China economic official in Taiwan for talks

TAIPEI, Mar 2 (Reuters) A senior Chinese government official is in Taiwan for meetings with leading Taiwanese companies in a rare exchange between the two political rivals, local media and a government official today said.

He Shizhong, chief of the economics department at China's Taiwan Affairs Office, is leading a delegation of banking and finance officials for the 10-day trip, the Chinese-language Commercial Times said.

The delegation arrived in Taiwan on Thursday, newspaper reports said.

An official at Taiwan's Mainland Affairs Council, the island's top China policy-making body, confirmed He was visiting at the invitation of Taiwan's Chinese National Federation of Industries, a group of leading industrialists.

The official declined comment on the delegation's itinerary.

No meetings were scheduled with Taiwan government officials, the Economic Daily News reported, quoting a source at the federation. It added that the trip was low profile.

Visits by Chinese officials are rare as Beijing considers the island a renegade province and it refuses to deal with the independence-leaning government of President Chen Shui-bian.

Taiwan has been ruled separately from China since 1949, when the former Nationalist Party government retreated to the island following its defeat by Chinese communists in the civil war.

The Chinese delegation includes Jin Qi, chief of the International Department from the People's Bank of China, and government trade agencies, the Commercial Times said.

He and the delegation would meet with executives from some of the island's largest firms including Formosa Plastics Group the island's largest private petrochemical group, Cathay Financial Holdings, Taiwan's top financial holding firm, and the Uni-President Group, the largest food group, the reports said.

Despite strained political ties, economic links between the two sides have blossomed since the late 1980s with Taiwan businessmen investing an estimated US0 billion in the mainland, the island's largest trading partner.

The two sides are also close to finalising a deal to expand direct charter flights between Taiwan and China, in what could be an interim step towards regular air links and help in opening the island to mainland tourists.

REUTERS SHB RAI1015