China on Wednesday welcomed Sao Tome and Principe's decision to sever ties with Taiwan, a move that comes after President-elect Donald Trump questioned long-standing US policy towards the self-ruled island.

Taiwan, stung by the loss of one of its few allies, accused Beijing of taking advantage of the small West African nation's financial woes to impose its "One China" policy and said the move would destabilise already tense cross-strait relations.

Tensions between the mainland and Taiwan have risen since a highly unusual call from President Tsai Ing-wen to congratulate Trump, who has questioned Washington's policy towards the island.

Beijing welcomed Sao Tome's decision, but made no reference to establishing diplomatic relations with the African nation.

"We welcome Sao Tome and Principe back onto the correct path of the One China principle," the Chinese foreign ministry said in a statement.

"The One China principle meets the common aspiration and the trend of the times," foreign ministry spokeswoman Hua Chunying told a regular press briefing, when asked about the split.

The principle, she added, "is the precondition and political foundation for China to maintain relations with other countries."

Taiwan's Foreign Minister David Lee strongly criticised Sao Tome's move, saying it was seeking "astronomical" financial assistance, which Taipei refused.

"Ignoring nearly 20 years of friendship between the two countries by wavering between both sides of the strait in hope for a better deal, we express deep regret and condemn such a reckless and unfriendly decision and action by the Sao Tome government," Lee said at a press conference.

"We take a practical approach to diplomacy, and we won't engage in any money games."

The small west African nation's split comes almost two decades after it officially recognised Taiwan in 1997, when it severed relations with China.

- Diplomatic tug-of-war -

Sao Tome's decision leaves Taiwan with formal diplomatic ties to only 21 states, including just two in Africa, and the Vatican -- its highest profile supporter.

For years, China and Taiwan have been locked in a bitter diplomatic tug-of-war, luring away each other's allies with generous financial packages in so-called "chequebook diplomacy".

But Lee said Beijing should not take advantage of countries' financial circumstances to impose its "One China" policy.

"This kind of action does not contribute to stability in cross-strait relations," he said.

Washington's adherence to the "One China" policy has been questioned by Trump, who suggested he could use recognition of the island as a bargaining chip to extract trade deals from Beijing.

"I don't know why we have to be bound by a One China policy unless we make a deal with China having to do with other things, including trade," he told Fox News earlier this month.

Diplomatic tussles between China and Taiwan had eased under Taiwan's previous Beijing-friendly government, but two months after Tsai's China-sceptic Democratic Progressive Party (DPP) won landslide elections in March, China recognised Taiwan's former ally Gambia.

Tsai is preparing for a trip next month to meet diplomatic allies in Latin America, and she is expected to pass through the United States, which may irk China.

In an editorial following the announcement, the Global Times newspaper, which has close ties to China's ruling Communist Party, warned that Taiwan's DPP was committing "diplomatic suicide."

The loss of Sao Tome's support it said is "obviously a punishment... for challenging the One China principle," adding if the DPP does not changes its ways "it's going to have diplomatic relations with 0 countries."