Taiwan has called on China to begin talks on a range of economic issues, as it seeks to build on the momentum created by a landmark deal that will see the first non-stop commercial flights between the two rivals in 55 years.

Aviation officials from Beijing and Taipei agreed at a weekend meeting in Macau to allow airlines to operate special charter flights across the Taiwan Strait around the Chinese lunar New Year, which this year falls in early February.

The agreement may open the way to dialogue on practical issues between the two sides after six years of near-deadlock and will ease international concerns about possible conflict across the Strait one of Asia's most potentially combustible military flashpoints.

Such fears were fuelled last year by increasingly martial rhetoric from Chinese officials angered by what they saw as efforts by Taiwan to formalise the island's de facto independence.

Joseph Wu, chairman of the Mainland Affairs Council, Taiwan's cabinet-level China policy body, said the weekend pact should also pave the way for wider talks.

“We are ready to negotiate common steps to fight crime, facilitate cross-Straits cargo transport and on other economic and financial issues,” Mr Wu said. “Progress can be made if China again takes the attitude it has adopted this time.”

Financial discussions could include negotiations aimed at allowing Taiwanese businesspeople to bring Chinese currency back to the island an important issue for the increasing number of Taiwanese investors into China.

However, the political gulf between the two sides means many issues surrounding their ever-closer economic and trade ties have never been discussed by the two governments.

The Macau deal will allow Chinese airliners to fly legally to Taiwan for the first time since 1949, when the Kuomintang fled to the island after losing the civil war in China.

While Taiwanese carriers were permitted to offer charter flights to the mainland in 2003, the agreement allows them for the first time to do so without stopping en route.

The economic and business impact of the agreement will be minimal, however, since the charter flights for Taiwanese businessmen in China and their relatives will only be allowed in the weeks around the lunar New Year.

Billy Chang, head of the Civil Aeronautics Administration, represented Taipei in the talks while Beijing sent Pu Zhaozhou, a senior official of the Civil Aviation Administration of China.

The officials met in a private capacity, since Beijing has insisted that Taipei accept its “One China” principle on reunification before formal talks between the two sides can resume.

Six airlines from each side will be allowed to operate cross-Strait charter flights from January 29 to February 20. Both sides can offer up to 24 return flights linking Shanghai, Beijing and southern Guangzhou city with Taiwan's capital Taipei and southern port of Kaohsiung.

Normally, cross-Strait travellers must change aircraft at a third destination because of Taipei's decades-old ban on direct cross-Strait flights. The charter flights must detour through Hong Kong airspace but they are not required to land.

The Bush administration which has been pushing both sides to resume a dialogue welcomed reports of the agreement although it noted that the US had yet to receive official confirmation. “We would welcome such an agreement, because we believe it improves cross-Straits economic ties, serves both the interests of the People's Republic of China and Taiwan and is conducive to peace and stability in the region,” a state department spokesman said.

An analyst with close ties to the administration added that the agreement could help relieve some of the pressure on the White House from Congress where vocal opposition is growing to what is widely seen as China's worsening human rights record and its growing threat towards Taiwan.

Source: FT