The pacts were the result of the first formal cross-strait talks in nine years and came a day after negotiators sprang a surprise breakthrough - to explore setting up semi-official offices in each other's territories.

The two sides, separated by the narrow Taiwan Strait, have had limited travel and trade links since splitting in 1949 amid a civil war.

While widely expected, the pacts turn the page on the past and help reduce tension across the strait - a key potential flashpoint in the region. They also allow thousands more people to travel between the mainland and Taiwan.

Regular direct flights starting on July 4 will end the current time- consuming - but mandatory - stopovers in Hong Kong, while the number of mainland visitors allowed to travel to Taiwan each day will treble to 3,000.

China's chief envoy at the talks, Mr Chen Yunlin, and Taiwan's top negotiator Chiang Pin-kung inked the agreements after striding side by side into a hall at Diaoyutai State Guesthouse, greeted by a blaze of camera flashes.

The two men head semi-official bodies which handle relations between China and Taiwan in the absence of official ties.

Signalling the importance Beijing placed on the signing, state broadcaster CCTV showed the 10-minute ceremony live.

In keeping with the conciliatory spirit of the occasion, the wives of Mr Chen and Mr Chiang wore similar cream-coloured suits and walked into the room holding hands. The two men exchanged the pens they used to sign the documents and clinked champagne glasses afterwards.

A day earlier, the two sides agreed to institutionalise exchanges and to hold the next round of talks in Taipei within the year.

Chinese President Hu Jintao, in his meeting with Mr Chiang in the afternoon, hailed the resumption of talks between Taiwan's Straits Exchange Foundation and the mainland's Association for Relations Across the Taiwan Strait as a 'good start worth celebrating'.

An equally upbeat Taiwan President Ma Ying-jeou said in Taipei that the resumption of talks might seem like a small step forward, 'but for us, it is a huge leap for cross-strait ties, almost like Armstrong landing on the moon'.

Adding a dose of realism, Mr Hu said there were still 'many problems to solve'.

Likewise, Mr Chiang said: 'There's still a long way to go for normalisation of cross-strait economic and trade exchange.'

Both sides had set aside politics to deal with less contentious economic issues first, but Mr Chiang said he raised Taiwan's perennial quest for more space on the international stage with Mr Hu.

In response, the Chinese leader suggested that Taiwan and China should seek 'mutually acceptable solutions' to the issue.

The United States and Japan yesterday welcomed the resumption of talks as a positive step towards cross-strait peace.

simcy@sph.com.sg

hwee@sph.com.sg

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