In an announcement on Monday, Panama's government said it recognized there was "only one China in the world" and that Taiwan was an inalienable part of Chinese territory.
"The Panamanian government is today breaking its 'diplomatic ties' with Taiwan, and pledges to end all relations or official contact with Taiwan," according to the statement. The decision reduces to 20 the number of countries that recognize Taiwan rather than Beijing as representing China.
Panamanian President Juan Carlos Varela said in a televised address that it was the "correct path for our country."
"We have taken a historic step," Varela remarked. "Both countries opt for the connection of a world that is more and more integrated, which creates a new era of opportunities for a relationship that we are starting today."
A joint statement released on Monday evening confirmed that Panama and China were recognizing each other and establishing ambassador-level relations as of the same day.
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