SINGAPORE: Chinese President Hu Jintao called Saturday for formal talks on a landmark economic pact with Taiwan to start by the end of the year, in a rare meeting here with a top politician from the island.

Hu met former Taiwan vice-president Lien Chan in Singapore on the sidelines of an Asia-Pacific Economic Cooperation (APEC) summit, in an encounter that was closely watched as a barometer of improving relations.

Hu appeared to give an important push to a recent thaw between the historic rivals that has them now mulling an unprecedented economic agreement, calling the improvement in ties "historic", according to Chinese media.

"We must... strive to start the process of negotiations on the Economic Cooperation Framework Agreement by the end of the year," Chinese state television quoted him as telling Lien.

Lien had said Friday he wanted formal talks on the agreement -- which would see the two sides put their fast-growing economic links on a regularised, systematic basis -- -- to begin by year-end.

Talks had so far been held on an informal basis in the absence of regular official contact between China and the self-ruled island, which Beijing claims as its own.

According to Taiwan's state-funded Central News Agency, Lien told Hu that Taipei welcomed Chinese investors and thanked Beijing for going ahead with several large purchasing delegations despite the economic crisis.

"At present, development of cross-strait relations is faced with an important historical opportunity," Hu was quoted as telling Lien by China's state news agency Xinhua.

"We should firmly grasp the theme of peaceful development of cross-strait relations, maintain the correct direction, widen the road ahead, and constantly open up new prospects for the peaceful development of cross-strait relations."

Chinese officials in Singapore for the APEC meeting -- which was to be attended by Hu, US President Barack Obama and 19 other Pacific Rim leaders -- declined to discuss more details of the talks.

Hu and Lien met one-on-one at last year's APEC gathering in Peru amid a warming in ties brought about the 2008 election of China-friendly President Ma Ying-jeou of the Kuomintang party.

It marked the highest-level overseas meeting between the former rivals since their split in 1949 after a civil war.

Lien, who is the honorary Kuomintang chairman, is the island's official representative to the APEC meeting.

Taiwanese presidents are barred from APEC summits due to objections from China, and have in the past been represented by senior economic advisers or business leaders.

The trade pact is likely to be discussed when delegates from the two sides meet in Taiwan for talks from December 21 to 23, Taiwan media reported on Thursday.

The talks will be the fourth since the marked improvement in relations began.