China's Hu calls for economic pact with Taiwan

SINGAPORE (AFP) – Chinese President Hu Jintao called on Saturday for formal talks on a landmark economic pact with Taiwan to start by the end of the year, in a rare meeting here with a top politician from the island.

Hu met former Taiwan vice president Lien Chan here on the margins of an Asia-Pacific Economic Cooperation (APEC) summit, in an encounter that was closely watched as a barometer of improving ties between the Cold War rivals.

Hu said the thaw in relations seen over the past year was "historic", according to Chinese state media.

"We must... strive to start the process of negotiations on the Economic Cooperation Framework Agreement (ECFA) by the end of the year," Chinese state television quoted him as telling Lien.

Taiwan's government says the pact will benefit the many companies on the island that depend on trade with China by removing tariffs and other barriers, and by boosting the flow of goods and personnel across the Taiwan Strait.

But the opposition Democratic Progressive Party, which favours independence from China, says it would reduce Taiwan to the status of a local government in future political talks with the mainland.

Lien, speaking to reporters after his meeting with Hu, said he hoped the pact could be finalised early next year.

"I'm happy to report to you that ... Mr. Hu agrees that we should try to start the formal negotiations on the signing of the ECFA," Lien said, speaking in English.

"The sooner the better, within this year, because there is only one month."

Talks had so far been held on an informal basis in the absence of regular official contact between China and the self-ruled island, which Beijing claims as its own.

According to Taiwan's state-funded Central News Agency, Lien told Hu that Taipei welcomed Chinese investors and thanked Beijing for going ahead with several large purchasing delegations despite the economic crisis.

"At present, development of cross-strait relations is faced with an important historical opportunity," Hu was quoted as telling Lien by China's state news agency Xinhua.

"We should firmly grasp the theme of peaceful development of cross-strait relations, maintain the correct direction, widen the road ahead, and constantly open up new prospects for the peaceful development of cross-strait relations."

Chinese officials in Singapore for the APEC meeting -- which was to be attended by Hu, US President Barack Obama and 19 other Pacific Rim leaders -- declined to discuss more details of the talks.

Hu and Lien met one-on-one at last year's APEC gathering in Peru amid a warming in ties brought about the 2008 election of China-friendly President Ma Ying-jeou of the Kuomintang party.

It marked the highest-level overseas meeting between the former rivals since their split in 1949 after a civil war.

Lien, who is the honorary Kuomintang chairman, is the island's official representative to the APEC meeting.

Taiwanese presidents are barred from APEC summits due to objections from China, and have in the past been represented by senior economic advisers or business leaders.

The trade pact is likely to be discussed when delegates from the two sides meet in Taiwan for talks from December 21 to 23, Taiwan media reported on Thursday.

The talks will be the fourth since the marked improvement in relations began.

Chinese Commerce Minister Chen Deming said on Friday the economic pact was vital for Taiwan because without it, businesses on the island would be at a competitive disadvantage with other countries in the mainland China market.