* Chinese official to try to allay suspicions over trade pact
* Will also meet leading opposition figure in southern city
* China's warming Taiwan ties in contrast to relations elsewhere in Asia
* But political talks not on the agenda
* Two-way trade was worth $200 billion last year
* U.S. says "watching with interest" (Adds U.S. comment, paragraphs 7-9)
By Faith Hung
TAOYUAN, Taiwan, June 25 (Reuters) - China's top official in charge of Taiwan ties arrived on the island on Wednesday to begin landmark talks aimed at wooing Taiwanese who remain suspicious about a pending trade pact and autocratic China's designs on Taiwan.
"It took three hours for me to fly here from Beijing, but it took 65 years for both sides across the Taiwan Strait to come this far," said Zhang Zhijun, director of China's Taiwan Affairs Office, as he sat down for talks with Taiwan's Mainland Affairs Minister Wang Yu-chi.
"I come here full of sincerity in my heart," said Zhang, the first head of the Taiwan Affairs Office to visit the self-ruled and democratic island where defeated Nationalists fled after losing a civil war to China's Communists in 1949.
His four-day trip focuses not on the affluent capital Taipei but on the poorer middle and south, which have benefited less from trade with China and where pro-independence sentiment can run deep.
While China regards Taiwan as a renegade province and has never ruled out the use of force to bring the island under its control, relations have improved markedly since China-friendly President Ma Ying-jeou took office in 2008.
China's charm offensive with Taiwan stands in contrast to its ties with several countries in Asia where territorial rows have flared over maritime boundaries. China has also denounced people in Chinese-run Hong Kong, where hundreds of thousands have been pushing for greater democracy.
The top U.S. diplomat for the East Asia region, Assistant Secretary of State Daniel Russel, was asked about Zhang's visit and said the United States was "watching with interest."
"We will look forward to hearing the outcome of Mr Zhang Zhijun's visit to Taiwan," he told reporters in Washington. "We welcome all steps forward on cross-Strait relations that are acceptable to the people on both sides."
The United States has been strongly critical of Beijing's recent behaviour in pressing its territorial claims in Asia and called for negotiated solutions.
Zhang's main talks, in Taoyuan, just outside Taipei, will be with Wang. He will not meet Ma, who has never held talks with senior Chinese officials as president.
Wang said he hoped that Zhang would come away with a better understanding of Taiwan and its political system, though he expected no breakthroughs this time.
"There are many issues that have long existed across the Strait. Myself and director Zhang do not expect one or two of our meetings can fix the problems," Wang told reporters after meeting Zhang.
Zhang is also to meet Chen Chu, an opposition party stalwart and mayor of the pro-independence southern port of Kaohsiung.
While Chen has previously visited China and met Zhang there, spearheading efforts by the Democratic Progressive Party to engage with Beijing, such high-level meetings in Taiwan with opposition figures are almost unheard of.
"This will be an opportunity for Taiwan's opposition and people who don't like the mainland to get to know Zhang Zhijun, to listen to him and understand that China wants to help, not harm, Taiwan's economy," said Zheng Zhenqing of Tsinghua University's Institute of Taiwan Studies in Beijing.
Chinese state media has said Zhang would also talk to small- and medium-sized industries which have been hit by competition from low-cost China and engage with Taiwanese youth, few of whom feel much cultural connection to China today.
His trip comes at a sensitive time.
Protesters occupied Taiwan's parliament and mounted mass demonstrations over three weeks starting in March in anger at the trade pact, which will open various sectors in both economies.
The opposition calls the pact a threat to Taiwan's industry and fears it could open the door to Chinese influence on its politics.
Signed a year ago, it has stalled in Taiwan's parliament, which is set to discuss it at a session overlapping with Zhang's visit. Advocates, including Ma, say it is a step to normalising ties and will provide jobs and raise living standards.
TRADE NO PANACEA
Trade worth nearly $200 billion last year has nonetheless brought no progress on political reconciliation or reduced military readiness on either side. Many Taiwanese, especially in the south, fear China's designs for their island.
In 2008, a vice president of China's Association for Relations Across the Taiwan Strait, a separate semi-official body that handled cross-strait ties in the absence of official contacts, was attacked by independence activists while in Tainan, Taiwan's former capital, located close to Kaohsiung.
"We expect at least a dozen separate groups will come out to protest in Kaohsiung," said Shinichi Chen, general secretary of the pro-independence South Taiwan Society.
"Our demands are very simple: we want Zhang to acknowledge that Taiwan is a nation that belongs to the Taiwanese, and that Taiwan's future will be decided by the Taiwanese."
While Chinese President Xi Jinping said in October that a political solution could not be put off forever, Ma has repeatedly said the time is not right for political talks.
Wang, and a spokesman for China's Taiwan Affairs Office, said a Ma-Xi meeting was not mentioned during the talks. Wang referred to two agreements that were reached - on humanitarian visits and tourism.
Tsinghua's Zheng said Zhang's goal was more about setting up a regular channel for high-level dialogue, and that with presidential elections in Taiwan just two years away he would avoid touching on the prickly subject of political talks.
"There's no way to resolve these sensitive subjects at the moment. But perhaps in the future this channel might be used for communication on the matter," he said.
China's efforts to be friendly were underscored last week by its number four leader, Yu Zhengsheng, who said Beijing respected Taiwan's social system and values.
In contrast, China has branded as illegal the campaign for more democracy in Hong Kong, where many residents are concerned that civil liberties are being eroded.
"The difference between Hong Kong and Taiwan is night and day," said Bruce Jacobs of Australia's Monash University, pointing to Hong Kong's almost complete reliance on China for even basics like water.
"Taiwan has its own army and 150 km (90 miles) of sea separating it from the mainland. The divisions between Taiwan and China run really deep and would clearly get in the way of any potential political agreement between the two." (Additional reporting by Michael Gold in TAIPEI, and Ben Blanchard in BEIJING and David Brunnstrom in WASHINGTON; Editing by Dean Yates, Michael Perry and Eric Walsh)
Our Standards: The Thomson Reuters Trust Principles.
