Reuters International

Taiwan's President Tsai Ing-wen (R) receives an official seal after swearing in at the Presidential Office in Taipei, Taiwan May 20, 2016. REUTERS/Taipei Photojournalists Association/Pool

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By J.R. Wu and Faith Hung

TAIPEI (Reuters) - Taiwan's new president urged China on Friday to "drop the baggage of history" in an otherwise conciliatory inauguration speech that Beijing's Communist Party rulers had been watching for any move towards independence.

President Tsai Ing-wen was sworn in with Taiwan's export-driven economy on the ropes and China, which views the self-ruled island as its own, looking across the Taiwan Strait for anti-Beijing sentiment that could further sour economic ties.

Tsai's Democratic Progressive Party (DPP), which has traditionally favoured independence, won parliamentary and presidential elections by a landslide in January on a voter backlash against creeping dependence on China. It takes over after eight years under China-friendly Nationalist Ma Ying-jeou.

Tsai, Taiwan's first woman president, said Taiwan would play a responsible role and be a "staunch guardian of peace" with China.

"Cross-Strait relations have become an integral part of building regional peace and collective security," she told thousands outside the presidential office.

"The two governing parties across the Strait must set aside the baggage of history and engage in positive dialogue for the benefit of the people on both sides."

China, which has never renounced force to take control of what it considers a renegade province, said this month the new Taiwan government would be to blame for any crisis that might erupt.

Chiang Kai-shek's Nationalists fled to Taiwan after losing the civil war to the Communists in China in 1949. China has pressured the new government to stick to the "one China" principle agreed with the Nationalists. That allows each side to interpret what "one China" means.

China's Taiwan Affairs Office said Tsai's remarks were an "incomplete answer", warning that China saw any push for Taiwan independence as "the biggest menace to peace across the Taiwan Strait", according to the official Xinhua news agency.

Chinese Foreign Ministry spokeswoman Hua Chunying, asked about the inauguration, merely praised the record of the "one China" policy.

"Regardless of what internal changes take place within Taiwan, China will uphold the one China principle and oppose Taiwanese independence," she told a briefing.

"LET'S SET ASIDE DISPUTES"

In a sign of a deteriorating economy, Taiwan's export orders fell more than expected in April, their 13th straight month of decline, according to data released on Friday, as demand in China and other global markets remained weak.

Taiwan markets reacted calmly to Tsai's speech. The main stock index reached an intraday high as she spoke, before closing 0.4 percent higher.

Tsai pledged to abide by the constitution of the Republic of China, Taiwan's formal name, and promised to safeguard the island's sovereignty and territory.

She also mentioned the East China and South China Seas, where an increasingly muscular China has been at odds over territorial claims with its neighbours.

"Regarding problems arising in the East China Sea and South China Sea, we propose setting aside disputes so as to enable joint development," she said.

The American Institute in Taiwan, which represents U.S. interests in the island in the absence of formal diplomatic ties, said it looked forward to working with the new government.

The United States switched diplomatic recognition from Taiwan to China in 1979 but is also Taiwan's biggest ally and arms supplier.

China is deeply distrustful of Tsai's DPP, whose charter includes a clause promoting "a sovereign and independent Republic of Taiwan".

Voted in by a Taiwanese public equally distrustful of growing economic dependence on China, the DPP also champions Taiwan’s own history. There were massive protests in 2014 that stalled a trade pact with China and were a key element of the DPP's rise.

(Additional reporting by David Brunnstrom in WASHINGTON and Megha Rajagopalan in BEIJING; Editing by Paul Tait and Nick Macfie)

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