By Frances Harrison
Religious affairs reporter, BBC News
The installation of a new Catholic bishop of Beijing, Joseph Li Shan, thought to be approved by the Vatican, is viewed as an important step towards improving the unity of Catholics in China.
The last bishop of Beijing was hostile to the Vatican
Catholics in China are split - between the open Church which was formed in the 1950s and is under Chinese state control, and the underground Church which has more followers and pledges allegiance to Rome.
In past decades, the underground Church has approved its own bishops with the agreement of the Holy See.
Over the years, the official pro-state Church has also appointed its own bishops without approval from the Vatican and has merged some Sees and created new ones.
Chance for reconciliation
Catholic worship is only allowed in the state-approved Patriotic Church
The result is Catholics are divided and there are serious administrative problems. Some areas have two bishops - official and unofficial - while church property is divided.
The Vatican wants the two churches to merge gradually - some estimates say more than 80% of the bishops in China are already recognised by the Vatican.
In June the Pope wrote to Chinese Catholics urging reconciliation and offering dialogue with the government on the issue of the appointment of bishops.
The letter received a subdued reaction from the Chinese government.
But all eyes were on future appointments of bishops, with the Beijing post being the most significant in the country.
The fact that a candidate deemed suitable by the Vatican has the post is important because the last bishop of Beijing was hostile to the Vatican, and last year three bishops were ordained without Vatican approval.
It is being viewed as a sign that China wants better relations with the Vatican in advance of the Olympic Games, and that it hopes Rome might be persuaded to cut off ties with Taiwan, which it regards as a renegade state.