TAIPEI (Taiwan News) — China and Nicaragua upgraded bilateral ties on Wednesday (Dec. 20) to a “strategic partnership,” as the Central American country faces Western sanctions.

A conference call between Chinese leader Xi Jinping (習近平) and Nicaraguan President Daniel Ortega marked the second anniversary since Nicaragua cut ties with Taiwan in 2021 and reestablished official relations with China.

According to a joint statement, China said it would boost economic investment and development assistance in Nicaragua, and the two countries agreed to expand political trust, security coordination, and people-to-people exchanges. In August, China and Nicaragua signed a wide-ranging free trade agreement (FTA), which will take effect on Jan. 1, 2024.

The U.S. said Nicaragua’s switch in diplomatic recognition from Taiwan to China was motivated by the prospect of Chinese economic investment. This comes as Nicaragua, one of the poorest countries in Central America, faces economic pressure after Western countries sanctioned Ortega’s administration over human rights violations.

Xi reportedly told Ortega, "I am willing to work with President Ortega to take today's announcement of a China-Nicaragua strategic partnership as a new start, to push relations between our two countries forward to build a model of solidarity, cooperation, and mutual benefit," per Chinese state media.

If any country wishes for diplomatic relations with China, Beijing demands it cease contact and official ties with Taipei. President Ortega has labeled Taiwan as a province of China, promoted the "one China” principle, and said that the U.N. does not recognize Taiwan’s sovereignty.

Taiwan was "deeply saddened" by Nicaragua’s actions, which it said "disregarded many years of friendship,” according to Taiwan’s Ministry of Foreign Affairs. For over 15 years, Ortega “unabashedly” received significant amounts of aid from Taiwan, but has chosen to align itself with China to receive even more assistance, it said.

In August, Nicaragua forced a proposal to eject Taiwan from the Central American Parliament and invite China instead. Taiwan, after over two decades as a permanent observer, withdrew preemptively.

China is Nicaragua's second-largest trading partner and second-largest source of imports. Nicaragua is also a participant in Beijing’s Belt and Road Initiative.

In Central America in recent years, Nicaragua, El Salvador, Honduras, Panama, and the Dominican Republic have severed ties with Taiwan. Guatemala is the only member of the Central American Parliament that still recognizes Taiwan.

Taiwan has formal diplomatic relations with only 13 countries.