Panama broke off all official ties with Taiwan and established a diplomatic relationship with the government of the People’s Republic of China (PRC). It recognizes Taiwan as a part of China. Now there are only 20 nations (image below) left who have official diplomatic ties with Taiwan.
Taiwan is an island at a distance of about 100 miles (160 km) from mainland China. The status of Taiwan is a controversy. In the 1940s, there were two main political parties in China – the Nationalists and the Communists. Most of the country was controlled by the Nationalist Party, but the Communists were growing stronger. Soon after World War II, there was a civil war in China and the Nationalists were pushed out. In 1949, they fled to Taiwan and created a government there, calling themselves the Republic of China (ROC). The Communists, in the meantime, took control of mainland China and called it the People’s Republic of China (PRC). Thus, two different parties claimed to be the official government of China. For over 20 years, the United Nations recognized the ROC as the government of China but switched to the PRC in 1971.
Today, Taiwan has its own government and runs its own economy. China considers Taiwan to be a part of itself. Many countries agree with this but still do business with Taiwan as if it is a separate nation. Many Taiwanese want Taiwan to be an independent country.
Image Credits: http://www.mofa.gov.tw for the image of the 20 nations with diplomatic ties with Taiwan. https://www.cia.gov for the map of Taiwan
Sources: http://www.mire.gob.pa, NPR.org, http://www.mofa.gov.tw, http://focustaiwan.tw, http://www.cnn.com, http://alphahistory.com, NowThis, https://history.state.gov