Taiwan on Thursday severed diplomatic relations with Grenada after receiving formal notification from the Caribbean state that it had opened official ties with China, the foreign ministry said. "We condemn China for applying tactics to lure away our allies. We refuse to play the 'dollar diplomacy' game with Beijing and we also refuse to accept blackmailing from Grenada," foreign ministry spokesman Michel Lu told AFP.
This latest setback means Taiwan is now recognised by just 25 countries.
The announcement came a week after Grenada dumped Taipei to recognise Beijing, signing a communique to establish diplomatic ties with the mainland.
Only hours beforehand, Taiwan President Chen Shui-bian left for visits to the South Pacific islands of Palau and the Solomon Islands, pledging to boost Taiwan's international profile.
The foreign ministry spokesman said the two countries had "hurt and embarrassed" Taiwan by establishing diplomatic ties ahead of Chen's visits.
"We lodge the strongest protest to China and we are also disappointed at Grenada Prime Minister Keith Mitchell," Lu said.
Lu also attacked Grenada for trying to use China as a bargaining chip to demand more financial aid from Taiwan.
The spokesman accused Grenada of trying to cash in on the confrontation between Taiwan and China, saying the Caribbean state had requested 245 million US dollars from Taipei for a five-year co-operation plan.
Taiwan has extended 28 million dollars in loans to Grenada since the opening of official relations in 1989.
Taiwan already summoned its ambassador to Grenada home last December in protest after Mitchell paid a visit to Beijing.