Taipei: Taiwan's stance on China remains unchanged, the country's top mainland policy maker insisted on August 5 before heading to the United States to reportedly reassure Washington on the island's China policy.

"Our mainland policy is consistent, based on President Chen's framework laid down in his inaugural speech," chairwoman Tsai Ing-wen of the Mainland Affairs Council said despite calls by President Chen Shui-bian for a referendum on Taiwan's future which has angered Beijing.

"Our efforts seeking ways to improve cross-straits ties and to resume dialogue with Beijing remain unchanged," she told reporters.

"As long as communist China drops its intention to use force against Taiwan, we will honour the President's pledge made at his inauguration and promote bilateral exchanges based on reconciliation, co-operation and peace."

Taiwanese media said Tsai would use her time in New York to clarify Taipei's China policy to Washington

The hastily arranged trip follows Chen's comments on August 3 that he favoured the island's 23 million people voting whether the country should declare independence or be reunified with the mainland in a plebiscite.

Chen, from the pro-Independence Democratic Progressive Party (DPP), said he would push for a referendum to decide the future of Taiwan, which Beijing considers part of its territory since their split in 1949.

He also defied Beijing's sovereignty claim over Taiwan by saying: "Each side (of the Taiwan Strait) is a country."

Tsai's comments came as China issued a stark warning that Chen's call would have dire consequences for the island.

"He will bring disaster to Taiwan," said Li Weiyi, a spokesman for the Taiwan Affairs Office of the State Council.

"We solemnly warn Taiwan splittists not to be mistaken: immediately rein in the horse, which is on the brink of disaster and end all splittist activities."

Share prices plummeted 5.8 per cent to close at 4,636.67 points on August 5 amid panic selling in reaction to Chen's provocative remarks that investors feared would jeopardise already volatile cross-strait ties.

Some analysts suspected he was trying to rally DPP candidates ahead of elections in the next two years including the March 2004 Presidential polls in which he is expected to run for re-elections.

"Chen deliberately voiced his preference for independence knowing it would trigger a negative response from China and fuel up ethnic conflicts at home to benefit the DPP," said Wei Yung, president of the Vanguard Institute for Policy Studies.

Tsai, however, asked the public not to over-interpret Chen's remarks which she said only "state a reality".

She asked Beijing "not to test our bottom line" by continuing to make moves that hurt bilateral ties.

"Our government policy of seeking a stable and constructive relationship has not been changed. We also have the responsibility to create a stable environment for the resumption of cross-strait dialogue," she said.

But despite various political and economic relaxations already adopted, Tsai lamented that Beijing "has not reciprocated our friendliness with a concrete and obvious response."

Beijing has instead continued to apply pressure on Taipei diplomatically and reiterate its threat to re-take it with force if necessary.

Chen's statement was in contrast to the mainland policy laid down at an inaugural speech when he pledged not to declare Taiwanese independence and not to push for a referendum.

Tsai argued that the president was trying to safeguard the status quo so "the independence and freedom we enjoy now will not be destroyed, changed." Chen has insisted on Taiwan's independent sovereignty since his May 20, 2000 inauguration, rejecting Beijing's reunification proposals under the "one China, two systems" policy which downgrades the island to a special administration district under Chinese rule.