China said on Friday it wants to sign a broad economic agreement with Taiwan, which would slash import tariffs and open the banking sector, as part of a drive to promote peaceful ties with the self-ruled island.

In the new year, we will continue to adhere to the principle of developing cross-strait relations and promoting the peaceful reunification of the motherland, Chinese Premier Wen Jiabao told the largely rubber-stamp parliament's almost 3,000 delegates.

We will strengthen economic, trade and financial contacts between the two sides, he added. We will encourage qualified mainland enterprises to invest in Taiwan.

Following Taiwan's election of the China-friendly President Ma Ying-jeou in 2008, the two sides have signed trade and tourism deals, though there have been no direct political talks and military suspicions remain deep on both sides.

The next major deal expected to be signed is an economic cooperation framework agreement (ECFA), bringing the export-reliant island and economic powerhouse China closer together.

Many in Taiwan fear the deal would flood the island with products from the much larger China.

Wen said China was committed to signing the agreement, and would not ignore Taiwan's concerns.

We will promote a win-win situation, set up an economic cooperation mechanism that reflects the characteristics of both sides by negotiating and signing an economic cooperation framework agreement, he said.

Beijing wants to sign the trade deal in early 2010 to stop it from becoming an issue ahead of year-end polls in Taiwan's biggest cities, or next year as candidates gear up for the 2012 presidential race, said Raymond Wu, managing director of the Taipei-based political risk consultancy e-telligence.

Clearly, Beijing senses the urgency of getting ECFA signed this year, Wu said.

In his annual address to parliament, Wen did not repeat last year's offer to hold political and military talks with democratic Taiwan and sign a peace agreement with the island.

China reacted angrily after the United States unveiled in January its first arms package for Taiwan -- including missiles, helicopters and mine hunting ships -- threatening to impose sanctions on the companies involved.

Beijing has largely aimed its ire at the United States rather than Taiwan, wary of damaging warming relations.

The United States has been Taiwan's main arms supplier for decades since China and Taiwan split in 1949 amid civil war.

Wen made no mention of the U.S. arms sales.

China has threatened to use force to bring Taiwan back to the fold. Taiwan says China aims more than 1,000 missiles it.

(Reporting by Ben Blanchard in Beijing and Ralph Jennings in Taipei; Editing by Benjamin Kang Lim and Jeremy Laurence)

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