(Bloomberg) -- New Taiwan President Lai Ching-te urged China to stop its campaign of pressure of the democratic island, comments aimed at calming a dispute at the heart of a geopolitical rivalry involving the world’s two biggest powers. 

“I call on China to stop intimidating Taiwan verbally and militarily, and, together with Taiwan, to shoulder our responsibility to the world to do our utmost to maintain peace and stability in the Taiwan Strait and the region,” Lai said Monday in his inaugural address on a breezy, overcast day in Taipei.

It was up to Beijing “to ensure that the world is free from the fear of war,” he said.

The 64-year-old ex-doctor and now former vice president said Beijing should hold talks with his government on an equal basis, while acknowledging that China was unlikely to give up its attempt to annex the island. He reiterated his previous pledges to maintain the status quo with China.

Lai also repeated Tsai’s position that the Republic of China — Taiwan’s formal name — and the People’s Republic of China are not subordinate to each other. That line got the biggest cheer of his speech from the crowd of dignitaries.

The benchmark Taiex gauge of stocks closed up 0.1% after falling as much as 0.7% during Lai’s address. The Taiwan dollar weakened 0.1% to trade at 32.24 versus the greenback.

Taiwan’s relations with China have become more pressing as the People’s Liberation Army has stepped up military activity near the island, raising the specter of a conflict. President Joe Biden has repeatedly said the US would defend the self-governing island of 23 million people from any attack by Beijing. Chinese leader Xi Jinping has referred to gaining control of Taiwan as a “historic mission.”

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How Lai manages relations with China as his government takes shape will be closely watched in Beijing and Washington. Beijing cut off direct communication with Taipei after the former president, Tsai Ing-wen, refused to accept the notion that Taiwan is part of China when she came to power in 2016.

Lai campaigned on a promise to continue many of Tsai’s polices — including embracing the US — a stance that means Taipei-Beijing relations will likely remain frosty in the coming years. China has referred to Lai in the past as an “instigator of war,” and pledged to bring Taiwan under its control someday, by force if necessary. The US is keen for Lai to avoid causing any surprises — especially mentions of independence — that would embroil it in potential diplomatic or military confrontations with China.

“As Lai clearly presented a stable approach, and he avoided sensitive terms and topics across the strait, I think the US should be satisfied or relieved,” Liao Yu-shih, assistant professor at Tamkang University’s diplomacy and international relations department, said in message about his speech.

China sharply criticized Lai’s remarks, with Chen Binhua, spokesman for the government department in Beijing that handles affairs related to the island, saying it “sent a dangerous signal of seeking ‘independence.’”

“The motherland must be reunified, and it will be reunified,” Chen said, according to the official Xinhua News Agency.

Also Monday, China also leveled largely symbolic sanctions on Boeing Defense, Space & Security and two other companies over arms sales to Taiwan.

Read More: China Rips Taiwan’s Lai for ‘Dangerous Signal’ in Opening Speech

In his speech, Lai outlined the key elements of his economic policy, saying his administration would seek to develop Taiwan’s semiconductor, artificial intelligence, military, surveillance technology and communications industries. He also promised to raise wages and maintain a welcoming investment environment.

Lai also suggested resuming tourism between China and Taiwan, part of his effort to show goodwill to Beijing. Taiwan has expressed hope that tour groups could resume trips, but both sides still bar their travel companies from arranging tours to the other side of the strait. China has prevented its people from traveling to Taiwan as individual tourists since 2019, citing its displeasure over the state of relations.

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The US’s top liaison to Taiwan, Laura Rosenberger, attended Lai’s swearing-in ceremony earlier in the day, and in a statement US Secretary of State Antony Blinken congratulated him on becoming president. 

“We look forward to working with President Lai and across Taiwan’s political spectrum to advance our shared interests and values, deepen our longstanding unofficial relationship, and maintain peace and stability across the Taiwan Strait,” Blinken said.

Japanese Chief Cabinet Secretary Yoshimasa Hayashi also congratulated Lai.

Tensions across the Taiwan Strait have escalated since mid-2022, when then-US House Speaker Nancy Pelosi visited Taipei and met with top leaders. Beijing responded to that trip with military drills that involved a mock blockade and missiles flying over Taiwan. 

Taiwan’s Defense Ministry said in a statement Monday that it continued to monitor the strait and that its operations were normal.

Lai’s time in office could also be complicated by the opposition Kuomintang controlling the legislature, even as the economy keeps cruising along, thanks to an AI boom that has boosted exports for semiconductors and servers. 

KMT lawmakers are moving to expand their powers by pushing a bill that would require Lai to deliver a state of the nation address to them every year and make a separate appearance to answer questions. Any officials found lying to lawmakers could face prison. 

Read More: Biden Says US Doesn’t Support Taiwan Independence After Vote

--With assistance from Jon Herskovitz and Jing Li.

(Updates with comments from China and with Japan’s government congratulating Lai.)

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