CASTRIES (AP):

China officially severed a 10-year diplomatic relationship with St. Lucia, a week after the Caribbean nation restored ties with rival Taiwan.

The Chinese Embassy in St. Lucia issued a terse statement Saturday saying all agreements between the island and the Asian superpower would be "suspended immediately" due to the April 30 switch, ending Beijing's financing for a nearly finished psychiatric hospital and scuttling plans for a cultural centre.

China and Taiwan - the self-governing island that Beijing claims is a renegade province - have for years waged a battle of dollar diplomacy, offering countries aid and trade inducements to switch diplomatic recognition from one to the other.

Tiny St. Lucia, with a population of 168,000, had long maintained diplomatic relations with Taipei under Prime Minister John Compton, until the country switched to Beijing shortly after Compton's United Workers Party was defeated in 1996.

But Compton's party returned to power last December, and Chinese pledges of more money and technical assistance failed to persuade St. Lucia from re-establishing ties with Taiwan.

Switch undermined Beijing

On Saturday, the Chinese Embassy said the switch undermined Beijing's One China policy and had done "serious harm" to relations.

St. Lucia indicated last week that after resuming relations with Taiwan, it would still want to be friends with China. The Chinese Embassy sent a rebuff on Friday, saying in a statement that China does not accept "double recognition". The Chinese Foreign Ministry has characterised the move as a "brutal interference in China's internal affairs".

Compton, 82, was in New York seeking medical attention for undisclosed reasons and was not available for comment.

Opposition leader and former Prime Minister Kenny Anthony, Compton's primary rival, urged islanders to rally behind the Prime Minister.

"We have our differences, however, there are issues when the interest of our country must override all other considerations," Anthony said.

Foreign Minister Rufus Bousquet had indicated that the decision was based on which suitor, China or Taiwan, could offer a better dealto St. Lucia, where some 20 per cent of the population lives in poverty. "Support those who give you the most," he said last month.