Taiwan is accusing China of using financial coercion to isolate it diplomatically, while the U.S. counters with legislation to support Taipei’s allies.
At a Glance
- Taiwan accuses China of using economic incentives to undermine its diplomatic relationships
- China is leveraging foreign aid and trade coercion to pressure countries to abandon Taiwan
- U.S. lawmakers are responding with a $120 million aid package for Taiwan’s allies
- Several nations are rethinking their alignment as criticism of China’s strategy intensifies
Beijing’s Economic Leverage Strategy
Taiwan’s government has launched pointed accusations against China, alleging a concerted campaign of financial coercion aimed at stripping Taipei of its diplomatic allies. According to Taiwanese officials, Beijing is using foreign aid and trade benefits to lure developing nations into severing formal relations with Taiwan in favor of recognizing the People’s Republic of China.
The approach—offering economic carrots while wielding punitive trade sticks—mirrors past CCP strategies used to exert influence across the Global South. As Ranking Member Krishnamoorthi stated, “Their attempts to intimidate and influence countries who diplomatically recognize Taiwan and economically coerce those who seek to strengthen unofficial relations must be condemned and rejected.”
Watch a report: Standing United Against PRC’s Economic Aggression.
Examples of this pressure abound. As detailed by the Center for Strategic and International Studies, Beijing has used import bans on items like Philippine bananas and Norwegian salmon as political tools. Taiwan has experienced similar tactics, especially during its 2024 election cycle, with China targeting Taiwanese agricultural exports and processed food goods for maximum political effect.
U.S. Legislators Push Back
In a sharp response to Beijing’s playbook, a bipartisan group of U.S. lawmakers introduced the Taiwan Allies Fund Act. This legislation earmarks $120 million in financial assistance to help Taiwan’s remaining diplomatic partners resist Chinese pressure. “[Our bill] will help Taiwan’s diplomatic allies resist CCP authoritarian pressure campaigns while meeting their development needs,” said Chairman Moolenaar.
This move signals a more aggressive U.S. posture in defending Taiwan’s international space, building on recent trends of closer cooperation between Washington and Taipei. Representative Gerry Connolly added, “The PRC’s attempts to intimidate friends of Taiwan must never go unanswered. Today, we speak with one voice in support of our friend and partner, Taiwan.”
Global Momentum Against Coercion
The effectiveness of China’s coercive tactics may be eroding. Growing awareness of Beijing’s aggressive influence methods has prompted some countries to reassess their alignment. According to a Global Taiwan Institute report, China’s targeting of specific regions within Taiwan with strategic trade bans has sparked domestic backlash and international concern.
What once seemed like unstoppable economic influence is now meeting bipartisan resistance and cross-border solidarity. “[China’s ambition for Taiwan] wraps around agriculture, farmers, and products like a net,” said one analyst, describing the CCP’s all-encompassing pressure.
If the trend continues, China’s bid to erase Taiwan diplomatically may backfire—especially if more countries interpret Beijing’s actions as a threat to their own sovereignty.
With the Taiwan Allies Fund Act poised for passage and resistance growing globally, the CCP’s tactics may face their stiffest challenge yet. The diplomatic battle over Taiwan is entering a new and more confrontational phase—one that could redefine the rules of engagement for small democracies resisting authoritarian power.
