Changes to cross-strait relations have been so far-reaching that the situation today seems a world away from the tense and hostile atmosphere of this time last year. Chen Shui-bian, then Taiwan's president, was determined to revive his faltering popularity by pushing through a referendum for the island to join the United Nations as Taiwan - a move many feared would provoke Beijing and even lead to military confrontation. Relations were so volatile that US Secretary of State Condoleezza Rice took the rare step of publicly criticising the plan. Military experts listed Taiwan among potential regional flashpoints. Twelve months on, ties are almost warm, hitting a high note this year with Beijing's offer - and Taiwan's acceptance - of a pair of giant pandas tellingly named Tuan Tuan and Yuan Yuan. Their names, read together, mean reunion. Many analysts now believe 2008 will be remembered as the beginning of a reconciliation across the strait. After six decades of rivalry, Taiwan and the mainland officially mended fences by resuming talks on June 13. The historic move was made possible after former Taipei mayor Ma Ying-jeou of the mainland-friendly Kuomintang (KMT) was elected president in March. He trounced Frank Hsieh Chang-ting of the pro-independence Democratic Progressive Party in a landslide victory. At his inauguration on May 20, Mr Ma vowed to engage the mainland in order to seek cross-strait peace and a diplomatic truce. 'I sincerely hope,' he said in an address then, 'that the two sides of the Taiwan Strait can seize this historic opportunity to achieve peace and co-prosperity.' The speech signalled an end to the approach taken by his predecessor, whose pro-independence rhetoric and moves had provoked the mainland into refusing to deal with him during his two tenures between 2000 and May this year. At the historic June 13 talks, Chiang Pin-kung, chairman of the Straits Exchange Foundation, led a group of Taiwanese experts and officials to meet Chen Yunlin of the Association for Relations Across the Taiwan Strait in Beijing. The meeting revived the two semi-official bodies, which had been dormant for a decade, since representing their respective governments in talks in 1998. Two agreements were signed at the June talks, allowing 36 direct weekend charter flights a week between the mainland and Taiwan, and 3,000 mainland tourists a day to visit the island. More milestones followed. On July 4, a China Southern Airlines A330 jetliner, with 106 mainland tourists on board, landed at Taiwan's international airport in Taoyuan, marking the start of regular charter flights across the strait. On November 3, Chen Yunlin set foot on Taiwanese soil to become the highest-ranking mainland official to visit the island. A second round of talks sealed four more agreements, paving the way for full direct transport, postal and trade links - commonly known as the 'three links' across the strait. Under the pacts, which became effective on December 13, the two sides would operate 108 daily charter flights a week and 60 cargo charters a month. Direct shipping by qualified vessels, direct postal exchanges and food safety co-operation would also begin. The first carrier on a daily direct flight, a Shenzhen Airlines plane, landed in Taiwan on December 15. An upbeat Mr Ma hailed the policy he pushed through, saying it would lead to further improvement in cross-strait exchanges. 'From now on, dialogue will replace confrontation,' he said. Beijing has also been moderating its stance towards the island. For the first time in 15 years, it did not object to the island sending its former vice-president, Lien Chan - also a former KMT chairman - to an informal leaders' summit of the Asia-Pacific Economic Co-operation forum in Peru last month. Beijing had, since the summit's inception in Seattle in 1993, protested at Taiwan's presence at the meeting, on the grounds that it was not a state. And in August, the mainland showed goodwill by heeding Mr Ma's call to refer to the Taiwanese Olympic team as 'Chinese Taipei', instead of the belittling 'China, Taipei'. Such concessions by Beijing have contributed to the success in forging direct transport and postal links, political observers say. Economist Yang Chia-yen, of the Taiwan Institute of Economic Research, said direct links would help encourage more Taiwanese firms with large mainland operations to set up or keep operational bases in Taiwan, thereby increasing investments on the island. In a further sign of cross-strait rapprochement, the mainland announced during an annual forum between the KMT and the Communist Party on December 21 that three mainland banks would lend up to 130 billion yuan (HK$148 billion) to Taiwanese businesses on the mainland to help them cope with global financial turmoil. It also proposed to buy up to US$2 billion worth of flat-screen television displays from the hard-hit industry on the island. 'Compatriots on both sides are from the same family and we feel the same pain at this critical moment of economic doldrums in Taiwan,' Wang Yi , director of the Taiwan Affairs Office (TAO) under the mainland State Council, said. Four days before the forum, the mainland had already extended an olive branch to Taiwan by offering to hold talks with the island over its long-standing bid to join the World Health Assembly as an observer. TAO spokesman Li Weiyi had said: 'The mainland has, as always, felt the desire of Taiwan compatriots to take part in international activities, and a solution could be found through the process of cross-strait consultations.' On December 23, in one highly visible sign of warming ties, two giant pandas arrived in Taipei. President Hu Jintao first offered the bears to Taiwan after his historic meeting with Mr Lien in 2005. But a year later, the government of Chen Shui-bian blocked an application by the Taipei Zoo to import the animals. With Mr Ma at the helm, the four-year-old bears finally arrived in Taipei. Prospects for cross-strait ties remain bullish next year, but analysts warn that economic woes and ethnic strife may mar the development of better relations. 'Ethnic disputes and economic issues will remain the major factors affecting the cross-strait ties,' said George Tsai Wei, professor of political science at Taipei-based Chinese Cultural University. 'If those cross-strait agreements and financial offers by the mainland are able to help lift Taiwan's economy, the prospect of cross-strait ties would be bright. Otherwise, it would serve only to back the claims by the pro-independence camp that the policy of the Ma government to engage the mainland and improve Taiwan's economy was wrong,' he said.