Dominican Prime Minister Roosevelt Skerritt announced on Monday that his government has established relations with China.

Mr Skerritt also said the island has severed its 20-year relationship with Taiwan.

He also said the Chinese government has pledged financial backing for the Windsor Park Stadium, the improvement of health facilities, rehabilitation of the West Coast highway, a new secondary school and thirty scholarships.

The two Governments have agreed to develop friendly relations between the two countries on the basis of the principles of mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs, equality and mutual benefit, and peaceful co-existence.

Mr Skerritt told BBC Caribbean Service that it was in Dominica's interest to establish a relationship with China, which he described as a major player in international diplomacy.

"We reassessed the and re-evaluated our foreign policy and felt that it was in Dominica's domestic interest that we establish relationship with the People's Republic of China which is a major player in international diplomacy," he said. "We could not continue ignoring the existence of China."

He said that China's assistance to the tune of $122 million was vital, given Dominica's current economic situation.

Mr Skerritt pointed out Dominica doesn't have the capacity to attract loans and there isn't the money in the economy for the necessary infrastructural development.

When asked about the timing of his decision to embrace the 'One China' policy in light of the diplomatic impasse between China and Taiwan, the Dominican leader said he saw no conflict.

"One has to recognise the fact that the majority of the members of the UN recognise that China s the sole government of the people of China and Taiwan is a part of China," he said.

"The US, the UK, France, Canada and most of the independent Caribbean countries recognise China as the sole legal government of China and Taiwan, so we are respecting international law."

Mr Skerritt said there was no animosity between the Dominican government and the Taiwanese government, and he didn't believe that he was offending the Taiwanese.

As far as he is concerned, his country's development comes ahead of the internal situation in China.

"The difficulty in Dominica cannot wait until the political situation in Taiwan is resolved. We do not know how long that is going to last," he said.

"I have to go out there and lead the people of Dominica out of difficulty and I have to bring prosperity and pride and hope to our people."