Panama switches diplomatic recognition from Taiwan to China

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Isabel de Saint Malo, the foreign minister, signed a joint communique with her Chinese counterpart in Beijing, drank a champagne toast and said that she looked forward to "exporting more goods from Panama to China".

Infuriated over the establishment of diplomatic ties between China and panama, taiwan said on Tuesday it would rethink its relations with the mainland in the wake of this decision and also accused it of stoking confrontation.

Taiwan Foreign Minister David Lee speaks at the Foreign Ministry in Taipei on June 13, 2017. Such complementary strengths herald a bright future of fruitful cooperation.

Beijing views self-ruling Taiwan as a breakaway Chinese province and opposes any official ties between the island and other countries. China put forward a formula, known as "one country, two systems", under which Taiwan would be given significant autonomy if it accepted Chinese reunification.

Panama's moves leaves Taiwan with only 20 diplomatic allies in the world, mainly small nations in Latin America and the Caribbean.

Although China refused to form such ties during the previous administration of China-friendly president Ma Ying-jeou, it no longer has any such qualms, Tang said.

Taiwan's government said it would not compete with China in what it described as a "diplomatic money game".

Panama broke off diplomatic relations with Taiwan and switched to Beijing, accepting its "One China" policy, the countries announced Monday.

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"The Panamanian government is today breaking its "diplomatic ties" with Taiwan, and pledges to end all relations or official contact with Taiwan", the statement read.

Beijing has lured away another of Taiwan's dwindling number of allies.

Diplomacy is closely related to trade, and, in continuing to invest in Panama, China had gained the upper hand on Taiwan, said Chen Chih-chieh (陳至潔), an associate professor of National Sun Yat-sen University.

"Both nations are betting on a more interconnected world", Varela said in a possible allusion to Chinese economic involvement in the canal.

A woman walk pass next to Panama flags a day before the inauguration of the Panama Canal Expansion project, in Panama City, Panama June 25, 2016.

The loss of Panama is meant to show Tsai that continued defiance of Beijing will harm Taiwan's overall interests, said Zhang Baohui, director of Center for Asian Pacific Studies at Lingnan University in Hong Kong.

China considers the self-governed island as part of its territory.