Security was tight as hundreds of demonstrators gathered in the central city of Taichung for the four-day visit by Chen Yunlin, the head of a quasi-official Chinese body handling Taiwan relations in the absence of formal ties.

A small scuffle broke out between police and protesters outside his hotel, but police said no one was injured or arrested. The numbers were well down on the tens of thousands of people opposed to closer Taiwan-China ties who had marched through Taichung on Sunday.

"Relations are constantly moving ahead in the right direction," Chen said after being whisked inside the hotel. "In the past year we have negotiated as equals and communicated with goodwill to reach consensus."

In a reference to the demonstrators, he said: "I saw many compatriots who oppose my visit and others who welcome me here to engage in talks for a mutual win-win. I definitely respect the expression of different opinions."

It is rare for a travelling Chinese official to acknowledge protests directed against him, let alone say that he tolerates them.

Anti-China demonstrators had lined up to protest against Chen as he drove into the city from Taichung airport but he avoided them by taking a different route from the one expected.

Chen is due on Tuesday to hold his fourth meeting with his Taiwanese counterpart Chiang Pin-kung since Ma Ying-jeou of the pro-China Kuomintang (KMT) party became president of the island in May last year.

Ma has promised to lift Taiwan's crisis-battered economy by deepening exchanges with China, and his administration aims to sign a wide-ranging trade pact with the mainland some time next year.

"All my policies focus on what is good for the Taiwanese people," Ma said. "The people can rest assured that I will defend Taiwan's sovereignty and interests."

A heavy police presence was in evidence outside the hotel, which was ringed by lines of barbed wire, with a total of 5,000 officers deployed to keep order during Chen's visit.

About 1,000 members of the Falungong spiritual movement, banned by China as an "evil cult," vowed to stage an overnight sit-in outside Chen's hotel to protest what they claim vicious persecution by the mainland authorities.

They were joined by pro-Tibet demonstrators carrying a large picture of the Himalayan region's exiled leader, the Dalai Lama.

"Even if he decided to stay for a whole month, we'd be protesting every day," a Tibetan told AFP as he waved the region's Snow Lion flag.

Taiwan and China have been ruled separately since the end of a civil war in 1949, but Beijing claims the island as part of its territory and believes reunification is only a question of time.

Chen is expected to sign agreements on agricultural quarantine and other economic issues during his talks on Tuesday. He will attend a business conference on Wednesday and tour scenic spots Thursday before leaving Friday.

But a planned deal to avoid double taxation has been put off for the two sides "to sort out some differences," said Kao Koong-lian, vice chairman of Taiwan's Straits Exchange Foundation.

The Chinese envoy said last week that although the trade pact would not be a top agenda item, he expected general discussions on it while he is in Taichung.

The main opposition Democratic Progressive Party (DPP), which seeks formal independence from China, says the pact could make the island more reliant on the mainland, and would not even create the promised economic benefits.

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