Panama has switched diplomatic relations from Taiwan to China, handing a huge victory to Beijing in its drive to isolate the self-governing island it claims as its own territory.

Panama’s president, Juan Carlos Varela, announced the change – which entails breaking off formal relations with Taiwan – in a televised address, saying it represented the “correct path for our country”.

A joint statement released on Monday evening said Panama and China were recognising each other and establishing ambassadorial-level relations the same day.

“The government of the republic of Panama recognises that there is but one China in the world, that the government of the People’s Republic of China is the sole legal government representing the whole of China, and that Taiwan is an inalienable part of China’s territory,” the statement read.

“The government of the Republic of Panama severs ‘diplomatic relations’ with Taiwan as of this day and undertakes not to have any more official relations or official exchanges with Taiwan.”



China has been seeking to punish Taiwan after President Tsai Ing-wen’s election victory last year. Tsai is sceptical of closer ties to Beijing and has declined to endorse China’s view that Taiwan and the mainland are part of a single Chinese nation.

“Beijing has made it clear they want to pressure Taiwan and try to diplomatically isolate it as a form of punishment,” said J Michael Cole, a senior fellow at the University of Nottingham’s China Policy Institute. “But in no way was Panama crucial to Taiwan existing as a sovereign state, and trade and investment between the two will continue.”

Panama had been among the largest economies to have maintained diplomatic relations with Taiwan. The island now has just 20 formal diplomatic partners, 12 of which are in Latin America and the Caribbean. The island is also excluded, at China’s insistence, from the United Nations and many other multinational bodies.

At the Diaoyutai state guesthouse in Beijing on Tuesday, the Chinese foreign minister, Wang Yi, and the Panamanian vice-president and foreign minister, Isabel de Saint Malo, signed a joint communique establishing diplomatic relations.

Wang said he was sure relations between the countries would have a “bright future”. De Saint Malo said she hoped the new relationship would lead to trade, investment and tourism opportunities, in particular “exporting more goods from Panama to China”.

“[Chinese president] Xi Jinping wants to show he is tough on Taiwan, especially in the lead-up to the Communist party congress [in October],” Cole said. “It plays well with the Chinese domestic audience and hardliners, but it will only alienate the Taiwanese public.”

A recent poll by Taiwan’s government found 73% rejected the idea that Taiwan and the mainland belonging to one China is a precondition for political negotiations.

China and Taiwan split during civil war in 1949 and Beijing has vowed to take control of the island by force if necessary. While the sides have maintained an undeclared diplomatic truce for much of the past decade, relations have deteriorated under the Taiwanese president.

In the past year China has increased the diplomatic pressure on Taiwan, barring its representatives from attending the World Health Organization’s annual conference and other international gatherings.

Beijing cut contacts with Taiwanese government bodies a year ago, and recently sailed an aircraft carrier strike force around the island.

Taiwan’s ministry of foreign affairs said in a statement that in breaking ties, President Varela had ignored the friendship between their countries and Taiwan’s efforts to help Panama’s development. Panama had “submitted to the Beijing authorities for economic benefits” and “lied” to the government of Taiwan, the statement said.

Taiwan would immediately cut ties, cease all bilateral cooperation projects and pull its diplomatic staff and technical advisers out of the country, the ministry said, adding that it would not “engage in competition for money diplomacy with the Beijing authorities”.

“We express our strong protest and condemnation over the Beijing authorities luring Panama into breaking ties with us, oppressing our diplomatic space to manoeuvre and harming the feelings of the Taiwanese people,” the statement said.

Beijing and Taipei have long competed to win diplomatic recognition, at times enticing small or poor countries with the promise of millions of dollars for public works projects.

China is the second-biggest client of the Panama Canal and the leading provider of merchandise to a free-commerce zone in the Panamanian city of Colon.

