China’s strategy vis-a-vis taiwan’s diplomatic friends: Is beijing using dollar diplomacy?

Abstract

The article responds to the argument that Beijing has been using economic incentives to cause recipient nations to switch their diplomatic allegiances, which ultimately means breaking off ties with Taiwan and recognizing the PRC. It can be concluded that the empirical data confirm China’s use of dollar diplomacy. In the case of most of the analysed countries capital flows and economic benefits were provided shortly before diplomatic ties were established. For all of the countries, their diplomatic recognition of the PRC enabled rich economic, trade, and development links with China. However, the volumes of capital flows were unstable and the awarding of economic advantages was not automatic and even in states which saw the biggest input of capital and the most lucrative economic deals, China’s use of dollar diplomacy leaves several questions.