China has said it will never allow independence for Taiwan, following the election victory of opposition candidate Chen Shui-bian.

And it said it would be keeping a close eye on Mr Chen, whose Democratic Progressive Party leans towards independence.

"The election of a new leader in Taiwan cannot change the fact that Taiwan is part of Chinese territory," the Chinese Government said in its first reaction to the election result.

Chen Shui-bian: No to ''one country, two systems''

"Taiwan independence, in whatever form will never be allowed,'' it added in a terse statement.

"There is only one China, and Taiwan is an inseparable part of Chinese territory."

The statement went on to say that Beijing was prepared for dialogue with anyone who supported the ''One China'' principle - but this is not something Mr Chen has ever backed.

Reunification

Beijing has proposed ''a one country, two systems'' formula for reunification, like that adopted for Hong Kong and Macau when they were returned to China.

Chinese Premier Zhu Rongji warned Taiwan to vote carefully

Speaking after his victory, Mr Chen immediately offered to make a "journey of reconciliation" to the mainland to reduce tensions arising from ''misunderstandings''.

But he ruled out reunification under the ''one country, two systems'' model.

Dialogue

The Chinese statement did not mention Mr Chen by name.

But it added: "We should listen to what the new leader in Taiwan says and watch what he does.

"We will observe where he will lead cross-Straits relations.

"We are willing to exchange views on cross-Straits relations and peaceful reunification with all parties, organisations, and personages in Taiwan who favour the "One China" principle.''

Force

It concluded: "We appeal to Taiwan compatriots to combine their efforts with ours to safeguard the sovereignty and territorial integrity of the motherland, protect the fundamental interests of the Chinese nation and realise the complete reunification of the motherland.''

In the run-up to the elections, Beijing repeatedly warned of military intervention if Taiwan moved towards independence.

But our Beijing corespondent says the statement indicates China will take its time in considering the situation.