A bird stands on anti-landing barricades, ahead of the 60th anniversary of Second Taiwan Straits Crisis against China, on Lieyu island, Kinmen county. Picture: Tyrone Siu/Reuters

Taipei - Taiwan said Tuesday it was breaking off diplomatic relations with El Salvador because the Central American country is switching recognition to China.

The move leaves Taiwan with just 17 diplomatic allies around the world, as Beijing, which claims sovereignty over the self-ruled island, continues in its attempts to isolate it on the international stage.

"All bilateral cooperation projects will be terminated. We will begin to recall all diplomatic staff and technical teams," Taiwan Foreign Minister Joseph Wu told a news conference in Taipei.

Beijing's "One China" principle requires that other nations avoid formal diplomatic recognition of Taiwan. The island has had a separate government since Chinese Nationalists fled there in 1949 after losing a civil war to the Communists.

Taiwan's government had received confirmation that the Central American nation was planning to end relations and defect to China, Wu said according to the official Central News Agency.

Meanwhile, China's official Xinhua news agency reported that Chinese Foreign Minister Wang Yi and Salvadorean Foreign Minister Carlos Castaneda on Tuesday signed a communique on the establishment of diplomatic relations.

Wu said that El Salvador had recently been demanding more financial assistance from Taiwan for joint development projects. Taiwan had sent a team to assess those projects but found they would possibly leave Taiwan in debt.

Wu added that Taiwan had since June been aware of El Salvador's intention to build diplomatic ties with China in order to receive investment and aid from China.

Wu said Taiwan will never compete with China in a diplomatic money game: "China's arbitrary behaviour has had negative impacts on the relations across the Taiwan Strait."

Since Taiwan's independence-leaning President Tsai Ing-wen took office in May 2016, Beijing has been increasing pressure on the island.

Tsai's ruling Democratic Progressive Party has refused to endorse Beijing's "One China" principle.

Over the past two years, China has poached four of Taiwan's allies, including the Gambia, Sao Tome and Principe, Panama and Burkina Faso.