If I was ruler of a small country, I would say "of course we won't recognize Taiwan. We will foobar them. They don't get an embassy, but they get a blah." (which de facto will be exactly the same thing)
[1] Concerning passports, no matter how radically different states are, the US, the Soviet Union, North Korea, the Vatican, one thing they can all agree on is that people have a "nationality" and must carry a "passport" when going over borders, the passport has a certain size and spaces for "visas", etc.. It really makes me consider how "radical" a state is if it partakes in this global system. Especially interesting, if you remember that a few centuries ago, none of this existed at all. In history lessions in school, I wondered how Lenin could travel through all of europe unhampered when he was fleeing from the tsarists. Well, there were only little borders or passports as we know them now around.