"We would like to make a solemn appeal: on the basis of the one-China principle let us discuss a formal end to the state of hostility between the two sides [and] reach a peace agreement," Hu had said.
"The 17th congress brings together more than 2,000 delegates from across China to evaluate the country's progress over the past five years"
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And unlike his predecessors, Hu did not threaten to take Taiwan back by force, though he warned the island against formally declaring independence, saying "China's sovereignty and territorial integrity brook no division".
The White House welcomed China's offer of talks with Taiwan, calling it a step in the right direction.
"The United States notes the moderate tone of President Hu's statement made today on the issue of cross-Taiwan Strait relations," White House spokesman Gordon Johndroe said.
But Chen, who implements Taiwan's mainland policy, said: "If China was sincere in pushing for peace, we urge them to recognise the fact that the two sides don't have jurisdiction over each other ... to dismantle military deployment targeted at Taiwan ... and hold talks with our popularly elected government without setting any preconditions."
The two sides split amid civil war in 1949. China has never veered from its insistence that Taiwan is part of its territory and has threatened to attack if the island makes its de facto independence permanent.
Chen Shui-bian, Taiwan's president, says China has more than 900 missiles aimed at military and civilian targets on the island.
Under his leadership, Taiwan's government has in the past few years emphasised its separate identity, drawing threats from Beijing.
Hu warned in his Monday speech that Taiwan's independence forces were "stepping up their secessionist activities", jeopardising chances for peace between the two sides.
He said people in China and Taiwan should work to "oppose and constrain such activities" and offered to work with any political parties in Taiwan as long as they agreed that Taiwan was part of China.
Beijing is particularly worried that with Taiwan's next presidential election due in March and the Beijing Olympics in August, Taiwanese leaders might be tempted to test the limits of China's tolerance.