"The opening of the embassy of the Republic of Panama in the People's Republic of China has been done in accordance with the rules that dictate diplomatic relations between the two countries," Panama's Foreign Ministry said in a statement.
It added that the embassy was already functioning, although an ambassador had yet to be installed.
Speaking in Beijing, Chinese Foreign Ministry spokesman Lu Kang said China's trade office in the country had on July 13 formally become its embassy in Panama.
Panama's business community, which encouraged the embrace of Beijing and helped drive the diplomatic deal, cheered the decision to establish full ties with China, hoping to deepen links with a key customer of the nation's shipping canal.
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