China's President Hu Jintao has held a historic meeting with Taiwan's Vice-President-elect, Vincent Siew.
It was the highest-level contact between the two governments since their post-civil war split in 1949.
The meeting, on the sidelines of a business conference on China's Hainan island, was short.
But correspondents say it represented an important signal that both sides now want to improve relations, after several years of worsening ties.
Mr Siew is the running-mate of Ma Ying-jeou, who won a convincing victory in Taiwan's elections in March, and has vowed to improve the island's standing with its much bigger neighbour once he takes office on 20 May.
The BBC's Caroline Gluck in Taiwan's capital, Taipei, says that while this may have been a low-key 20-minute meeting, it was one laden with symbolism.
She says expectations are high that the meeting could mark a watershed in relations which had been severely strained during the eight-year administration of Taiwan's independence-leaning President Chen Shui-bian.
Mr Siew was already attending the Boao Forum for Asia in his capacity as chairman of the Cross-Strait Common Market Foundation, a non-profit group that works to improve economic co-operation between Taiwan and China.
After exchanging pleasantries with his Taiwanese visitor, Mr Hu said improving relations required efforts from both sides.
"On this occasion I am happy to exchange opinions on the cross-strait economy with Mr Siew," he said.
Before the meeting, Mr Siew said: "I hope that through this meeting we can deepen the understanding between the two sides and also create a basis for common trust."
Although under President Chen economic links have steadily tied the Taiwan closer to the mainland, China has aimed hundreds of missiles at the island.
Beijing regards Taiwan as part of its territory, and has aggressively countered any moves to formalise Taiwan's de facto independence.
Ahead of the meeting, US Deputy Secretary of State John Negroponte labelled it "a good way forward" in efforts to settle differences between the two sides.