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PANAMA CITY (Reuters) - Panama has opened an embassy in China, the Central American country's Foreign Ministry said on Tuesday, deepening its links with the world's No. 2 economy after its diplomatic break with longtime ally Taiwan.

Panama established diplomatic ties with China in June and broke with Taiwan in a major victory for Beijing, as it lures away the dwindling number of countries that have formal relations with the self-ruled island that China regards as a wayward province.

"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.

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.

(Reporting by Elida Moreno; Editing by Peter Cooney)

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Reuters