China and Taiwan in historic flights breakthrough

BEIJING (Reuters) - Long-time political rivals Taiwan andChina, in their first formal talks in almost a decade, agreedon Thursday to launch direct weekend passenger flights startingfrom July 4, the first in nearly 60 years, Taiwan TV reported.

In another move that suggests relations are at theirwarmest in decades, a senior Chinese official will also visitTaiwan later this year for discussions on a slew of otherissues in what could shape up as a regular exchange, the twosides said.

Apart from on special holidays, there have been no regulardirect flights between China and Taiwan since 1949. Chinainsists flights to and from Taiwan go via a third territory,such as Hong Kong or Macau, ostensibly for security reasons.

Taiwan TV said China had also agreed to allow tour groupsof up to 10 people at a time to visit Taiwan from July 18.

A formal accord on the deals is expected on Friday.

"In today's negotiations, the two sides in a harmoniousatmosphere frankly exchanged ideas, accumulating a large numberof common ideas," Taiwan's negotiating body, the StraitsExchange Foundation, said in a statement.

Trickier issues such as a peace treaty and the hundreds ofmissiles Taiwan says China has aimed at the island are notexpected to be discussed at the talks.

Though China claims sovereignty over Taiwan and Beijing hasvowed to bring the island under its rule, by force ifnecessary, ties are improving under Taiwan President MaYing-jeou, who was elected in March on pledges to make peacewith Beijing.

Chen Yunlin, who heads a semi-official body set up to dealwith Taiwan in the absence of diplomatic ties, accepted aninvitation to visit Taiwan from his counterpart, P.K. Chiang,at a date to be decided later.

Chen would be the most senior Chinese official to reachTaiwan since 1949, when Mao Zedong's Communists won the Chinesecivil war and Chiang Kai-shek's Nationalists fled to theisland.

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Chiang also said the two sides should look beyond the firstround of talks and at other issues that need tackling.

In the first formal talks between the two sides since 1999,negotiators indicated they could reach a direct cargo agreementwithin three months of July and later let airlines from eachside station personnel on the other's territory, Taiwan TVsaid.

But the direct weekend flights must continue to detourthrough Hong Kong airspace, as they do now during majorholidays, for security reasons, TV reported. New air routeswill be a subject of later negotiations.

China's Xinhua news agency added that China's Associationfor Relations Across the Taiwan Strait and Taiwan's StraitsExchange Foundation, the only agencies empowered to negotiateformally, would set up representative offices on either side.

China and Taiwan last spoke formally in 1999, before formerTaiwan President Lee Teng-hui enraged Beijing by describingties as "a special state-to-state relationship".

Thursday's negotiations should pave the way for regulartalks at which harder issues can be discussed, said AlexanderHuang, a professor of strategic studies at Taipei's TamkangUniversity.

"We are trying to put all the difficult issues on the shelfthis time," Huang said.

China is keen to avoid diplomatic rows in the run-up to theBeijing Olympics in August and had been expected to take aconciliatory line this week.

In Taiwan, 750,000 business people have gone to work inChina, pressuring the two sides to add direct flights, whileTaiwan's moribund hospitality industry wants to see more visitsfrom increasingly well-off Chinese tourists, who are usuallybarred now due to security and visa overstay concerns.

In a further sign of a thaw, Taiwan's central bank said onWednesday it would allow financial institutions to sell Chineseyuan to individuals as well as buying the currency from them.

But Taiwan's main opposition Democratic Progressive Partyaccused the government of courting Beijing because of theruling party's business connections in China.

"We can't belittle Taiwan's sovereignty, and we can't losethe country's dignity," a party official said in a statement.

(Additional reporting by Ralph Jennings in Taipei; Editingby David Fox)