A joint statement by China's National Development and Reform Commission and the Taiwan Affairs Office publicly outlined three criteria for companies registered on the mainland who wish to invest in Taiwan.

They said such companies would need approval for Taiwan-bound investment from the Chinese economic planning agency with adequate proof of financing, according to a statement posted on the government's website late Wednesday.

They must also abide by laws and not harm China's aim of bringing about unification with Taiwan, it said.

Chinese companies still cannot invest directly in the island without approval from Taiwan's government, but the release of the guidelines pushes forward the issue of tightening ties, which Beijing has been pursuing.

China still regards Taiwan as a renegade province that must eventually come back into Beijing's political fold, by force if necessary.

But relations have improved rapidly since the election in March of Taiwan President Ma Ying-jeou, who has promised closer ties. His election ended eight years of rule by Chen Shui-bian, whose pro-independence rhetoric inflamed China.

This month direct daily flights and postal and shipping services were resumed between the two sides.

Taiwan announced plans to lift a ban on Chinese banks investing in their counterparts on the island in June, and allowed Chinese investors to buy Taiwan shares in October.

The release of Thursday's statement came after a two-day meeting in Shanghai of the Cross-Straits Economic, Trade and Cultural Forum that focused on strengthening mutual ties.

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