Panama has cut long-standing diplomatic ties with Taiwan and established relations with China instead. The government said it recognised there was “only one China” and that it considers Taiwan part of it.
China regards Taiwan as a breakaway province that it insists should be reunited with the mainland.
Panama is the latest among the handful of countries that had maintained ties with Taipei instead of Beijing to switch sides.
In December last year, the African island of Sao Tome and Principe made a similar move. Now only 20 countries maintain ties with Taiwan.
In recent years China has intensified its economic investment into the Central American country – home of the economically vital Panama Canal.
Taiwan’s foreign ministry expressed anger and regret over Panama’s decision and said it would not compete with Beijing in what it called the diplomatic money game. It was as recently as June last year that Taiwan’s President Tsai Ing-wen visited Panama.
The United Nations in 1971 switched diplomatic recognition to Beijing’s People’s Republic of China (PRC) and most countries have since followed that lead in order not to antagonise the resurging economic giant.
Many of Taipei’s remaining backers are small island states or in Central and South America – regions that so far had few economic ties with China.
Given China’s rapid growth as economic and political superpower, it has been increasingly easier for Beijing to sway countries to their side.
In the case of Sao Tome, Taiwan’s foreign ministry condemned the move, alleging the island nation demanded a huge amount of financial support.
Panama did not give any reason as to why it changed its diplomatic allegiance but there has been growing economic cooperation with China over the past years.
Chinese companies are developing ports in Panama and Chinese state firms are said to have expressed interest in developing the land around the Panama Canal once the country opens a tender for later this year.
The Panama Canal is a vital shipping route and as China expands its global trade ambitions with its One Belt One Road initiative, access to the eastern coasts of both South America and the US is expected to be of growing importance for Beijing.