Mr Chen pledged to build a "bridge of trust"
Taiwan's President Chen Shui-bian has been sworn in for a second four-year term after winning a controversial election in March.
Following are the excerpts from Mr Chen's inaugural speech in the capital, Taipei.
On his 20 March election
We must not allow the narrow margin of victory to become a source of greater conflict in society.
Thus, I hereby pledge to listen, to understand, to abide by laws and reasoning, and to strive to unify the people of Taiwan - so as to dissipate the animosity engendered by the campaign and rebuild a "bridge of trust" between the governing and opposition parties.
On relations with China
Faced with an ever-increasing military threat from across the Strait, it is imperative for all the people, including political adversaries, to forge a strong will to defend ourselves, proactively strengthening our defence equipment and upgrading our self-defence capabilities.
With the new century upon us, let the leaders on both sides of the Strait, in striving to attain the greatest welfare for their peoples, heed this new trend by adopting a brand new frame of mind - together, let us take a fresh, unparalleled approach in addressing future cross-strait issues.
We can understand why the government on the other side of the Strait, in light of historical complexities and ethnic sentiments, cannot relinquish the insistence on the "One China Principle".
By the same token, the Beijing authorities must understand the deep conviction held by the people of Taiwan to strive for democracy, to love peace, to pursue their dreams free from threat, and, to embrace progress.
But if the other side is unable to comprehend that this honest and simple wish represents the aspiration of Taiwan's 23 million people, if it continues to threaten Taiwan with military force, if it persists in isolating Taiwan diplomatically... this will only serve to drive the hearts of the Taiwanese people further away and widen the divide in the Strait.
If both sides are willing, on the basis of goodwill, to create an environment engendered upon "peaceful development and freedom of choice," then in the future, the Republic of China and the People's Republic of China - or Taiwan and China - can seek to establish relations in any form whatsoever. We would not exclude any possibility...
By building bridges, we will aim to close gaps and establish a foundation for mutual trust.
On proposed constitutional changes
Our current Constitution was promulgated under circumstances that were very different from the society we know today, and the majority of the articles in the Constitution no longer address the present - much less the future - needs of Taiwan.
The promotion of constitutional re-engineering and the re-establishment of the constitutional order are tasks that correspond with the expectations of the people and are in accordance with the consensus shared by all political parties.
By the time I complete my presidency in 2008, I hope to hand to the people of Taiwan and to our country a new version of our Constitution - one that is timely, relevant and viable - this is my historic responsibility and my commitment to the people.
In the same context, I am fully aware that consensus has yet to be reached on issues related to national sovereignty, territory and the subject of unification/independence. Therefore, let me explicitly propose that these particular issues be excluded from the present constitutional re-engineering project.
On relations with Taiwan's allies
Taiwan's long-term friendship with the United States, Japan and our allies in the world has been founded on the safeguarding of our common interests.
More importantly, it is an alliance of core values that we share: freedom, democracy, human rights and peace.