"The recent speeches of the leader of the Taiwan region... continue to adhere to the separatist position of 'Taiwan independence'," Chen Binhua, a spokesperson for Beijing's Taiwan Affairs Office, said according to CCTV.

Lai, a staunch defender of Taiwan's sovereignty and detested by Beijing, spoke on Tuesday of the need "to prepare for war to avoid war" and bolster the island's economic resilience.

"Peace is priceless and there are no winners in war," Lai said in a speech marking his first year in office.

But he added "we cannot have illusions" and vowed "to strengthen our national defence capabilities".

China, which claims self-ruled Taiwan as part of its territory, has threatened to to annex it by force and has held several rounds of large-scale military drills around the island since Lai took office.

Lai insisted in his speech that Taiwan was "willing" to communicate with Beijing if there was "parity and dignity".

China said Tuesday it was "willing to engage in dialogue" with Taiwan -- with conditions.

"On the basis of the one-China principle, we are willing to engage in dialogue... on issues relevant to promoting the reunification of the motherland," Beijing's spokesperson Chen said.

He also warned against Lai's "two-faced approach" that promoted "economic decoupling" across the Taiwan Strait.