, where many mainland families settled in the late 1940s after then KMT leader Chiang Kai-Shek lost a civil war to the Communist Party’s Mao Zedong and moved its capital to Taipei.

Taiwan has come a long way since, becoming the world’s No. 22 economy and a vital source of semiconductors. Local chip industry leader TSMC just last week said it would boost investment in Arizona to $40 billion — one of the largest outlays by a foreign company in U.S. history — in a ceremony attended by U.S. President Joe Biden. Politically, Taiwan has become a spirited democracy with a free press that contrasts starkly with the mainland. Biden has said the U.S. will aid Taiwan if Beijing attacks; Washington allies have also spoken up for Taipei since Beijing launched military exercises around the island after a visit by U.S. House of Representatives Speaker Nancy Pelosi in August.

Who’s in the mix of possible presidential candidates in 2024? It’s a far-flung group that includes one of Asia’s richest billionaires, two physicians, a popular talk show host, a long-time law enforcer, a former teacher at City University of New York, and a former human rights lawyer for Taiwan’s political opposition during the martial law era that ended in 1987. Here are seven likely contenders (in alphabetical order) named by Ting.

Eric Chu: Long-time KMT politician holds a PhD in accounting from New York University. Once taught at City University of New York, before returning to Taiwan to teach at National Taiwan University; later entered politics. Ran for president against Tsai Ing-wen in 2016 and didn’t come close. Chu is currently the KMT’s chairman, a good launching pad for a presidential run.

Terry Gou: Rags-to-riches, 72-year-old electronics billionaire worth $6.3 billion on the Forbes Real-Time Rich List ran for president in 2019, citing a message from sea goddess Matsu. Lost in the KMT primary. Image as a business success has recently been damaged by labor woes at his flagship Hon Hai Precision’s huge iPhone factory in China.

Hou You-yi: Top vote-getter on Nov. 26 triumphed as the KMT candidate in race for mayor of New Taipei City. Long career in law enforcement has bought success in high-profile cases. “I just always happened to be in the right place at the right time and did what I was supposed to do,” 65-year-old Hou has been quoted as saying. “That is all.” Pollster Ting, who holds a PhD in sociology from the University of Michigan, says the downside of Hou’s background could be a negative association with police that dates back to the days of Japanese colonial rule in 1895-1945.

Jaw Shao-kong: Popular talk show host at age 72 and former legislator with a graduate degree from Clemson University in mechanical engineering switched from KMT to China-friendly New Party in the 1990s; now with the KMT again. Could win party’s presidential primary with 30% to 40% of the votes if the rest of the field is divided, Ting said. He once led Taiwan’s Environmental Protection Agency.

Ko Wen-je: Holder of a PhD in clinical medicine from Taiwan’s prestigious National Taiwan University worked as a researcher in the surgery department at the University of Minnesota early in his career. Elected Taipei mayor in 2014 and 2018, has hit his term limits and couldn’t seek reelection last month. He formed and currently chairs the new Taiwan People’s Party, but it won only 1.5% of the city and county council seats up for grabs on Nov. 26. Media suggests he’s aligned with Gou.

Lai Ching-te: Lai, Taiwan’s current vice president, “has the best chance to win” the presidential election, Ting said. The son of a coal miner turned physician holds a master’s in public health from Harvard. Lai was premier before he joined the winning presidential ticket with incumbent Tsai in 2019, and is likely able to mobilize the DPP grassroots for a presidential run, Ting said. Lai announced his candidacy for DPP chairmanship on Dec. 8 after Tsai said she’d resign from that post to take responsibility for the party’s Nov. 26 election loss.

Su Tseng-chang: Party co-founder and former DPP chairman was a lawyer for opposition activists in Taiwan’s martial law era. Currently premier, 75-year-old Su offered to resign after the DPP’s defeat on Nov. 26. Safe though aging as a possible DPP presidential flag-bearer, Su hasn’t announced plans to run for president.

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@rflannerychina

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