China and Taiwan sign landmark deal

China and Taiwan moved closer to overcoming six decades of hostilities today, as they signed deals drastically expanding direct flights and allowing shipping links across the Formosa strait.

The agreement follows a dramatic thaw in relations over the last six months, since the election of Taiwan's new president, Ma Ying-jeou. The island broke away from the mainland at the end of the civil war in 1949.

Beijing and Taipei have agreed to set aside contentious political issues to work on improving economic links - important to both at a time of worldwide gloom.

Thousands of demonstrators led by the opposition Democratic People's party spent a night on the streets of central Taipei, using loudspeakers to condemn the visit of Chen Yunlin - the most senior Chinese official to visit the island in 60 years - and accuse Ma of selling out to Beijing.

But today Chen enjoyed a warmer welcome as he sipped champagne with his Taiwanese counterpart, Chiang Pin-kung. The two men posed for photographers holding a piece of framed calligraphy reading: "Peaceful negotiation creates a win-win situation."

Chiang told reporters that direct shipping would shave 16 hours and up to 30% in costs off voyages, helping Taiwan to become an Asian transport hub and explore the mainland market.

This summer saw the first regular direct flights across the 100-mile strait since the civil war, but Andrew Yang, the secretary general of the Chinese Council for Advanced Policy Studies think tank in Taipei, said today's deal, which also tripled the number of flights, was a major advance on that symbolic change.

"Now it's more substantial," he said. "Direct cargo links also means Taiwan's hi-tech products can be directly shipped to the mainland, which should boost the confidence of local people ... Hopefully more robust cross-Straits economic ties will help to stabilize the economic situation."

Yang said it was too early to judge how Ma's slumping poll ratings would be affected by the agreement.

The agreement also includes measures for greater cooperation on food safety, enabling faster recalls of substandard products and better exchange of information.

The two sides agreed to hold talks every six months and focus on closer financial ties in the next round of discussions. Taiwan's negotiator suggested joint criminal law enforcement could also be on the agenda.

Taiwan has enjoyed effective independence since the end of the civil war in 1949, but Beijing has warned it would take military action if the island attempts to formalise its status.