China and Taiwan in historic flights breakthrough: TV

BEIJING (Reuters) - Long-time political rivals Taiwan and China, in their first formal talks in almost a decade, agreed on Thursday to launch direct weekend passenger flights starting from July 4, the first in nearly 60 years, Taiwan TV reported.

In another move that suggests relations are at their warmest in decades, a senior Chinese official will also visit Taiwan later this year for discussions on a slew of other issues in what could shape up as a regular exchange, the two sides said.

Apart from on special holidays, there have been no regular direct flights between China and Taiwan since 1949. China insists 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 groups of 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 harmonious atmosphere frankly exchanged ideas, accumulating a large number of common ideas," Taiwan's negotiating body, the Straits Exchange Foundation, said in a statement.

Trickier issues such as a peace treaty and the hundreds of missiles Taiwan says China has aimed at the island are not expected to be discussed at the talks.

Though China claims sovereignty over Taiwan and Beijing has vowed to bring the island under its rule, by force if necessary, ties are improving under Taiwan President Ma Ying-jeou, who was elected in March on pledges to make peace with Beijing.

Chen Yunlin, who heads a semi-official body set up to deal with Taiwan in the absence of diplomatic ties, accepted an invitation 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 reach Taiwan since 1949, when Mao Zedong's Communists won the Chinese civil war and Chiang Kai-shek's Nationalists fled to the island.

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Chiang also said the two sides should look beyond the first round 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 agreement within three months of July and later let airlines from each side station personnel on the other's territory, Taiwan TV said.

But the direct weekend flights must continue to detour through Hong Kong airspace, as they do now during major holidays, for security reasons, TV reported. New air routes will be a subject of later negotiations.

China's Xinhua news agency added that China's Association for Relations Across the Taiwan Strait and Taiwan's Straits Exchange Foundation, the only agencies empowered to negotiate formally, would set up representative offices on either side.

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

Thursday's negotiations should pave the way for regular talks at which harder issues can be discussed, said Alexander Huang, a professor of strategic studies at Taipei's Tamkang University.

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

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

In Taiwan, 750,000 business people have gone to work in China, pressuring the two sides to add direct flights, while Taiwan's moribund hospitality industry wants to see more visits from increasingly well-off Chinese tourists, who are usually barred now due to security and visa overstay concerns.

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

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

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

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