Taiwanese Vice President William Lai has arrived in Paraguay after a stopover in the US to attend the inauguration of new Paraguayan President Santiago Pena on Tuesday.
Paraguay is one of the only 13 countries that maintain official diplomatic ties with Taiwan.
Lai, a member of the center-left Democratic Progressive Party, is a frontrunner ahead of Taiwan's presidential vote next year.
His trip to Paraguay after a stopover in the US has sparked fears it could spur more Chinese military drills near Taiwan.
Beijing, which claims the self-ruled territory as its own, has repeatedly staged military exercises in the waters off the island to press its claim of sovereignty.