BOAO, China — Chinese President Hu Jintao met with Taiwan's vice president-elect today on improving economic relations, the highest-level political contact between the sides in more than half a century.

Separated amid civil war in 1949, China and Taiwan have had almost no direct contact between their governments. China claims Taiwan as part of its territory and threatens to invade if the self-governing island tries to make its de facto independent status formal.

But today, Hu sat down with Vincent Siew for a low-key but historic meeting on the sidelines of a business conference in the southern Chinese resort of Boao.

Better economic relations with China was a key plank in the platform that boosted incoming Siew and President-elect Ma Ying-jeou to victory in Taiwan's March 22 elections. They take office on May 20.

After exchanging pleasantries with his Taiwanese visitor, Hu said improving relations required efforts from both sides.

"On this occasion I am happy to exchange opinions on the cross-strait economy with Siew," he said.

Siew, who was accompanied by a 12-member Taiwanese delegation, said closer economic ties would facilitate regional peace and improve the lives of ordinary Taiwanese and Chinese.

"Reality proves that cross-strait economic development is the common wish of people on both sides (of the strait)," he said.

The meeting could mark a watershed for relations that have been especially bumpy over the past eight years under independence-leaning Taiwanese President Chen Shui-bian. Siew's Nationalist Party, in contrast, favors eventual unification with China although Ma has placed the issue on the back burner.

Beijing refuses to recognize Taiwan's elected government, acknowledging Siew only as chairman of the Cross-Strait Common Market Foundation, a private group that seeks to build economic cooperation between China and Taiwan.

U.S. Deputy Secretary of State John Negroponte told reporters Friday that the meeting would be "a good way forward" in efforts to settle differences between the rivals.

Despite the rocky political relations, Taiwanese companies have already invested more than $100 billion in mainland China. Bilateral trade in 2007 exceeded $80 billion.