The Dominican Republic announced on Monday that it will break diplomatic ties with Taiwan, establish diplomatic relations with mainland China, and recognize Taiwan as an “inalienable part of Chinese territory.”

The move came after China offered the Dominican Republic a $3 billion investment and loan package and fits neatly into China’s strategy of isolating Taiwan.

“The decision was the latest setback for Taiwan in the Caribbean and Latin America. Panama dropped its longtime ties with Taiwan last year and established relations with China, which considers Taiwan to be Chinese territory. The island is recognized as a sovereign nation by only 19 mainly small, developing countries, 10 of them in this region,” the Associated Press noted.

Taiwanese Foreign Minister Joseph Wu said his government is “deeply upset by China’s actions,” which he said involved offering the Dominican Republic “vast financial incentives” to move into Beijing’s orbit after 77 years of diplomatic relations with Taipei.

The government of the Dominican Republic did not exactly deny their decision was based on what Taiwan derided as “dollar diplomacy.”

A legal consultant for the presidential office said that “history and socioeconomic reality now force us to change course,” citing the Dominican Republic’s $2 billion in trade with China.

An official for Taiwan’s Foreign Ministry told Reuters on Monday that the Dominican thinking was also shaped by a $3.1 billion package of investment, loans, and financial assistance offered by Beijing, including $1.6 billion in infrastructure spending and $400 million for a freeway.

“It was a cost that Taiwan could not match,” the official said.

The Taiwanese say that while China often says it desires peaceful relations across the Straits of Taiwan, its aggressive campaign of peeling away Taiwan’s allies is increasing tension in the region.

Taiwanese Foreign Minister Wu said on Monday that his government “strongly condemns China’s objectionable decision to use dollar diplomacy to convert Taiwan’s diplomatic allies. Beijing’s attempts at foreign policy have only served to drive a wedge between the people on both sides of the Taiwan Strait, erode mutual trust and further harm the feelings of the people of Taiwan.”

“The Dominican Republic has ignored our long-term partnership, the wishes of the people of the Dominican Republic and the years of development assistance provided by Taiwan to accept false promises of investment and aid by China,” Wu told reporters on Tuesday.

The Taiwanese added a warning to the Dominican Republic and other nations considering Beijing’s overtures that China has a history of failing to “follow through” on promises to former allies of Taiwan, citing unfulfilled pledges of investment and aid to Costa Rica, Sao Tome, and Principe.

Taiwan’s President Tsai Ing-wen responded to the Dominican Republic’s announcement via Twitter on Tuesday:

“Today’s event will create a stream of diplomatic switching from Taipei in a matter of months, if not in years,” University of Hong Kong professor Richard W. Hu told the New York Times.

The Times noted that some observers believe China is wooing the Vatican to switch its diplomatic relationship from Taipei to Beijing by offering improvements to the life of Christians in China.

The South China Morning Post sees China’s brazen move in the Caribbean as a message to the United States, and a response to the Trump administration’s support for Taiwan.

“Beijing has not only won the support of the government, but also those from the public, which would mean a big deal in terms of wrestling with Washington,” Professor Wang Kung-yi of the Chinese Culture University in Taipei told the SCMP, referring to the technology and human resources China poured into the Dominican Republic.

“The Taiwan issue is part of the China-US rivalry, and America has intensified its efforts to use Taiwan as leverage against China,” said Yang Liqian, a Beijing-based expert on Taiwan.

“While the U.S. only sees Taiwan as a chess piece, China sees Taiwan as part of its core interests that cannot be compromised. Taiwan should not have any illusions about that,” Yang warned.

“Latin America is an important target for Taiwan’s diplomacy, and the Dominican Republic is the second fastest growing economy in the region after Panama. Negotiations to switch recognition to China have been ongoing for a long time. But the decision now is a stern warning against Taiwanese independence,” added Xu Shicheng, vice president of the Chinese Association for Latin American Studies.