China and Nauru formally re-established diplomatic relations Wednesday, after the tiny South Pacific nation cut ties with Taiwan.

Officials from the two countries held a signing ceremony in Beijing, state news agency Xinhua said.

In a post-election blow to Taiwan, Nauru unexpectedly announced last Monday that it would no longer recognize Taiwan "as a separate country" but "rather as an inalienable part of China's territory".

The decision was seen as a major coup for Beijing -- Nauru was one of the few nations to officially recognize Taiwan on a diplomatic basis.

Only 12 states, including the Holy See, now fully recognize Taiwan.

Nauru -- population 12,500 -- is one of the world's smallest countries and lies about 4,000 kilometres (2,500 miles) northeast of Sydney.