The ending of ties with Taiwan had been expected after the Honduran foreign minister travelled to China last week to open relations and President Xiomara Castro said her government would start ties with Beijing.

China said its foreign minister, Qin Gang, and Honduran Foreign Minister Eduardo Enrique Reina signed the deal on diplomatic recognition in Beijing, ending relations with Taiwan dating back to the 1940s.

In a brief statement late on Saturday, the Honduran foreign ministry said it recognised the People's Republic of China as the only legitimate government that represents all of China and that Taiwan is an "inseparable part of Chinese territory".

China claims democratically ruled Taiwan as its own territory with no right to state-to-state ties, a position Taipei strongly rejects.

China demands that countries with which it has ties recognise its position.

Speaking in Taipei, Taiwan Foreign Minister Joseph Wu said Castro, who took office early last year, and her government had "always had illusions" about China and China's "luring" had never stopped.

"The foreign ministry and embassy grasped the relevant information and handled it carefully," Wu said.

"However, the Castro government also asked us for billions of dollars in huge economic assistance and compared prices for assistance programs provided by Taiwan and China."

Taiwan President Tsai Ing-wen, in a video statement, said Taiwan will not compete with China in "meaningless" dollar diplomacy.

"Taiwan's people have proved to the world that we never cower from threats," she said.

"Taiwan's co-operation and links with allies and like-minded countries to jointly promote international well-being and security will only increase, not decrease."

Neither the Chinese nor the Honduran statements made mention of aid.

Wu said Reina wrote to Taiwan on March 13, the day before Castro's original announcement, demanding a total of $US2.45 billion ($A3.68 billion) in aid, including the construction of a hospital and a dam and to write off debt.

"It felt like what they wanted was money, not a hospital," Wu said.

Reina told Reuters last week the $US2.5 billion ($A3.8 billion) figure was "not a donation" but rather "a negotiated refinancing mechanism".

Tsai is due to depart on a sensitive visit to the United States, Guatemala and Belize on Wednesday. She is expected to meet U.S. House Speaker Kevin McCarthy in Los Angeles at the end of the trip.

Wu said he was "highly suspicious" of the timing of the Honduran decision so close to Tsai's overseas tour.

"China seems to be doing this intentionally," he said.

Taiwan now only has formal diplomatic relations with 13 countries, mostly poor and developing countries in Central America, the Caribbean and the Pacific.

Australian Associated Press