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The Dominican Republic has switched allegiance from Taiwan to China after it offered a $US3.1 billion ($4.1 billion) package of investments and loans, a Taiwan official says.

Key points:

  • Package includes freeway, infrastructure investment, natural gas power plant
  • China is Dominican Republic's second largest supplier of imported products
  • Taiwan's Foreign Minister warns developing nations against falling into China's debt trap

Taiwan, claimed by China as its own, has formal relations now with only 19 countries, many of them poor nations in Central America and the Pacific such as Belize and Nauru.

China said Taiwan was simply a wayward province with no right to state-to-state ties.

China and Taiwan have tried to poach each other's allies over the years, often dangling generous aid packages in front of developing nations, though Taipei struggles to compete with an increasingly powerful China.

Panama ended its long-standing relationship with Taiwan last year in a major diplomatic victory for China.

The Vatican is possibly next on the list, as the Holy See and China edge closer to an accord on the appointment of bishops in China.

News of the Dominican Republic switch attracted strong and swift condemnation from Taiwan's Foreign Minister, Joseph Wu.

"President Danilo Medina of the Dominican Republic has ignored our long-term partnership, the wishes of the people of the Dominican Republic, and the years of development assistance provided by Taiwan, to accept false promises of investment and aid by China," Mr Wu told reporters.

"[Taiwan] strongly condemns China's objectionable decision to use dollar diplomacy to convert Taiwan's diplomatic allies.

"Beijing's attempts at foreign policy have only served to drive a wedge between the people on both sides of the Taiwan Strait, erode mutual trust and further harm the feelings of the people of Taiwan."

Package includes freeway, natural gas power plant

A Taiwan Foreign Ministry official, speaking on condition of anonymity, said initial calculations showed China dangled at least a $4.1 billion package of investments, financial assistance and low-interest loans for the Dominican Republic.

That included $535 million for a new freeway, $2.1 billion for infrastructure projects and $401 million for a new natural gas power plant.

"It was a cost that Taiwan could not match," the official said.

China's Foreign Ministry said the move was a political one with no economic pre-conditions, but now that they had established ties, China would, "proactively promote mutually beneficial cooperation in all areas".

President Tsai Ing-wen of Taiwan

China has stepped up the pressure on Taiwan since the 2016 election of Tsai Ing-wen, from the pro-independence Democratic Progressive Party, as president.

Beijing fears she will push for Taiwan's formal independence, but Ms Tsai says she wants to maintain the status quo.

Taiwan's presidential office said despite the severe challenges, the Government would not bow its head in pressure to Beijing, and vowed to do all it could to protect Taiwan's interests.

The Taiwan official said the Dominican Republic move was not unexpected.

"We've always known things were not looking rosy here," the official said.

Chinese Foreign Minister Wang Yi, right, holds a press briefing with Dominican Foreign Minister Miguel Vargas.

China's top diplomat, State Councillor Wang Yi, told reporters at a news conference the "important and correct decision" by the Dominican Republic accorded with the basic interests of the country and its people.

The Dominican Republic said it had taken the decision after a long process of consultation, taking its needs and potential into account, according to a statement on the President's website.

It said that even without formal diplomatic ties, China was already its second largest supplier of imported products.

"Of course we know that now we're establishing diplomatic relations, the growth potential of our trade links is immense," presidential legal adviser Flavio Dario Espinal said.

Mr Espinal said the Government was grateful to Taiwan.

"We are deeply grateful for the cooperation we've shared for years," he said.

"However, history and the socioeconomic reality force us now to change direction.

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