China has warned Taiwan that President Chen Shui-bian's suggestion of a referendum on independence will lead the island to "disaster".

We seriously warn Taiwan... to immediately stop the horse at the edge of the precipice

Chinese spokesman

A spokesman for China's Taiwan Affairs Office was reacting to a speech made by President Chen on Saturday, which referred to China and Taiwan as two countries.

Taiwan broke with China at the end of a civil war in 1949 and Beijing still views the island as a renegade province.

"We seriously warn Taiwan splittist forces not to wrongly judge the situation, to immediately stop the horse at the edge of the precipice and to stop all splittist activities," said Li Weiyi, a spokesman in Beijing.

Officials in Taiwan have reacted swiftly to China's angry comments, with Taiwan's top official on policy towards China currently travelling to the United States to discuss Mr Chen's comments.

Officials said the trip was to put Mr Chen's comments in context and to clarify the situation. They said the comments were a restatement of the existing situation and not a new policy.

'Two countries'

China condemned Mr Chen for trying to "split" China, warning that a bid for independence would be against the interests of the Taiwanese people and would "affect the economy of Taiwan, harm the fundamental interests of Taiwan residents and bring Taiwan into disaster".

	1949: Chinese Nationalists flee to Taiwan as People's Republic of China declared 1979: China-US diplomatic ties established after Washington switches recognition from Taipei 2000: Chen Shui-bian elected Taiwan president. Beijing threatens to attack if island attempts to secede 2001: Taipei lifts ban on direct trade and investment with China 2002: Taiwan warns China is boosting military spending and losing patience over peaceful reunification Q&A Taiwan's relations with China

"Both the mainland and Taiwan are part of China. The sovereignty and territorial integrity of China can't be separated," the Chinese spokesman said.

The Taiwanese stock market plunged 5% in early Monday trading, reflecting concerns over the disagreement between the two countries.

China's comments follow a video broadcast on Saturday to Taiwanese living in Japan, in which the Taiwanese leader referred to Taiwan and China as two countries, echoing comments made by his predecessor three years ago that dramatically raised tensions with Beijing.

''Taiwan's future and destiny can only be decided by the 23 million people living on the island," Mr Chen said.

Holding a referendum was ''a basic human right that cannot be deprived or restricted", Mr Chen told pro-independence activists in Tokyo during the video conference.

The president gave no timetable, but his remarks contrasted with an earlier pledge not to push for a referendum on independence during his four-year tenure.

US visit

On the question of sovereignty, Mr Chen said: ''Simply put, with Taiwan and China on each side of the (Taiwan) Strait, each side is a country. This needs to be clear.''

Taiwanese offficials are going to the US to explain the position

In July 1999, then-President Lee Teng-hui, said Taiwan and China had ''special state-to-state'' relations.

The move triggered a round of intense sabre-rattling during which Chinese fighter jets flew sorties in the Taiwan Strait.

The chairwoman of Taiwan's Mainland Affairs Council, responsible for policy towards China, has now joined other government officials in a trip to the US following Mr Chen's comments.

Tsai Ing-wen's office said that the decision for her to join the trip was made several days ago.

However, BBC correspondents say official permission to make the trip was only given on Sunday, in response to the war of words between the countries.

The US is the only Western power that supplies Taiwan with defensive weapons, and has warned China that it will protect Taiwan should China attack.

However the US has also said that it will not defend the island if it begins an unprovoked war of independence.