China Premier Wen Jiabao made a new overture to Taiwan on Thursday, saying Beijing was ready to create the conditions needed to reach a peace agreement with the neighbouring self-ruled island China claims as its own.
China was also willing to hold talks with Taiwan on military issues, Mr Wen said.
His comments - while not representing a major breakthrough in cross-strait political relations and Beijing's "one-China" principle - underscore the warming of ties since China-friendly Taiwan President Ma Ying-jeou took office in May last year.
Mr Ma has advocated a peace deal since his election.
Any pact would benefit both sides, Taiwan's government said, but added that the recession-hit island wanted economic agreements with its massive trade partner before political ones.
China has claimed sovereignty over Taiwan since the end of the Chinese civil war in 1949 when defeated Nationalist forces fled to the island. It has vowed to bring the island under mainland rule, by force if necessary.
Tensions have brought China and Taiwan intermittently to the brink of war during the past six decades in what is considered potentially one of the most dangerous flashpoints in Asia.
But building on better ties since Mr Ma took office, the two sides have launched direct daily passenger flights, new shipping routes and postal links.
Mr Wen did not elaborate on talks on political and military issues, but they could include military confidence building, Chinese military vessels making port calls on Taiwan ports and vice-versa.