Taiwan has condemned a decision by Sao Tome and Principe to sever official bilateral ties, making the West African nation the first of its remaining 22 diplomatic allies to do so after President Tsai Ing-wen took office in May.
Tuesday's move, which comes amid frosty ties between China and Taiwan, is seen by analysts and observers as a sign that Beijing is tightening the diplomatic noose around Taipei, which it regards as a breakaway province, for not acknowledging the "one China" principle.
Ms Tsai yesterday said Beijing's "suppression and obstruction of Taiwan's diplomatic and international participation has never stopped", citing as an example how Gambia was pressured to cut ties with Taiwan in 2013.
"Such actions will not help the long-term development of cross- strait relations. To deliberately isolate Taiwan and let it be ignored in the international arena will cause Taiwanese, who already feel aggrieved, to be more indignant," she said at a ruling Democratic Progressive Party (DPP) conference.
The latest development - and rife speculation that the Vatican may also cut ties with Taiwan - will no doubt put a damper on Ms Tsai's upcoming trip to Central America, where she is to visit Nicaragua, Guatemala, El Salvador and Honduras.
Despite the challenges, Ms Tsai said Taiwan will "only be stronger" as it engages in "pragmatic diplomacy" to strengthen its friendship with other countries. She also called on opposition parties to put aside their differences and unite at this "critical moment... to protect Taiwan's interests".
In remarks released by the Presidential Office, Ms Tsai told a Cabinet meeting that Taiwan will not "use money to compete with China in the diplomatic field".
The Presidential Office also accused Beijing of taking advantage of Sao Tome's financial woes to enforce the "one China" principle.
"This practice not only hurts the feelings of the Taiwan people, but also destabilises cross-strait relations," it said in a statement.
Sao Tome's decision to cut nearly 20 years of ties leaves Taiwan with only 21 diplomatic allies, most of them small and impoverished countries in Latin America, Africa and the Pacific that have benefited from Taiwanese financial aid.
Beijing welcomed the move.
"China expresses appreciation of this, and welcomes Sao Tome back onto the correct path of the 'one China' principle," the Foreign Ministry said in a statement yesterday. But Beijing did not say explicitly if it will establish ties with Sao Tome.
China's Taiwan Affairs Office (TAO) spokesman An Fengshan, responding to media questions, said: "We firmly adhere to the 'one China' principle and stand firm in our opposition of Taiwan's independence, which will gain more and more recognition and support from the international community."
Earlier, Taiwanese Foreign Minister David Lee, who called Sao Tome's move "abrupt and unfriendly", said Taipei was "not able to satisfy the nation's huge financial gap".
Taiwan had reportedly rejected Sao Tome's request for NT$6.4 billion (S$289 million) in financial aid.
While Mr Lee did not confirm the figure, he said the amount was "astronomical" for a nation with a population of some 150,000.
The opposition Kuomintang urged Ms Tsai to "reflect on how to find a more effective way to handle diplomatic and cross-strait ties". Its vice-chairman is expected to visit Beijing tomorrow for talks with Communist Party officials.
Analysts say Sao Tome's move is a sign that China has the upper hand in the "diplomatic game".
Tamkang University's political expert, Professor Edward Chen I-hsin, said Taiwan is "losing its bargaining chips" and it will just become more difficult in the coming years for it to hold on to its remaining allies.
"China has deeper pockets to convince allies that they have more to gain by ditching ties with Taiwan and establishing ties with the mainland," said Prof Chen.