5TH LD: Costa Rica switches diplomatic ties from Taipei to Beijing.

BEIJING, June 7 Kyodo

(EDS: ADDING COMMENTS FROM CHINESE FOREIGN MINISTRY SPOKESWOMAN)

China announced Thursday that it has established diplomatic ties with Costa Rica, luring the Central American country away from Taiwan, its ally of several decades.

The Chinese Foreign Ministry said an agreement to forge diplomatic ties was signed by the two countries' foreign ministers earlier this month.

''The Costa Rican government recognizes that there is only one China in the world and the government of the People's Republic of China is the sole legitimate government representing the whole of China,'' a ministry statement said.

Ministry spokeswoman Jiang Yu rejected suggestions that China is buying friends among small nations with generous grants and aid.

''More and more countries are now establishing ties with China,'' she said. ''China has forged ties with 169 countries. It's simply impossible that this is just a question of money.''

Taiwan Foreign Minister James Huang told a press conference in Taipei that he had offered to resign to take political responsibility for the diplomatic setback. But President Chen Shui-bian later rejected the offer, according to the island's Central News Agency.

Huang told reporters he was disappointed by the decision and he accused China of engaging in what he called ''money diplomacy'' to win Costa Rica's support.

Reading out a statement, Huang said Taiwan was terminating formal relations with Costa Rica and ceasing all cooperation projects with it over its decision ''to ally with the autocratic Communist China.''

''The government of the Republic of China (Taiwan) strongly regrets the decision of President Oscar Arias, which was contrary to the national spirit of Costa Rica and the ideals of the Nobel Peace Prize, and condemns the money diplomacy of the PRC,'' he said.

Arias, who became Costa Rica's president in May 2006, received the Nobel Peace Prize in 1987 for his efforts to end the civil wars then raging in several Central American countries.

''Yet now President Oscar Arias chooses to discard the universal values of peace, freedom and human rights commonly treasured by Taiwan and Costa Rica and to turn to ally with the autocratic Communist China,'' Huang said.

A Taiwanese diplomat stationed in Central America was quoted by CNA as saying he is worried that Costa Rica's switching of diplomatic recognition to Beijing could trigger a ''domino effect'' and affect Taiwan's ties with its other Central American allies.

China and Taiwan have for many years engaged in a diplomatic tug-of-war trying to lure allies away from each other with generous aid packages.

Taiwan last month announced it and the tiny Caribbean country of St. Lucia had resumed full diplomatic relations, in a move that prompted China to slam Taipei's ''money diplomacy'' and warn St. Lucia of unspecified consequences.

The loss of Costa Rica brings to 24 the number of countries with which Taiwan had diplomatic relations, mostly poverty-stricken nations in the Americas, Africa and the South Pacific.

China demands that countries with which it has diplomatic relations abide by the ''one-China principle'' which holds that there is only one China, ruled from Beijing, and that self-ruled Taiwan, which calls itself the Republic of China, is a part of China.

Costa Rica had maintained diplomatic ties with the Republic of China since before the Nationalists who once ruled China fled to Taiwan at the end of a civil war in 1949.

China and Taiwan have since been governed separately, but China sees the island as a breakaway province and strongly opposes any official exchanges between it and other countries.