Already this year, Taiwan has lost two other allies in Burkina Faso and the Dominican Republic as Beijing has continued to turn up the pressure on Tsai Ing-wen's government by splashing its money around.
The president of El Salvador, Salvador Sanchez Ceren, said in an address on national television Monday night: "I announce that my government has taken the decision to break diplomatic relations maintained until today between the Republic of El Salvador and Taiwan, and establish diplomatic relations with the People's Republic of China".
"We think this is an inappropriate development plan that risks causing both countries to fall into great debt", Wu said, noting that some developing countries were increasingly concerned about the risks of unsustainable debt linked to Chinese investments.
Taiwan president visits Belize looking to shore up support.
The Government of the People's Republic of China and the Government of the Republic of El Salvador agree that in accordance with the provisions of the Vienna Convention on Diplomatic Relations of 1961 and common worldwide practice, they will exchange ambassadors, and provide each other with all the necessary assistance for the establishment and performance of the functions of their respective embassies in each other's capitals on the basis of reciprocity, the communique said.
"Pressure from China would only make Taiwan more determined to continue our path of democracy and freedom", he said.
The communique was signed by Chinese State Councilor and Foreign Minister Wang Yi and Salvadorean Foreign Minister Carlos Castaneda.
The news will come as a bitter blow to Wu, who personally visited El Salvador's capital, San Salvador, as recently as July this year.
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"This is a step in the right direction, corresponding to the principles of global law, worldwide relations and the inevitable trends of our times".
Despite Taiwan's dwindling number of formal allies globally - with the remaining 17 mostly small and poor countries in the Pacific and the Caribbean - the government in Taipei is not preparing for the prospect of not having any diplomatic partners.
"The People's Republic of China and the Republic of El Salvador, in keeping with the interests and desire of the two peoples, have chose to recognize each other and establish diplomatic relations at the ambassadorial level effective from the date of signature of this communique".
While the United States has no formal ties with Taiwan, it is its main supplier of arms and military hardware, and its strongest unofficial diplomatic backer.
The move comes just a day after China's foreign ministry said it had complained to the US over Taiwanese President Tsai's visits this month to Los Angeles and Houston while in transit to diplomatic allies Paraguay and Belize.
In Beijing, Castaneda said it was a strategic decision his government made to "create conditions to change the historical standing of our country and to really elevate the livelihood of our people".
Beijing has stepped up its poaching of Taiwan's allies since Tsai became president in 2016, while also sending bombers, spy planes and destroyers, and even its aircraft carrier, on circumnavigation missions to deter the island's separatists. "What China did was to humiliate Taiwan repeatedly without getting any respect from Taiwan's people", Taiwan's ruling Democratic Progressive Party wrote in a statement. "It would only boost our determination to go overseas", she said on her return to Taiwan on Monday.