Taiwan president accuses China of ‘dollar diplomacy’ after country loses recognition from largest Pacific ally

Taiwan’s president on Monday accused China of “dollar diplomacy” after the Solomon Islands, one of the few remaining countries to recognize Taiwan, switched allegiance to China.

The Solomon Islands, located directly between Australia and the U.S., is the sixth country to cut ties with Taiwan since President Tsai Ing-wen took office in 2016.

FILE: Ships are docked offshore in Honiara, the capital of the Solomon Islands. 

FILE: Ships are docked offshore in Honiara, the capital of the Solomon Islands.  (AP)

“Over the past few years, China has continually used financial and political pressure to suppress Taiwan’s international space,” Tsai told reporters in Taipei, according to Reuters. “I want to emphasize that Taiwan will not engage in dollar diplomacy with China in order to satisfy unreasonable demands.”

Most countries recognize Beijing today, with only 16 countries – mostly less-developed nations in the Pacific and Central America – recognizing Taiwan. Of those, the Marshall Islands and Palau have close ties with the U.S. and are unlikely to switch allegiance anytime soon. But experts say Kiribati, Nauru and Tuvalu could soon switch.

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James Batley, a researcher at the Australian National University and a former Australian high commissioner in the Solomon Islands, said the move didn't come as a surprise.

"The sense in Solomon Islands is that there are significant resources on offer here from China, and they want to move with the times and on the side of history," he said.

But he said the Solomons needs to be careful not to get into serious debt to China, particularly as, even before the switch, it was looking to take out big loans to fund infrastructure projects, including a hydroelectric dam.

Customers shop for vegetables at the Honiara Central Market in Honiara, the capital of the Solomon Islands. 

Customers shop for vegetables at the Honiara Central Market in Honiara, the capital of the Solomon Islands.  (AP)

China, meanwhile, said it welcomed the Solomon Islands into its Pacific family.

"China highly commends the decision of the Solomon Islands' government to recognize the one-China principle and sever the so-called 'diplomatic ties' with the Taiwan authorities," Foreign Ministry spokeswoman Hua Chunying said in a statement.

China considers Taiwan to be part of its territory and wants to bring the island back into its fold. Taiwan split from mainland China during a civil war in 1949 and set up a rival government to the Communists in Beijing.

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With a population of 660,000, the Solomon Islands were Taiwan's largest remaining ally in the Pacific. Its economy relies on agriculture, fishing, and forestry, and the country has a wealth of undeveloped mineral resources.

U.S. Republican Sen. Marco Rubio said the U.S. shouldn't stay silent.

"The Solomon Islands has officially become the latest nation to bow to Chinese gov't pressure and sever ties with Taiwan," Rubio tweeted. "The U.S. and Int'l community must push back against Beijing's bullying and efforts to isolate #Taiwan."

He later tweeted that he would explore "ways to cut off ties with #SolomonIslands including potentially ending financial assistance & restricting access to U.S. dollars & banking."

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Professor Anne-Marie Brady, an expert on China at the University of Canterbury, said the blow to Taiwan wasn't as big now as it might have been in the past. She said that's because Taiwan has managed to forge unofficial relations with dozens of countries and the European Union as part of a more pragmatic approach to its diplomacy.

The Associated Press contributed to this report.