Panama and China announced on Tuesday they were establishing diplomatic relations, as the Central American nation became the latest to dump Taiwan for closer ties with the world's second-largest economy.
Panama's Foreign Minister Isabel de Saint Malo, left, poses with Chinese Foreign Minister Wang Yi for a photo during a joint press briefing in Beijing Tuesday, June 13, 2017.
Wang said he was sure relations between the countries would have a "bright future".
A joint statement released in the evening said Panama and China were recognizing each other and establishing ambassador-level relations as of that same day.
US President Donald Trump set off a diplomatic firestorm before his inauguration by calling Taiwan's President Tsai Ing-wen - the first contact between a US president or president-elect and Taiwan's leaders.
Taiwanese businessmen are also encouraged to invest in allied countries, but after the cutting of ties, Taiwanese businessmen in Panama are now like orphans without protection, he lamented.
Taiwan now has formal ties with 20 governments, 12 of which are 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.
China has made intensive investments in recent years into Panama, which owes economically vital Panama Canal. Joseph Wu, the secretary-general of the office said Taiwan would not use money to compete on the diplomatic stage.
"It yielded to Beijing because of economic benefits, did a diplomatic turn in a very unfriendly way and deceived the government of the Republic of China (Taiwan) until the last minute", David Lee, Taiwan's foreign minister said.
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Panama is the second country to switch recognition to Beijing since Tsai took office a year ago, following Sao Tome and Principe in December.
Panama also agreed to recognize that there is only one China and that Taiwan is part of it.
China has a non-negotiable One-China policy and the government regards Taiwan as an integral part of it.
Taiwan would immediately end cooperation with and assistance for Panama, and evacuate embassy and technical personnel "in order to safeguard our national sovereignty and dignity", Lee said.
Beijing has lured away another of Taiwan's dwindling number of allies.
Cole said Taiwan needs to focus more on developing healthy relations with unofficial allies that are democracies and important economies, and not worry about maintaining official ties with small states which infrastructure investment Taiwan can not afford.
Jou said Panama was an important diplomatic ally of Taiwan because of its strategic position and its Panama Canal, the world's busiest transportation route.
China is the second-biggest user of the Panama Canal, the president said.
"By taking away Panama, it once again teaches Tsai's government the lesson that if she doesn't accept the "one China" principle ... there will be consequences".