* China, Taiwan hold highest-level talks since 1949
* Both agree to rep offices, to deepen economic ties
* China's president has said politcal standoff cannot last forever
China and Taiwan, at odds for more than six decades, agreed at historic talks on Tuesday to set up representative offices as early as possible, though sensitive political issues like a formal peace treaty were not up for discussion.
The talks between Taiwan's Mainland Affairs Minister Wang Yu-chi and China's Vice Foreign Minister Zhang Zhijun, who heads the Taiwan Affairs Office, were the first since the 1949 creation of the People's Republic of China.
They mark a big step towards expanding cross-strait dialogue beyond economic and trade issues.
China's ruling Communist Party considers Taiwan a renegade province and has never ruled out the use of force to bring the island under its wing after taking control of the mainland at the end of a civil war. But economic ties have grown considerably in recent years.
Taiwan's Wang described his meeting with Zhang, in the eastern Chinese city of Nanjing, as "an unimaginable occasion in earlier years", China's official Xinhua news agency reported.
"Being able to sit down and talk is a really valuable opportunity, considering that the two sides were once almost at war," Wang said.
The mainland's Zhang told Wang that both sides should have "a little more imagination" regarding relations.
"We meet under great attention and expectations and bear great responsibilities," Zhang said.
Xinhua later reported that the two sides agreed to set up representative offices "as early as possible" for the two semi-official organisations which deal with ties between the two.
Taiwan and China also agreed to deepen economic ties and "appropriately deal with" issues on medical care for students in either place.
CHINA WANTS END TO STANDOFF
In October, Chinese President Xi Jinping said a political solution to the standoff between the mainland and the island could not be postponed forever.
But Taiwan President Ma Ying-jeou later said he saw no urgency to hold political talks and he wanted to focus on trade.
Zhang signalled that China would never stand for Taiwan formally declaring independence, considered a red line for Beijing which Taipei must never cross.
"The political basis for peaceful development of cross-Strait relations is to oppose Taiwan's independence," he said.
Ties between China and Taiwan hit a new low during the 2000-2008 presidency of Chen Shui-bian, a vocal advocate of the island's formal independence who infuriated Beijing, which sees Taiwan as simply a wayward province with no right to statehood.
Nanjing, where the meeting was taking place, is of historic and emotional significance for both sides, especially for Taiwan's ruling Nationalist Party, which once governed the whole of China.
It was China's capital during the rule of the Nationalists, until they fled to Taiwan in 1949 upon losing the civil war with the communists.
The city is also the burial place of Sun Yat-Sen, the founder of modern China, revered by both mainland China and many in Taiwan.
Since taking office in 2008, Taiwan's Ma has signed a series of landmark trade and economic agreements with China, cementing China's position as Taiwan's largest trading partner.
But booming trade has not brought progress on political reconciliation or reduced military readiness on both sides. Many in democratic Taiwan fear autocratic China's designs for their free-wheeling island.
Despite the close economic ties, U.S.-armed and backed Taiwan remains a potential flashpoint and its recovery is a priority for China's Communist Party, which is investing billions to modernise its military.