The mainland is playing a crucial role in helping Taiwan out of an economic downturn, island leader Ma Ying-jeou said on Wednesday.

In an interview with Radio Taiwan International broadcast live to the mainland, he also said he would continue to push for better cross-Straits ties.

Expounding his mainland policy in the first ever radio program targeting listeners across the Straits, Ma said that the mainland - Taiwan's largest trade partner and biggest export market - is vital to the island's economy. Trade with the mainland reached a record high of US$130 billion last year, Ma, who took office on May 20, noted.

"That is significant because external trade has always been key to Taiwan's economic growth, contributing as much as 70-80 per cent."

The island entered a recession in the third quarter and is likely to remain so through the first quarter of next year as a result of the global economic slowdown.

Taiwan's gross domestic product contracted 1.02 percent in the third quarter from a year earlier, the first drop in five years as domestic and external demand weakened.

Given the gloomy economic prospects, Ma said the third round of the cross-Straits dialogue, scheduled later this month or early next month, should focus on the economy.

The mainland's Association for Relations Across the Taiwan Straits (ARATS) and Taiwan's Straits Exchange Foundation (SEF) have held two rounds of the dialogue, first in Beijing in June and the other in Taipei last month.

The upcoming talks will touch on signing an MOU on financial cooperation and a pact on investment promotion, Ma noted.

He stressed that both Beijing and Taipei agree they should put aside differences and cooperate on trade and stable cross-Straits ties.

Ma rejected the opposition Democratic Progressive Party's (DPP) criticism that he has sacrificed Taiwan's interests in developing ties with the mainland.

"The whole international community has affirmed Taiwan's efforts to improve ties with the mainland, which benefits the region and the world," Ma said.

"And Taiwan will not be criticized as a troublemaker any more," he said, apparently referring to his predecessor Chen Shui-bian's provocative mainland policy.

Cross-Straits relations have warmed significantly after Ma, of the Kuomintang, took power from Chen of the pro-independence DPP.

During their latest dialogue, the mainland and Taiwan agreed to launch direct shipping, postal service and daily charter flights starting Dec 15.

However, signing a peace treaty with the mainland is not an urgent matter because "hostility across the Straits has been reduced to an all-time low", Ma told a news conference with foreign correspondents later on Wednesday.

Instead, he said, trade issues are more pressing. "We do have other, more urgent issues in the areas of trade and investment."

The Taiwan leader had pledged during his election campaign that he would try and sign a peace pact.

Yesterday, Ma also ruled out a visit by the Dalai Lama to the island, saying the timing is not right.

"I think at the current moment, the timing isn't appropriate for that," he said.

His remarks were in response to widely circulated reports that the Dalai Lama proposes to visit the island in the coming months.

The Dalai Lama visited Taiwan in 1997 and 2001 during the rule of former island leaders Li Teng-hui and Chen Shui-bian.

Mainland experts said on Wednesday Ma has made "a right and wise decision" on a sensitive issue.

"Cross-Straits ties have made historic progress since Ma took office. Both sides should treasure the current momentum and avoid making any move that may harm it," said Hu Yan, a Tibetologist at the CPC Central Committee's Party School.

(China Daily December 4, 2008)