Relations between the Holy See and the PRC have been strained over various issues, especially the Chinese Communist Party's (CCP) policy of restricting religious activities and the appointment of Catholic bishops in mainland China. There have been attempts to improve China-Holy See relations, with an agreement signed in September 2018 between the PRC and the Holy See allowing the pope to appoint and veto bishops approved by the CCP. The agreement was renewed for another two years in October 2020.[1] However, in 2022, the Vatican has accused the government for violating the terms of the agreement with the appointment of a diocese not recognised by the Holy See.
https://en.wikipedia.org/wiki/China%E2%80%93Holy_See_relations
Aside perhaps making the Holy See end its recognition of Taiwan, does China have anything else to gain from improving ties with the Holy See, because to me it seems that China is only willing to return them a favor if they decide to end their recognition of Taiwan as a country. So I am wondering if there's more at play here, or I am guessing correctly.
The agreement reflects the long-standing desire of the Chinese government to end the Holy See's recognition of the government in Taiwan, even as the Chinese Communist Party of General Secretary Xi Jinping continues the campaign, launched in the spring of 2018, to increase control of foreign religious institutions.[32][dubious – discuss] In October 2018, local Chinese government officials destroyed two Marian shrines, one in Shanxi and one in Guizhou.[33]