( AP ) - President Oscar Arias announced Wednesday that Costa Rica has broken diplomatic ties with Taiwan and established relations with China, delivering a blow to the Asian island's fragile international standing.
Arias said Costa Rica needed to strengthen ties with China to attract foreign investment.
Taiwanese Foreign Minister James Huang quickly offered to resign to take responsibility for Costa Rica's switch, which left the Taiwan with relations with just two dozen nations.
Since splitting amid civil war in 1949, Taiwan and China have fought to win the diplomatic allegiance of countries around the world. China refuses to have diplomatic ties with nations that recognize Taiwan, which Beijing regards as a renegade province it plans to eventually unify with the mainland.
Central America in particular has been a bulwark of support for Taiwan, and Taiwan had expressed fears that if Costa Rica were to shift its recognition to Beijing, other nations such as Nicaragua and Panama could soon follow suit.
"We are looking to strengthen the commercial ties and attract investment," Arias said. " China is the most successful emerging economy in the world and soon it will be the second strongest economy in the world after the United States."
Arias said China is the Central American nation's No. 1 trading partner, buying more than $1 billion worth of Costa Rican exports last year.
China spends heavily to induce nations to change diplomatic allegiances, offering investment, loans and other incentives.
" Taiwan has been very generous and I thank it for the solidarity and co-operation it has shown for nearly 60 years, but I have taken this decision thinking of all the Costa Ricans," Arias said.
The change is just one more strike against Taiwan in its campaign for international legitimacy. During the late 1960s, it had full relations with 67 countries, including the United States. But the U.S. pulled it embassy out of the Taiwanese capital a decade later and today just 24 states recognize Taiwan.
The United States, Japan, Great Britain and dozens of others maintain quasi-official ties - part of a diplomatic sleight of hand to honor Beijing's condition that full diplomatic recognition be accorded to only one of the rivals.
However, Beijing resents even those connections. Its main concern is the United States, which remains Taiwan's most important foreign link, providing it weapons for its defense against a possible Chinese attack.
Taiwan President Chen Shui-bian has said that Taiwan could enjoy formal independence in his lifetime. This angered China, which has threatened to attack the island if it formalizes its de facto independence.
At a press briefing shortly after Costa Rica's announcement, Huang, Taiwan's foreign minister, offered to resign.
"I went to President Chen (Shui-bian) ... and asked to resign to take political responsibility," Huang told reporters. He did not say if his offer was accepted.
Huang said that he believed Costa Rica was an isolated case. But he acknowledged he had ordered Taiwanese embassies in Latin America to guard against possible Chinese inroads.
"I've asked our embassies to take extreme precautions against any further pressure by the Chinese communists," he said.
Taiwan has been concerned about a deterioration of its relations with Costa Rica since May 14, when the Latin American country voted at an international health conference against holding a discussion on proposed Taiwanese membership in the World Health Organization.
On May 25, Huang met with officials from Costa Rica and four other Latin American countries in Belize City in an effort to shore up Taiwan's diplomatic standing in the region.
Arias declined to comment on whether his decision could encourage other Central American nations to transfer their allegiance from Taipei to Beijing.
Analyst Andrew Yang of the Taipei-based Chinese Council of Advanced Policy Studies said the Costa Rican action would probably create a chain reaction among at least a number of Taiwan's remaining seven Latin American allies.
"This will have a significant impact on other countries, a kind of domino effect" he said. "Probably Nicaragua and Panama are next and then maybe Paraguay."
Salvadoran President Tony Saca said Wednesday that his nation was interested in establishing relations with China but did not want to sever ties with Taiwan.
" Taiwan is an independent country that has won its space and we will going maintaining relations with Taiwan. If China accepts this we will open relations with pleasure," Saca said.