China and Taiwan agree on flights

China and Taiwan signed a landmark deal on Friday to launch regular flights between the long-time rivals as politics was put aside in favour of practicalities in the first such talks in almost a decade.

Apart from special holidays, there have been no regular direct flights since 1949, when the defeated Nationalists fled to the island amid civil war with the Communists.

China has claimed sovereignty over self-ruled and democratic Taiwan ever since and has pledged to bring the island under its control, by force if necessary.

But the election of Taiwan President Ma Ying-jeou, who won by a landslide in March on pledges to boost the local economy by improving trade with China, has suddenly warmed relations.

"This is good for Ma Ying-jeou because he wants to deliver in his first 100 days," said Joseph Cheng, political science professor at City University of Hong Kong.

"Beijing is eager to win the hearts of the Taiwan people."

Goldman Sachs forecast Taiwan GDP growth to slow to 4.5 percent this year from 5.7 percent in 2007, but to rise to 4.8 percent next year "as the economic impact from the progress on cross-Strait policies comes to fruition".

The Taiwan dollar rebounded against the U.S. currency on Friday. Taiwan stocks were up just 0.45 percent.

Chinese shares in Xiamen International Airport, which is located in Fujian province across from Taiwan and could benefit from air links, jumped 5.32 percent on Friday morning in a weak overall market.

The first flights, limited for now to weekend charters, will start on July 4 and Taiwan media said the first Chinese tour groups to Taiwan would start arriving from July 18, two key election pledges of China-friendly Ma.

"POSITIVE STEP FORWARD"

As many as 3,000 China tourists, the number Ma first proposed, could come to the island per day, Taiwan media said.

China's Xinhua news agency said service would include 36 return flights for every weekend, from Friday to Monday, and the number would increase according to demand.

Mainland and Taiwan airlines would operate 18 flights each.

"It's a very positive step forward," said Taiwan businesswoman Natasha Lai. "Before, we were not able to travel directly for business or pleasure. Now to see our sentiment reciprocated on the other side is great."

Talks between China and Taiwan had been broken off for almost a decade, with Beijing refusing to deal with pro-independence then President Cheng Shui-bian.

"The good momentum of cross-Strait relations development is hard-won and we should cherish and nurture it," Xinhua quoted Wang Yi, head of China's Taiwan Affairs Office, as telling chief Taiwan negotiator, P.K. Chiang, in Beijing.

The talks were conducted by two semi-official bodies in the absence of formal diplomatic links.

Trickier issues, such as a peace treaty formally ending the civil war and the hundreds of missiles Taipei says China has aimed at Taiwan, were not believed to have come up.

Ma hopes letting Chinese tourists visit can boost the island's economy, while opening direct flights will save time and money for the hundreds of thousands of Taiwanese who live and work in China and now have to fly via Hong Kong or Macau.