"Panama succumbed to Beijing's influence for the sake of economic interest, informing Taiwan on a unilateral rupture of diplomatic relations, what we regret and what we are outraged by," Lee told a press conference as quoted by the CNA news agency, adding that Taiwan would cut all contacts and cooperation with Panama and pull out its diplomatic staff from the country.
Earlier on Tuesday, 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, democratic 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.