The next signature is the real test

Beijing has made the purpose of its latest sanctions unusually clear: to warn others.

On Monday, China targeted Paraguayan Minister of Information and Communications Technology Gustavo Villate and Belizean Minister of Foreign Affairs Francis Fonseca over their countries’ ties with Taiwan. However, the real test is whether an official signs an agreement with Taiwan or a company decides to invest.

The Chinese Ministry of Foreign Affairs ordered the freezing of the two men’s assets in China and prohibited organizations and people there from dealing with them. It also barred them from entering China, Hong Kong and Macau.

Beijing accused the officials of supporting their countries’ diplomatic ties with Taiwan and engaging in actions it said harmed China’s core interests. It did not identify particular joint projects as grounds for punishment.

Both officials have helped translate diplomatic ties with Taiwan into practical cooperation. In May, Paraguay and Taiwan signed a memorandum to develop a sovereign artificial intelligence (AI) computing center, bringing together Paraguay’s electricity resources and Taiwan’s AI capabilities. Villate’s ministry has outlined a 10-megawatt facility; as of August, the project was still undergoing technical feasibility studies.

Beijing’s warning arrived while a potentially significant partnership was being developed, not after a completed facility had begun operating.

Last month, Fonseca and Minister of Foreign Affairs Lin Chia-lung (林佳龍) signed an agreement on diplomatic training. They also witnessed a separate letter of intent between the University of Belize and Taiwan’s International Cooperation and Development Fund to establish a Taiwan-Caribbean Academy. These initiatives aim to embed cooperation in training, education and professional institutions, rather than confining it to diplomatic ceremonies.

Neither the timing nor the sanctions orders prove that these projects prompted Beijing’s decision. Villate has linked the move to Paraguay’s technology cooperation with Taiwan, but that remains his interpretation. The broader risk is that officials who turn diplomatic recognition into working programs can become targets. Whether other decisionmakers respond by pulling back remains unproven.

The immediate political response was defiant. Villate called the sanction a “medal of honor” and pledged to press ahead with cooperation. Paraguay’s foreign ministry rejected China’s measures and reaffirmed support for Taiwan.

Such political defiance is important, but it cannot tell us how a future minister, university administrator or private investor would assess possible losses. Public resistance today can coexist with quieter hesitation tomorrow. An investor might worry about suppliers, approvals or customers even when a Taiwan-linked agreement remains lawful. An official might wonder whether signing it could expose domestic businesses to pressure. The chilling effect requires neither immediate punishment nor universal compliance, only enough uncertainty to influence the next decision.

The sanctions’ practical force depends on economic exposure. A prohibition on transactions within China might have little immediate effect on an official with no assets or business interests there. A company whose operations depend on Chinese suppliers or customers might calculate differently.

The WTO’s trade profile, drawing on UN Comtrade, shows that China accounted for 34.8 percent of Paraguay’s merchandise imports last year, or about US$6.66 billion. This indicates significant import exposure; it does not establish that particular inputs are irreplaceable or that the proposed AI center depends on Chinese components.

Lithuania illustrates a different form of pressure. Following its closer engagement with Taiwan, China restricted Lithuanian goods’ access to its market, affecting European companies exporting products containing Lithuanian inputs.

The European Commission documented the wider supply chain consequences. Unlike Paraguay’s possible vulnerability as an importer of Chinese goods, Lithuania faced barriers linked to China as a buyer. Neither experience means that the current personal sanctions have already produced comparable commercial disruption.

These measures follow the meeting between US President Donald Trump and Chinese President Xi Jinping (習近平), but high-level risk management does not necessarily restrain pressure on Taiwan’s diplomatic partners. Nor is there evidence that these sanctions were coordinated with separate Chinese military activities or designed specifically to alter Washington’s Taiwan policy.

Warning third-country partners is an identifiable objective in its own right. Taiwan’s response should be measured by whether cooperation continues. Taipei can map partners’ exposure to Chinese suppliers and markets, help identify alternatives where feasible, and support projects with demonstrable local benefits. Training arrangements should become durable programs; investment plans should survive changes in political leadership. Transparent milestones and feasibility assessments would also help partners defend cooperation on domestic economic grounds, rather than diplomatic symbolism alone.

Beijing can sanction a minister, but it cannot automatically dissolve an institution or cancel the value of a partnership. The next signature, next investment and next functioning project will reveal whether its warning has succeeded.

Chih-Cheng Meng is a Taiwan-based political scientist specializing in international political economy and US-China-Taiwan relations, with a doctorate in political science from the University of Texas at Austin.