The Vatican is currently one of only 26 countries that recognize the Republic of China as an independent country (Nauru recently returned
into Taipei's fold, bringing the number up to 26). Some are predicting that the Vatican will cut ties to Taiwan in order to open relations with China. Supposedly, this would serve to facilitate cooperation with the PRC in order to turn China into a more Christian-friendly environment. Taiwan's ambassador to the Holy See has said
The Holy See's relationship with China was unlikely to undergo major changes in the near future because their views on religious matters are still very different. Apparently there is also talk of changing the name of the embassy to "Embassy of Taiwan" instead of "Embassy of China" as it is currently known.