Panama Ends Ties with Taiwan, Recognizes New ‘One China’ Relationship
Panama, one of the few countries to recognize Taiwan’s sovereignty, has cut ties with the island and forged relations with China, adding there there was “only one China” of which Taiwan was a part.
HSBC Global Research Resources
China and the World: New Frontiers, Fresh Connections
China's role in the global economy keeps expanding, and over the past 25 years, it has gone from 11th largest to second, the country’s economy is now 60% that of the US, and that means its role in determining global demand is critical, however,…
- All Resources
We deliver high-quality, award-winning research and analysis to investors around the world. With more than 600 staff in 23 developed and emerging countries, we cover economics, currencies, fixed income, equities, asset allocation, quantitative research, and climate change.
- Company Quicklook
Panama has established diplomatic ties with China and broken with Taiwan in a major victory for Beijing, as it lures away the dwindling number of countries that have formal relations with the self-ruled island.
Panamanian President Juan Carlos Varela said in a televised address on Monday that Panama was upgrading its commercial ties with China and establishing full diplomatic links with the second most important customer of its key shipping canal.
"I'm convinced that this is the correct path for our country," Varela said.
Taiwan's government said it was sorry and angry over Panama's decision, and it would not compete with China in what it described as a "diplomatic money game".
"Our government expresses serious objections and strong condemnation in response to China enticing Panama to cut ties with us, confining our international space and offending the people of Taiwan," David Lee, Taiwan's minister of foreign affairs, told a briefing in Taipei.
Taiwan would immediately end cooperation with and assistance for Panama, and evacuate embassy and technical personnel" in order to safeguard our national sovereignty and dignity", Lee said.
Panama’s reversal may be linked to China’s massive investment in the country; Beijing has spent billions of dollars in the area around the Panama Canal.
China state firms eye land around Panama Canal
Chinese state firms have expressed an interest to develop land around the Panama Canal, the chief executive of the vital trade thoroughfare said, underlining China's outward push into infrastructure via railways and ports around the world.
The Panama Canal Authority will officially open a tender to develop about 1,200 hectares of land - roughly the size of 1,200 football fields - around the waterway by the end of this year into a logistics park, after completing a five-year-long decontamination of the area, Chief Executive Jorge Quijano said.
"We have been talking to people here in China," Quijano told Reuters ahead of a meeting with the canal's advisory board in Shanghai. China Communications Construction Corp, its subsidiary China Harbour Engineering Company and China Railway Group have shown interest in the project, he added.
This comes at a time when China is urging its companies to invest in infrastructure overseas as part of Beijing's "One Belt, One Road" initiative to improve global trade links.
China is deeply suspicious of Taiwan President Tsai Ing-wen, who it thinks wants to push for the island's formal independence, although she says she wants to maintain peace with Beijing.
China and Taiwan have tried to poach each other's allies over the years, often dangling generous aid packages in front of developing nations, although Taipei struggles to compete with an increasingly powerful China.
Panama is the second country to switch its recognition to Beijing since Tsai took office last year, following a similar move by Sao Tome and Principe in December, trimming to 20 the number of countries that formally recognise Taiwan.
Related China Trade White Papers
China Trade Operations: Trends and Advancements
While over 77% of companies are currently operating in China, the majority are unable to address the dynamic and complex trade environment - this Aberdeen Group report provides in-depth insights into the complexities of China trade operations. Download Now!
China and the World: New Frontiers, Fresh Connections
China's role in the global economy has gone from 11th largest to second, the country’s economy is now 60% that of the US, China’s relationship with the world is changing, this report sets out to examine these changes and what they mean for China and the rest of the world. Download Now!
The Keys to Effective China Trade Operations
China’s dominance as the world’s top country for sourcing hasn’t swayed under the pressures that have been the topic of discussion in the boardroom, on the campaign trail, around the dining room table, or during trade negotiations in nearly every country around the world. Download Now!
2016 Global Manufacturing Competitiveness Index
With the release of the 2016 Global Manufacturing Competitiveness Index (GMCI), Deloitte Touche Tohmatsu Limited (Deloitte Global) and the Council on Competitiveness (the Council) in the US build upon the GMCI research, with prior studies published in 2010 and 2013. Download Now!
U.S.-To-China B2c E-Commerce: Improving Logistics to Grow Trade
Merchants should carefully design their logistics strategy to promote the greatest efficiency and profits while addressing customers’ expectations and needs, based on factors such as their product mix, target geography, demographic segment, product price points, returns strategy, and more. Download Now!