Taiwan bid farewell on Saturday to late-president Lee Teng-hui, dubbed "Mr. Democracy" for ending autocratic rule in favour of free elections and championing Taiwan's separate identity from China.

Lee's memorial service took place in the shadow of Chinese war games, as did his election as Taiwan's first democratic leader in 1996. China claims the island as its own territory.

Lee was president from 1988 to 2000.

Lee's greatest act of defiance was becoming Taiwan's first democratically-elected president in March 1996, achieved with a landslide following eight months of intimidating war games and missile tests by China in waters around the island.

Those events brought China and Taiwan to the verge of conflict, prompting the United States to send a carrier task force to the area in a warning to the Beijing government.

On Friday, China carried out drills in the Taiwan Strait, including sending 18 fighter jets to buzz the island, as Beijing expressed anger at the visit of a senior U.S. official to Taipei, there for Lee's memorial.

Speaking at the memorial service in a chapel at a Taipei university, President Tsai Ing-wen said he had shaped the Taiwan of today.

"Confronted with daunting international challenges, he skillfully led the people of Taiwan by promoting pragmatic diplomacy. Taiwan became synonymous with democracy and was catapulted onto the world stage. Because of this, President Lee came to be lauded as Mr. Democracy," Tsai said.

"Thanks to his efforts, Taiwan now shines as a beacon of democracy."

Lee, a committed Christian, died in July aged 97.

U.S. Undersecretary for Economic Affairs Keith Krach and former Japanese prime minister Yoshiro Mori also attended his memorial.

Lee's remains will be interred at a military cemetery next month.