China walks a tightrope in hitting Taiwan without alienating its residents

Hong Kong

CHINA'S push to woo Taiwan's remaining friends - seen again with Beijing's move to establish ties with Panama - matters more for President Tsai Ing-wen's political prospects than the island's economy.

The long-anticipated defection, which Chinese and Panamanian officials celebrated with champagne on Tuesday, left Taiwan with just 20 diplomatic partners and underscored how far relations between Beijing and Taipei have deteriorated since Ms Tsai's election last year. Still, the financial impact was expected to be limited: Panama represented just 0.03 per cent of the island's total trade in 2016.