Mr Lien is accused of ignoring China's military threat

Lien Chan is in the Chinese capital Beijing for two days of talks with the communist party. He is due to meet President Hu Jintao on Sunday.

Mr Lien is leading a delegation of more than 100 Taiwanese opposition politicians and business people.

The visit has attracted criticism from government supporters in Taiwan.

'Shared prosperity'

Mr Lien told a forum on cross-strait economic ties that the absence of direct transport links was an obstacle to further development.

"Without the resources of the mainland, Taiwan cannot go far," he said.

And he urged against demonising China and treating it "as a threat".

"Faced with China's rise, we should be benign, optimistic and focused on co-existence and shared prosperity," he said.

Chinese Communist Party official Jia Qinglin said there was great potential for co-operation between the two.

"We should have more exchanges in key industrial sectors and set up a mechanism to share research resources, thus improving innovation capabilities," he said.

Mr Lien visited Beijing in April 2005, the first meeting between the leaders of the Kuomintang and the Chinese Communist Party since the Kuomintang lost the civil war and fled to Taiwan in 1949.

His visit has attracted criticism in Taiwan amid a debate over expanding commercial ties with China.

Analysts have suggested Beijing's overtures to Taiwan's opposition are an attempt to isolate President Chen Shui-bian, who leans towards formal independence for Taiwan.

China regards Taiwan as a renegade province that must be re-united with the mainland.