Switching Sides: Diplomatic Recognition, Trade Realignment, and Democratic Resilience in the Taiwan–China Divide

ABSTRACT This paper investigates how switching diplomatic recognition from Taiwan to China reshapes trade relations and democratic governance in small developing states. Using a mixed‐methods approach, the study draws on panel data and case studies of eight countries that severed ties with Taiwan in favor of Beijing. The Recognition Realignment Framework (RRF) posits that recognition shifts correlate with structural changes in trade flows and exerts asymmetric pressure on domestic institutions. Quantitative analysis confirms that trade with China increases sharply post‐switch, as trade with Taiwan declines. However, the degree of democratic erosion or institutional continuity varies. Countries with stronger democratic institutions tend to undergo more gradual and contested transitions, whereas those with weaker systems experience accelerated realignment and greater political volatility.