The two sides are holding their first formal talks since 1999
China and Taiwan have agreed to establish offices in each other's territory to facilitate travel amid warming bilateral ties.
The agreement came as delegations from both sides met in Beijing for the first formal talks for almost a decade.
They are also hoping to finalise agreements on direct passenger flights and increasing tourist traffic.
Bilateral relations have thawed since the election in March of Taiwanese President Ma Ying-jeou.
He favours closer ties with China and, when he took office in May, said maintaining regional stability was his priority.
Shortly after that, Chinese President Hu Jintao met the head of Taiwan's governing Kuomintang party in Beijing, the most senior meeting between the two sides since they split at the end of a civil war in 1949.
In the absence of formal diplomatic ties which would allow direct government-to-government talks, semi-official bodies have been established on both sides to conduct the discussions, which take place in Beijing's Diaoyutai guesthouse until 14 June.
They are the first formal talks since dialogue was suspended in 1999, when Taiwan's leaders angered Beijing by leaning towards formal independence.
Ruled by separate governments since end of Chinese civil war in 1949
China considers the island part of its territory
China has offered a "one country, two systems" solution, like Hong Kong
Most people in Taiwan support status quo
The talks appeared to bear their first fruit on Thursday morning, with delegates agreeing for the first time to set up permanent offices in each other's territories.
The offices will help facilitate travel between China and Taiwan such as handling visa applications, but their role could expand in future, said the Taiwanese body involved in the talks, the Straits Exchange Foundation.
"The two associations should push forward for the full normalisation of trade and culture exchanges of the two sides," the foundation said in a statement.
In another apparent gesture of goodwill, China's chief negotiator Chen Yunlin accepted an invitation to visit Taipei on an unspecified date later this year.
An agreement is expected to be signed on Friday, after which Taiwan's top delegate, Chiang Pin-kung, is due to meet Chinese President Hu Jintao.
Other items on the talks agenda include the establishment of direct weekend charter flights and increasing the number of mainland Chinese tourists allowed to visit Taiwan.
At the moment direct flights between the two sides are restricted to major holidays and numbers of Chinese tourists limited.
But economic problems - including inflation and a growing wealth gap - are high on the list of public grievances in Taiwan at the moment, and so local businesses are keen for the income a new influx of tourists would bring.
Beijing also has good reason to encourage smiling handshakes and headlines about cross-straits friendliness, analysts say.
Two months before the Olympics, the Chinese government is very sensitive to international criticism, and Beijing's long-standing threat to use force against Taiwan, if it takes steps towards independence, continues to be an obvious focus for concern.
The two sides hope that the negotiations will pave the way for regular meetings, helping to improve cross-strait relations after decades of tensions and mistrust.
"As long as we have mutual trust and understanding... these talks are going to become an important communication mechanism for cross-strait development," said China's Mr Chen.
But while economic growth and a reduction in cross-straits tension will certainly be welcome, an agreement on core political principles - including re-affirmation of the One China principle - may be harder to reach.
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