South Africa's government said on Friday that it had asked Taiwan to relocate its de facto embassy out of the capital Pretoria, while Taiwan accused it of bowing to pressure from China.
South Africa rejected this characterization and said the move was standard diplomatic practice, given that it severed political and diplomatic ties with Taiwan in 1997.
The Taipei Liaison Office in Pretoria will be rebranded as a Trade Office and moved to commercial capital Johannesburg, said South Africa's Department of International Relations and Cooperation.
"Relocating what will be rebranded as Trade Offices both in Taipei and in Johannesburg... will be a true reflection of the non-political and non-diplomatic nature of the relationship between the Republic of South Africa and Taiwan," it said in a statement, adding it had given the office six months to move.
China is South Africa's largest trading partner globally and one with which it is looking to expand cooperation in areas such as renewable energy.
Taiwan's Foreign Ministry said that warming relations between South Africa and China were posing a challenge for its own friendly relationship with South Africa.
"If the South African government still insists on submitting to China and changing the status quo... the Ministry of Foreign Affairs will... study and formulate all possible responses in order to safeguard the sovereignty and dignity of our country," it said in a statement.
Taiwan, which China claims as its own territory with no right to state-to-state relations, has formal ties with only a dozen countries, almost all small, less developed nations.
Taiwan's government rejects China's sovereignty claims and says Beijing has no right to represent or speak for the island on the international stage
China welcomed the move.
"We appreciate South Africa's correct decision to relocate the Taipei Liaison Office in South Africa out of Pretoria, the administrative capital," said China's Foreign ministry spokeswoman Mao Ning.
Reporting by Nellie Peyton; Additional reporting by Joe Cash in Beijing and Ben Blanchard in Taipei; Editing by Olivia Kumwenda-Mtambo, William Maclean