Taiwanese President Lai Ching-te on Tuesday said that while Taiwan was ready to have exchanges with China, it also had to keep strengthening its defenses in the event that Beijing decided to assert its claim to sovereignty over the island with military force.

His remarks came as Lai — whom China has called a "separatist" while rejecting previous offers he has made for talks — marked one year in office.

What did Lai say on China and defense?

"I, too, am committed to peace. Because peace is priceless and war has no winners. But when it comes to seeking peace, we cannot have dreams or illusions," Lai said.

He said Taiwan would keep strengthening its defense capabilities, adding that the best way to prevent a war happening was to prepare for it.

Lai said his country would procure arms from abroad while developing its own arms industry, and stand "shoulder to shoulder" with its allies "to exert deterrent power."

But he said he also wanted dialogue with China, provided it was on an equal footing.

"I also reiterate here: Taiwan is happy to have exchanges and cooperation with China as long as there is reciprocal dignity. Using exchanges to replace hemming in, dialogue to replace confrontation," he said.

Over the last few years, China has stepped up military drills around Taiwan in a seeming bid at intimidation.

Last month, it held war games code-named "Strait Thunder-2025A" near the island, with the "A" at the end implying that they were not the last of their kind.

What did he say on US tariffs?

Taiwan is also grappling with the challenge posed by possible US tariffs, after US President Donald Trump imposed 32% levies on all imports from Taiwan last month before lowering them to 10% for 90 days to allow trade negotiations to take place.

Lai struck a conciliatory note on the subject.

"The US and Taiwan have long "cooperated and have also encouraged each other to grow," he said. "There are bound to be frictions between friends, but they can eventually be reconciled."

"Even if there are differences of opinion, as long as there is a foundation of trust and sincere dialogue, they can understand each other better and deepen their friendship," he added.

The US has traditionally been Taiwan's strongest unofficial ally in the face of military threats by China and is bound by law to provide the island with the equipment it needs to defend itself in the case of an attack.

Officials from both sides held a first round of trade talks last month and another is to follow in the coming weeks.

Edited by: Kieran Burke