China delivered another diplomatic punch to Taiwan on Tuesday by establishing relations with Panama at the expense of Taipei, further isolating the island's Beijing-sceptic government.

China, which considers self-ruled Taiwan a renegade province waiting to be reunited with the mainland, has been infuriated by President Tsai Ing-wen's refusal to acknowledge the island is part of "one China", unlike her predecessor Ma Ying-jeou.

Panama is the third country to switch allegiances to China since Tsai's Democratic Progressive Party was swept to power last year, China's nationalistic Global Times reported, warning more would follow in a "domino effect".

"This is the cost the Tsai administration needs to pay," the newspaper said in an editorial.

Chinese Foreign Minister Wang Yi and his Panamanian counterpart Isabel Saint Malo de Alvarado toasted with champagne in Beijing after signing a communique formalising the establishment of diplomatic relations while angering Taiwan.

"This is a historic moment, China-Panama relations have opened a new chapter," Wang said, adding that Panama's decision was in "complete accordance" with its people's interests and "in keeping with the times".

Saint Malo said Panama and China had made an "important step" and started a "new page in our strategic relations"

After decades of siding with Taiwan, Panama now "recognises that there is only one China in the world" and that Taiwan is part of Chinese territory, said the joint communique.

While the Central American country is small, the Panama Canal canal is a crucial gateway for global trade between the Pacific and Atlantic oceans.

- 'Teach a lesson' -

The latest move infuriated Taiwan, which is still recognised by around 20 mostly small and economically weak countries, including Haiti, Tuvalu and Burkina Faso.

"Beijing's action has impacted the stable cross-strait status quo. This is unacceptable for the Taiwanese people and we will not sit back and watch our country's interests being repeatedly threatened and challenged," Tsai told reporters in Taipei.

"As the president, maintaining national sovereignty is my biggest responsibility. Greater challenge will bring stronger will. Taiwanese people's faith should not and will not be defeated easily. We will not be shaken."

Diplomatic tussles between Taiwan and Beijing eased under the island's previous Beijing-friendly government, but relations have deteriorated since Tsai took office.

China "is seeking to undermine President Tsai while intimidating Taiwan by narrowing its international space," said Michael Cole, Taipei-based senior fellow with the China Policy Institute at the University of Nottingham.

Cross-strait tensions have been further exacerbated by a highly unusual call from Tsai to congratulate then US President-elect Donald Trump.

Trump questioned Washington's policy towards the island, including its decision to not formally recognise its government, but later reiterated Washington's One China policy.

"I think the phone call has reinforced Beijing's determination to teach Taiwan a lesson," said Willy Lam, an expert on politics at the Chinese University of Hong Kong.

- Panama Canal -

Two months after Tsai's election win in January 2016, China recognised Taiwan's former ally Gambia, ending an unofficial diplomatic truce between the two sides.

In December China signed an agreement to restore diplomatic relations with Sao Tome and Principe after the African nation ditched the island.

Panamanian President Juan Carlos Varela announced his decision in a nationally televised address.

The announcement came after Beijing began construction last week of a container port, with natural gas facilities, in Panama's northern province of Colon.

Panama had long stressed it had diplomatic ties with Taipei and commercial ones with Beijing.

Chinese ships, after those from the United States, are the number two users of the Panama Canal, the Central American country's main source of budget revenue.

"It's about who can give the most," said Carl Thayer, an emeritus professor of politics at the UNSW Canberra college in Australia. "Taiwan has resources but it can't match China."

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Panama cuts ties with Taiwan, switches to China
Beijing (AFP) June 13, 2017
Panama and China announced 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. The move prompted an angry response from Taiwan and will likely further strain ties between Taipei and Beijing, which considers the self-ruled island a renegade province awaiting reunification ... read more

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