TAIPEI - Taiwan has lost one of its 22 diplomatic allies after the West African island of São Tomé and Príncipe cut official bilateral ties, the first nation to do so after President Tsai Ing-wen was sworn into office in May.
The 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.
Taiwan's Presidential Office said on Wednesday that it regretted Sao Tome's move, adding that while it is willing to do its utmost to assist its allies, it will not "use money to engage in diplomatic competition".
In a statement that was posted on its website, the Presidential Office also accused Beijing of taking advantage of Sao Tome's financial difficulties to enforce the "one China" principle.
"This practice not only hurts the feelings of the Taiwan people but also destabilises cross-strait relations," said the statement.
Taiwan will now have 21 diplomatic allies, most of them small and impoverished countries in Latin America, Africa and the Pacific that have benefited from the financial aid that Taiwan provides.
Beijing welcomed Sao Tome's move to ditch Taiwan as a diplomatic ally.
"China expresses appreciation of this, and welcomes Sao Tome back onto the correct path of the 'one China' principle," the Chinese Foreign Ministry said in a statement.
Beijing, however, did not say explicitly if it will establish diplomatic ties with São Tomé.
Responding to questions from reporters on Wednesday, China's Taiwan Affairs Office spokesman An Fengshan 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."
Speaking at a press conference on Wednesday morning, Foreign Minister David Lee said the Taiwanese government "deeply regrets and condemns" the move, which he called "abrupt and unfriendly".
Taiwan was "not able to satisfy the nation's (Sao Tome's) huge financial gap", he said.
Taiwan had reportedly rejected Sao Tome's request for NT$6.4 billion (S$290 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.
Saying that Taiwan will not indulge in "dollar diplomacy", Mr Lee added Taiwan will terminate its relations with Sao Tome to "maintain its national dignity".
Taiwan will continue to seek a voice in the international space, he said.
The Ministry of Foreign Affairs (Mofa) said in a statement that since diplomatic relations were established in May 1997, Taiwan had "actively assisted" São Tomé in advancing its national development. The bilateral cooperation covered areas such as public health, agriculture, infrastructure, energy, and education.
The Mofa statement highlighted an instance when a team of Taiwanese malaria prevention advisers were despatched to São Tomé to help reduce its malaria rates from 50 per cent in 2003 to 1.01 per cent in 2015.
Taiwan's circle of diplomatic allies has been shrinking since it lost its United Nations seat to Beijing in 1971. The next two decades saw most major states switching diplomatic recognition from Taiwan to China, with Japan doing so in 1972 and the United States in 1979.
A diplomatic truce of sorts was in place when the pro-unification Kuomintang's Ma Ying-jeou was President from 2008 until this year. While some of Taiwan's allies were keen to defect and reap the benefits of formal ties with the world's second-largest economy, Beijing had rebuffed most of their overtures to support Mr Ma, who endorsed the 1992 Consensus and made closer cross-strait ties a centrepiece of his government.
The 1992 Consensus is a tacit agreement that there is only one China, with each side having its own interpretation of what it means. China, which sees Taiwan as a breakaway province to be reunited into the fold eventually, sees the consensus as crucial to stable cross-strait relations.
But Ms Tsai has not acknowledged it, which resulted in an impasse in cross-strait relations. China revealed that it cut off all official communication with the island after Ms Tsai became President.
The latest news will no doubt put a dent on Ms Tsai's upcoming trip to Central America as she seeks to step up the charm offensive with Taiwan's remaining diplomatic allies, including Nicaragua, Guatemala, El Salvador and Honduras.
Analysts and observers say Sao Tome's move is a sign that China has the upper hand in the "diplomatic game" against Taiwan.
Tamkang University's political expert Edward Chen I-hsin said Taiwan is "losing its bargaining chips" and it will just become more difficult in the coming years for Taiwan 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 Professor Chen.
Ruling Democratic Progressive Party legislator Lo Chih-cheng, who has been Ms Tsai's long-time adviser on international affairs, said the government will monitor Beijing's diplomatic moves.
"It is no secret that China wants to push Taiwan into a corner and force it to accept the 'one China' principle.
"But such offensive moves will not be helpful to make Taiwan concede. We don't want to engage in diplomacy warfare but a win-win solution for both sides to establish stable cross-strait relations."
