Faced with pressure from China, Taiwan's new President Tsai Ing-wen struck a conciliatory tone in her inauguration speech, calling for both sides to "set aside the baggage of history" and engage in "positive dialogue".
But Ms Tsai, 59, who was sworn into office yesterday, stopped short of mentioning the 1992 Consensus, a tacit agreement between the two sides recognising that there is one China but with each side having its own interpretation of what it means. Beijing insists it must be the basis for stable cross-strait ties.
Instead, Ms Tsai merely alluded to it, saying: "I respect this historical fact." She acknowledged that talks between both sides took place in 1992 at which there was "joint acknowledgement of setting aside differences to seek common ground".
But she made a small concession, saying cross-strait affairs will be handled in accordance with the Constitution of the Republic of China - Taiwan's official name - which states that Taiwan and the mainland are both part of "one China", and other relevant legislation.
Responding to Ms Tsai's remarks China's Taiwan Affairs Office said they were an "incomplete answer" on the nature of relations between the two sides. It warned that China sees any push for Taiwan's independence as "the biggest menace to peace across the Taiwan Strait", reported Xinhua news agency.
Beijing, which regards Taiwan as a breakaway province, is deeply suspicious of Ms Tsai and her independence-leaning Democratic Progressive Party and has been piling on the pressure for her. Among other things, it has formalised ties with the Gambia, which had earlier severed ties with Taiwan. Still, observers like Academia Sinica's Professor Wu Yu-shan thought Beijing's response "will be measured", given that she did not mention the pursuit of independence.
Taiwanese markets reacted calmly yesterday, with the island's main index closing 0.4 per cent higher.
Dressed in a cream jacket over a white top, and black pants - neutral, non-partisan colours - Ms Tsai also spoke about the need for transitional justice so that the historical past does not continue to divide Taiwanese society. She was alluding to the White Terror era of suppression of political dissidents from 1947 to 1987.
A good part of her 30-minute speech was on reforms to boost a moribund economy, improve the social safety net and better prepare Taiwan's youth for the future.
Acknowledging that "the path forward is not a smooth one", Ms Tsai appealed to the Taiwanese people to work together with her.
Ms Tsai is Taiwan's fourth directly elected president and its first woman president.
Some 27,000 people attended the inauguration and millions more watched it live on TV.
"I hope she will be able to deliver what she promised during the elections and make our lives better," said schoolteacher Lin Kai-xi, 38, who took part in the celebrations.