Taiwan’s dollar diplomacy doomed to end in failure

By Song Wei Source:Global Times Published: 2018/5/27 22:03:39

Illustration: Luo Xuan/GT

The African country Burkina Faso on May 24 declared it would break off diplomatic relations with Taiwan. On May 26, State Councilor and Foreign Minister Wang Yi and Alpha Barry, the foreign minister of Burkina Faso, jointly signed a communique to resume diplomatic ties. It showed the limitations of Taiwan's dollar diplomacy.

Foreign assistance without economic and trade relations is hard to maintain, when it comes to projects. But Taiwan has only one purpose, which is to maintain the number of so-called "diplomatic alliances" while offering foreign aid. It does not pay attention to the development of economic and trade relations.

Red broomcorn is the main agricultural product of Burkina Faso. Taiwan invested $3.9 million in Burkina Faso in 2006 to carry out a cooperation project, together with Germany, to experiment with making medical disinfectants with broomcorn. The experiment succeeded in 2009.

However, the project came to a stop before commercial production. Without using aid as leverage to mobilize commercial capital, projects can hardly develop and progress due to the lack of a market operation mechanism. The assistance projects will end up as "isolated islands" on the industrial chain, with no connections to upper- and lower-steam industries.

Assistance not aimed at promoting local economic development will not build solid economic and trade relations. Taiwan's foreign assistance model has the goal of gaining more "diplomatic" partners. Capital with a commercial purpose or on the private level has a hard time to get involved. 

Trade between Taiwan and Burkina Faso was only $13 million in 2015, while bilateral trade between the Chinese mainland and Burkina Faso was $395 million. There are only 30 small and medium-sized Taiwan companies doing business in Burkina Faso, but at least 600 mainland-based companies including Huawei and ZTE are actively cooperating with local businesses and creating "employment miracles."

Similar situations can be seen in some other countries that are considered Taiwan's "iron friends." The "foreign relations" bought by Taiwan don't last because they do not have a solid base at the private level.

The mainland has a different foreign assistance model. Foreign assistance, foreign investment and foreign trade are deeply intertwined. These three channels are in line with the mainland's image as well. They have a common function and logic, serving as necessary conditions to promote economic development.

The China International Development Cooperation Agency was inaugurated in April, meaning the country's assistance to Africa has moved to a new level. To build a community of shared future for China and Africa, foreign assistance, foreign investment and foreign trade must be integrated, with better allocation of resources and a goal of expanding the effects of development achievements. This approach helps with poverty reduction and government modernization, and it also injects long-lasting dynamism into sound Sino-Africa relations.

There are only 18 "diplomatic allies" left for Taiwan. It is hard to tell who will be the next to break "diplomatic" ties with Taiwan, but its dollar diplomacy surely has a gloomy future.

The author is an associate researcher with the Chinese Academy of International Trade and Economic Cooperation. bizopinion@globaltimes.com.cn


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