Chinese President Hu Jintao offered on Monday to enter into negotiations with Taiwan to reach a peace agreement in an overture to the self-ruled island which China claims as its own.

Addressing the opening of the Communist Party's 17th Congress, Hu warned the democratic island against formally declaring independence, but did not take the opportunity to threaten force as predecessors have in the past.

"We would like to make a solemn appeal: on the basis of the one-China principle let us discuss a formal end to the state of hostility between the two sides (and) reach a peace agreement," Hu said, reading from a prepared statement.

China has offered in the past to resume talks with Taiwan, frozen since 1999 when then-Taiwan president Lee Teng-hui insisted that bilateral relations be described as "special state to state" which would imply that Taiwan was a separate country.

China has claimed sovereignty over Taiwan since their split in 1949 when Mao Zedong's Communists won the Chinese civil war and Chiang Kai-shek's defeated Nationalists fled to the island.

"We are ready to conduct exchanges, dialogue, consultations and negotiations with any political party in Taiwan on any issue as long as it recognizes that both sides of the Straits belong to one and the same China," Hu said, referring to Taiwan's ruling pro-independence Democratic Progressive Party.

In Taipei, the government's Mainland Affairs Council said it was willing to meet but not if Hu insists that Taiwan is part of China or continues to govern China under one-party rule.

"We hope to meet with China at an early date to discuss democratic development," the council said in a statement. "But (Hu's) political report lacks any real democratic reform, and the whole country's power is grasped in the hands of Communist Party dictators."

The China point man with Taiwan's ruling Democratic Progressive Party China cautiously welcomed the overture.

"We would like to talk about everything. Our consistent position is to talk without any preconditions ... We want to wait to see more. (Hu's) actions speak louder than words," Lai I-Chung, the DPP's director of China affairs, told Reuters.

China says the civil war with Taiwan has not ended, although bilateral trade, investment and tourism have blossomed since the late 1980s.

An increasingly assertive Taiwan plans to hold a referendum next year on U.N. membership, ignoring warnings from the United States and China. The bid is doomed whatever the outcome, however, because China is a veto-wielding permanent member of the U.N. Security Council.

Hu's 140-minute speech was milder in tone than that of his immediate predecessor, Jiang Zemin, who threatened to use force against Taiwan in his 16th Party Congress speech in 2002.

Hu pledged peaceful reunification to sustained applause from the Congress, the Communist Party's five-yearly gathering of officials and carefully vetted grassroots delegates who meet to endorse the Party's policies and likely future leaders.

"We will ... never abandon our efforts to achieve peaceful reunification, never change the policy of placing our hopes on the people in Taiwan and never compromise in our opposition to the secessionist activities at Taiwan independence," Hu said.

"We will never allow anyone to separate Taiwan from the motherland in any name or by any means."

At the same time Hu acknowledged that China and Taiwan have yet to be reunified.

"Although the mainland and Taiwan are yet to reunified, the fact that they belong to one and the same China has never changed," Hu said.

Hu told President George W. Bush last month that the run-up to the 2008 Beijing Olympics would be a period of "high danger" in the Taiwan Strait, seen as one of Asia's most dangerous flashpoints.

(Additional reporting by Vivi Lin in Beijing and Ralph Jennings in Taipei)

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