GUATEMALA CITY, Aug 21 (Reuters) - The Central American Parliament on Monday voted to expel Taiwan after more than two decades as a permanent observer and replace it with China, whose growing economic influence in Latin America has increasingly marginalized Taipei.

The six-nation parliament, known as Parlacen, met in the Nicaraguan capital Managua where local legislators proposed adding China, which claims democratically ruled Taiwan as its own territory.

Taiwan's foreign ministry said it had decided to withdraw from Parlacen immediately in the interests of upholding "national dignity", and condemned what it called China's efforts to suppress Taiwan's international participation.

In a statement, Parlacen cited the United Nations' 1971 expulsion of Taiwan in favor of China, saying this deemed Taiwan to be a "province of mainland China, which disqualifies it from participating as an independent country".

Beijing has expanded its influence in Central America with Parlacen members Nicaragua, El Salvador, Honduras, Panama and the Dominican Republic breaking off diplomatic ties with Taiwan in recent years.

Guatemala, the most populous country in Central America, is the only Parlacen member that still recognizes Taiwan.

U.S. Senators Tim Kaine, a Democrat, and Marco Rubio, a Republican, who lead a Senate Foreign Relations Subcommittee on the Western Hemisphere, condemned the vote.

"Since 1999, Taiwan has served as a strong partner in its role as a permanent observer of the Central American Parliament, encouraging good governance and economic development in our Hemisphere," the senators said in a joint statement.

The senators also accused China of undermining democracy, hindering regional growth and subjecting Uyghurs in its Xinjiang region to myriad human rights abuses including genocide.

China has strongly denied any abuses in Xinjiang. Its embassy in the U.S. did not immediately respond to a request for comment.

Belize and Paraguay also retain relations with Taiwan, though U.S. officials believe Paraguay could be the next country in the Americas to flip loyalties.

The United States recognizes China diplomatically but has unofficial ties with Taipei, and the Biden administration has said it opposes efforts to change the status quo in Taiwan.