Making a conciliatory gesture in the midst of menacing Chinese war games, Taiwan's president said Wednesday he wants better relations with China and eventual reunification.

But President Lee Teng-hui said China has to be democratic before that, and said Taiwanese stood united in the face of military intimidation before weekend presidential elections.In an attempt to quell independence sentiment, China has been holding war games in two parts of the 90-mile-wide Taiwan Strait that separates the island from the mainland.

One set held 75 miles southwest of Taiwan ended Wednesday after eight days, China's official Xinhua news agency reported.

In the second area, just 11 miles from outlying Taiwanese islands, "only a few ship activities" took place, perhaps because of bad weather, Taiwan's Defense Ministry said. There was no sign of large-scale joint exercises by China's army, navy and air force, the ministry said.

Taiwan is ruled by the Nationalists, who fled to the island after losing a civil war in 1949 to the Communists. Both governments say the island and China are one country, but China suspects Lee - the leading candidate in Saturday's presidential election - harbors dreams of Taiwanese independence.

"We have with goodwill extended both hands to our compatriots on the Chinese mainland," Lee said at a news conference. "We would like in the future to have China unified, in freedom (and) democracy."

Lee's running mate, Premier Lien Chan, said Taiwan wants to resume talks on closer economic and political ties.

"We are interested in seriously negotiating a peace agreement between the two sides of the straits," he said. "As far as the concrete contents, that will have to wait for the future."

The vote for Taiwan's first directly elected president culminates a decade of reforms that have transformed Taiwan from a military dictatorship into a democracy.

China, angered at Lee's attempts to raise Taiwan's international profile, has tried to dampen pro-independence enthusiasm with three rounds of missile tests since July and war games that began last week.

The war games have rattled Taiwan's financial markets and triggered panic buying of U.S. dollars.

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Taiwan hasn't said it expects the war games to turn into an invasion attempt, and China hasn't said they will.

Military analysts have said China, which has little naval experience, would find it difficult to capture Taiwan, which has a large, sophisticated air force and 400,000-member military.

The pro-Chinese newspaper Wen Wei Po of Hong Kong countered Wednesday that China's military abilities have been underestimated. Quoting an unidentified military analyst, it said because of Taiwan's long coastline, Chinese forces attacking at several points could easily seize one or more beachheads.

Lee says Chinese leaders are afraid the example of Taiwan's democracy will undermine their control.

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