SHANGHAI - CHINESE companies need official approval before they can invest in Taiwan, Beijing has said, even as it pledged it would encourage businesses to expand into the island.

Chinese companies wishing to put money into Taiwan must first apply to the Ministry of Commerce and the Cabinet's Taiwan Affairs Office, according to a joint statement posted on the ministry's website.

Investments in Taiwan must be mutually beneficial and are not allowed to hurt national security or 'unification' of the mainland and the island, the statement said.

The two sides have been governed separately since they split in 1949 at the end of a civil war.

The statement was dated Sunday, the same day Wang Yi, head of the State Council Taiwan Affairs Office, said Beijing would push mainland businesses to invest in Taiwan to help it weather the global economic crisis.

Relations between Taiwan and once bitter rival China have warmed since Taiwanese President Ma Ying-jeou was elected a year ago.

The two sides have since held three rounds of meetings and signed a raft of agreements that led to regular direct flights across the strait, a steep rise in Chinese tourists, and greater cooperation between the two. -- AFP