The Dominican Republic's government announced on Tuesday that it is establishing diplomatic relations with China and breaking its diplomatic ties with Taiwan.

It says it will later recognise Taiwan as an "inalienable part of Chinese territory."

At a news event in Beijing on Tuesday morning, Chinese Foreign Minister Wang Yi and Dominican counterpart Miguel Vargas signed a joint communique marking the establishment of ties.

In a joint statement, the countries said the move was "in keeping with the interests and desire of the two peoples" and that the Dominican Republic will sever ties with rival Taiwan as a result.

Taiwan swiftly condemned what it called China's "dollar diplomacy" and announced it would terminate ties with the Dominican Republic immediately, including all projects and assistance it provides to the Caribbean nation.

The decision was the latest setback for Taiwan in the Caribbean and Latin America.

Panama dropped its long-time ties with Taiwan last year and established relations with China, which considers Taiwan to be Chinese territory.

The island is recognised as a sovereign nation by only 19 mainly small, developing countries, 10 of them in this region.

Beijing insists that only it has the right to represent China in international society.

The island is excluded from the United Nations and other multinational bodies that require official governmental recognition at China's insistence.