Foreign Minister Wang Yiand Panamanian Vice-President and Foreign Minister Isabel de Saint Malo toast the signing of a joint communique on establishing diplomatic relations on Tuesday in Beijing. FENG YONGBIN / CHINA DAILY

Beijing and Panama City announced the establishment of diplomatic relations on Tuesday, as the Central American country cut its "diplomatic ties" with Taiwan.

"In light of the interests and wishes of both peoples, the Republic of Panama and People's Republic of China have decided to grant each other, from the date of this document's signing, mutual recognition and establishment of diplomatic ties at the ambassadorial level," the two nations said in a joint communique.

Panama now "recognizes that there is only one China" and that Taiwan is part of Chinese territory. The country promises that it will never establish any official relations with Taiwan, nor have any official contact.

Foreign Minister Wang Yi and Panamanian Vice-President and Foreign Minister Isabel de Saint Malo signed the communique in Beijing. "This is a historic moment. China-Panama relations have opened a new chapter," Wang said.

The nations will cooperate in areas such as trade, investment, maritime affairs, culture and education as well as tourism, Wang said. "China welcomes Panama to actively participate in the Belt and Road construction," he added.

Wang said the Chinese people cherish the long-term friendship with Panamanians.

Chinese laborers first arrived in Panama 163 years ago and helped build the Panama Canal and the railway there. Among Panama's population of 4 million, there are about 150,000 people of Chinese origin — one of the largest Chinese communities in Latin America.

Saint Malo said that Panama and China had made an "important step" and started a "new page in our strategic relations".

Wang said at another event on Tuesday that Panama did not raise any preconditions in the process, and there were no so-called deals.

Vice-President Li Yuanchao and State Councilor Yang Jiechi also met with Saint Malo on Tuesday.

In December, Beijing restored diplomatic relations with Sao Tome and Principe after the African nation cut relations with Taiwan.

Cross-Straits relations have been strained after Taiwan leader Tsai Ing-wen, who took power last year, refused to embrace the 1992 Consensus, which embodies the one-China principle, unlike her predecessor, Ma Ying-jeou.

The establishment of diplomatic relations between China and Panama is another sign of the consensus of the international community in adhering to the one-China principle, Ma Xiaoguang, spokesperson for the State Council's Taiwan Affairs Office, said on Tuesday.

Ma urged the Taiwan administration to gain a clear understanding of the situation and make the right choice.

Yuan Zheng, a researcher of US studies at the Chinese Academy of Social Sciences, said as long as the Taiwan authorities decline to follow the 1992 Consensus, it will be difficult for Taiwan to maintain "diplomatic relations" with any countries.

"Given the rising global influence of China, the one-China policy is increasingly recognized around the world," he said.

Liu Yuqin, former Chinese ambassador to Chile, said though Beijing and Panama City did not have diplomatic ties in the past, they have enjoyed quite close business and civilian exchanges.

"The decision to establish diplomatic ties is not something that can be bought by money. It reflects the expectation of the people and long-term mutual interests of the two countries."

Xinhua contributed to this story.