"In accordance with the interests and aspirations of the two nations, China and Panama decided to establish diplomatic relations from the moment of signing the relevant communique," the ministry's statement read, adding that Beijing and Panama City agreed to respect each other's sovereignty and territorial integrity.
The sides also agreed on the mutual non-interference, stressing the need to develop friendly relations based on the principle of equality, mutual benefit and peaceful coexistence.
Earlier on in the day, Panama’s President Juan Carlos Varela said the Central American country was breaking diplomatic ties with Taiwan and establishing official relations with China.
Taiwan now has formal ties with 20 governments, 12 of which are Latin America and the Caribbean.
After Chinese Nationalist forces were defeated by Mao Zedong’s Communists, the Nationalist government moved to Taiwan in 1949. Since then, Beijing has viewed the self-ruled island as a breakaway province. The United States, along with many other countries, does not recognize Taiwan as a sovereign nation and sticks officially to the "One China" position, but has kept informal relations with the island after severing diplomatic ties with it in 1979.
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