Chinese President Hu Jintao has met Taiwan's opposition leader in the highest-level contact between the two sides since they split amid civil war in 1949.
Nationalist Party chairman Lien Chan's visit comes as China tries to combat Taiwanese pro-independence activists by reaching out to parties such as Lien's that favour uniting the two sides.
Beijing claims Taiwan as its territory and has threatened to attack if the self-ruled island tries to make its independence permanent.
Hu and Lien shook hands on Friday in a ceremony broadcast live on television in both China and Taiwan to a potential audience of hundreds of millions of viewers.
"Your coming is a great thing," Hu told Lien after their delegations sat down in rows of easy chairs in the Great Hall of the People, the seat of China's legislature in central Beijing.
Before the meeting, Lien urged the two sides to "build a bridge to unite our people".
"This is something that our people will welcome because we want to avoid confrontation across the Taiwan Strait and our people would like to see dialogue and reconciliation and cooperation," Lien said in the 40-minute speech, which was interrupted repeatedly by applause.
"We can't stay in the past forever"
Nationalist Party chairman
"We can't stay in the past forever," he said.
Lien said recent Chinese reforms, including non-partisan elections to village-level posts, are closing the political gap between the communist mainland and democratic Taiwan.
"No matter the speed and scope of political reform on the mainland, there is still considerable room to develop," he said.
Lien began his eight-day mainland tour on Tuesday in Nanjing, the eastern city that was the Nationalist cause's capital.
He says he hopes to ease tensions with Beijing, which enacted an anti-secession law in March authorising military action if Taiwan moves towards formal independence.
Call for calm
Lien on Friday appealed to both governments to maintain the status quo - a reference to the unspoken deal under which Beijing refrains from attacking as long as Taiwan does not declare formal independence.
He later walked around the leafy Peking University campus, where crowds of hundreds of students cheered as he passed.
"It's good that he has come here after so many years," said Su Yonggan, a 28-year-old software student. "No one wants war."
The Lien-Hu meeting is the first between leaders of their parties since Nationalist dictator Chiang Kai-shek and communist guerrilla commander Mao Zedong held talks in 1945 in an attempt to create a national unity government.
They failed to reach an agreement and after four years of war, the defeated nationalists fled to Taiwan.
More recently, the nationalists and communists have found common cause in their opposition to Taiwan's President Chen Shui-bian, whose party favours independence.
Chen was elected in 2000 in voting that put an end to decades of nationalist rule in Taiwan.
Chen was elected in 2000 ending
decades of nationalist rule
Taiwan is a major potential flashpoint in Asia. Though the United States has no official ties with Taiwan, it is the island's main arms supplier and could be drawn into any conflict.
Taiwan barred contact with the mainland for decades, but has eased those limits since the early 1990s. Since then, Taiwanese companies have invested about $100 billion in China.
Analysts disagree on whether Lien's trip will help ease China-Taiwan tensions. Some say the former vice-president and foreign minister can win Beijing's trust. Others say Chinese leaders are using Lien to widen the schisms in Taiwanese society.