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By Daniela Desantis and Lucinda Elliott
ASUNCION (Reuters) -Paraguayan President Santiago Pena said on Wednesday he was "fully open" to trade deals with China via the South American trade bloc Mercosur, despite his country's diplomatic ties with Taiwan.
Paraguay's long-standing diplomatic support for Taiwan has hindered local farmers' grains exports to China, which claims sovereignty over the democratically governed island. Paraguay is the only South American country with formal relations with Taiwan, which objects to China's sovereignty claims.
Mercosur, a customs union that includes Brazil, Argentina and Uruguay, has been in talks to finalize a trade deal with the European Union, but has also discussed a potential trade deal with China.
"Our position with China is one of total openness," Pena said of Paraguay's position within Mercosur, adding that the obstacle was China not accepting its recognition of Taiwan.
"We are in favor of advancing trade agreements," he added in an interview with Reuters.
China hopes the Paraguayan government will "stand on the right side of history", its foreign ministry spokesperson Mao Ning said at a regular news briefing on Thursday.
Mao said China views trade and economic cooperation with Mercosur nations and other Latin America countries as important.
Taiwan's foreign ministry told Reuters that Pena has repeatedly and publicly expressed his support for their ties, and his consistent support for Taiwan cannot be questioned.
"In the face of China's habit of unfairly dumping goods on other countries, we believe that Mercosur member states will carefully assess their economic and trade relations with China," it said in a statement.
Mercosur officials held a dialogue with Chinese counterparts on Aug. 12 in Uruguay's capital.
"I see prudence on Brazil's side," Pena said of a possible China agreement, which he said he supported. "I think that the most interested is Uruguay and we accompany this effort to have a conversation as a bloc."
(Reporting by Daniela Desantis and Lucinda Elliott; Additional reporting by Colleen Howe in Beijing and Ben Blanchard in Taipei; Editing by Adam Jourdan, Rosalba O'Brien and Bernadette Baum)
