Paraguay is one of only 14 nations globally that retains diplomatic ties with Taiwan and the only South American country to do so. China, which considers Taiwan one of its provinces and not a county, has convinced a number of the island's allies to shift allegiance in recent years, the last being Nicaragua in December.
The comments came after the Financial Times cited Paraguayan President Mario Abdo saying the country was seeking $1 billion in investment from Taiwan to maintain ties. Abdo is under pressure from soy and cattle farmers who want access to China.
The foreign ministry said that while Abdo had encouraged more investment, there was no "quid pro quo" and Paraguay maintained "excellent diplomatic, political and friendly ties" with Taiwan, a relationship that goes back over six decades.
"At no time during the interview did the President refer to conditioning the relationship with Taiwan, much less subjecting it to some amount," the ministry said in a statement.
Taiwan's foreign ministry spokeswoman Joanne Ou said in a press conference on Thursday that officials from the two sides had talked to "clear things up" and reiterated that there were no strings attached to the relationship.
"Our country's government will continue to encourage Taiwanese companies to invest in Paraguay," Ou said, adding the country was politically stable and had a good investment environment.
China has increased military and political pressure on Taiwan to accept its sovereignty claims, drawing anger from the democratically ruled island, which has repeatedly said it would not be bullied and has the right to international participation.
China says the island's allies remain with Taipei only due to pressure from Washington and so-called "dollar diplomacy".
(Reporting by Daniela Desantis in Asuncion and Ben Blanchard in Taipei; Editing by Adam Jourdan, Alexandra Hudson)
By Daniela Desantis and Ben Blanchard
