China-Taiwan relations have been for decades a hot issue in East Asia as well as worldwide. The thesis researches on the China’s foreign policy toward Latin America and the Caribbean region in terms of competition with Taiwan for diplomatic recognition from the perspective of zero-sum and non zero-sum game. This study’s objective is to examine the impact of recently improved cross-Strait relations on the intensity of diplomatic competition for recognition in Latin America and the Caribbean between both sides of the Strait. Two following questions are going to be answered: Is a complete victory in diplomatic competition in Latin America and the Caribbean region a short-term goal for the PRC? How can China’s refusal of its diplomatic recognition by Paraguay be interpreted? First, literature review and theoretical framework is provided. Second, China’s and Taiwan’s policy towards Latin America and the Caribbean is researched. Third, cross- Strait rapproachement is depicted. Fourth, relations between the PRC and Taiwan after year 2005 are presented. Fifth, three case studies of Costa Rica, Panama, Paraguay are discussed. In the study I am going to look for evidence to prove that the rapprochement and the new cross-Strait diplomacy are good signs of non-zero sum game between Taiwan and China with a significant impact on diplomatic competition in Latin America and the Caribbean region. To fulfil the aim of this master thesis I am using secondary data. The scope of the paper in terms of the time period is from the establishment of the PRC but the bigger part of the paper is focused on the recent events.