Taiwan Fights to Maintain Allies

GUATEMALA CITY -

Taiwanese President Chen Shui-bian encouraged his allies on Monday to open trade offices in China as well as maintain diplomatic ties with Taiwan.

In an exclusive interview with The Associated Press, Chen also said he would step back from the presidential campaign after a landslide defeat in Taiwan over the weekend. On Saturday, Chen's Democratic Progressive (nyse: PGR - news - people ) Party was devastated by the Nationalists in legislative elections, winning only 27 of 113 seats.

On March 22, the DPP's Frank Hsieh goes up against Ma Ying-jeou of the Nationalists in a presidential contest that Ma is heavily favored to win.

Malawi's break is a substantial setback for the island's already fragile diplomatic standing, reducing its declared allies to 23. Most are small and impoverished nations in Latin America, Africa and the South Pacific.

Chen expressed confidence that his island's remaining allies would not switch allegiance to China, and said opening commercial offices in Beijing would not affect relations with Taiwan.

"You don't need an embassy to do business with China, just a commercial office" he said.

He added that he had met with several allies and they had "reiterated and stressed that they would strengthen diplomatic ties with Taiwan."

Taiwan uses foreign relations to press the case that it is a sovereign nation, but in recent years it has been losing allies to mainland China. The two split amid civil war in 1949.

More than 170 countries now recognize Beijing, and in recent years the communist colossus has been leveraging its growing political and diplomatic clout to increase its advantage.

Malawi is the third Taiwanese ally to defect to Beijing in the past 18 months. Chad switched sides in August 2006 and Costa Rica followed suit last June.