Taiwan`s aviation and shipping industries expect to receive a huge economic boost from closer ties with China once agreements on a range of improved economic links are finalised as expected Tuesday.

Chen Yunlin, a senior Chinese negotiator, arrived in Taipei Monday for historic talks with his Taiwanese counterpart Chiang Pin-kung to map out the expansion of direct air links and establishment of direct shipping services.

The agreements are expected to see the expansion of weekend charter flights to daily services, the launch of direct cargo services as well as the improved shipping links.

Late Monday, the two sides announced they had agreed to triple direct passenger flights to 108 per week and expand services to a total of 21 Chinese cities.

Chen, representing Beijing`s Association for Relations Across the Taiwan Strait, is set to attend a signing ceremony Tuesday with Chiang, head of the Straits Exchange Foundation.

In July, the once-fierce rivals launched the first direct weekend flights across the Taiwan Strait, with 36 round-trip flights weekly, operating between six Taiwanese airports and five Chinese airports.

Both sides will benefit from direct services rather than having to fly through the airspace of a third territory, usually Hong Kong, on the way.

`I expect the new measure will help airlines save 10-20 percent on their costs -- it is definitely a big plus for us,` said Roger Han, senior vice president of China Airlines, Taiwan`s leading international carrier.

Han said he estimates the flight time between Taipei and Shanghai, the most popular route for Taiwanese travellers, will be cut by as much as 40 percent, to about 90 minutes.

This shorter flight time would translate into a cost reduction of about 20 percent, he said.

`More convenient and cheaper flights will no doubt attract more passengers and boost business,` Han said.

Direct air cargo services would save Taiwanese investors in China hundreds of millions of Taiwan dollars each year, said Cheng Cheng-mount, chief economist of Citibank in Taiwan.

But Allen Tseng of Capital Securities Corp sounded a note of caution, saying current demand did not justify such an expansion in services.

`Just look at the demand for current weekend charter flights. How will increasing the number of flights and increasing the number of locations help with a basic lack of demand?` he told local media.

Meanwhile, Yang Ming Marine estimated direct shipping links will cut 800 million to one billion Taiwan dollars (24.3-30.5 million US) in costs a year.

Currently, most Taiwanese ships must traverse Japanese waters before heading to China.

A company spokesman said the journey time would be reduced by about 15 percent on average, with the improved links expected to generate 100 billion Taiwan dollars in new business for the sector over the next three to five years.

Since the early 1990s, Taiwanese investors have poured an estimated 150 billion US dollars into China, which is the biggest market for Taiwanese exporters, accounting for 28 percent of total exports in the first half of this year.