TAIPEI: Taiwan's relations with China must be decided by the will of the people and peace must be based on "dignity", President Tsai Ing-wen said on Monday after China's leader, Xi Jinping, said "reunification" with the island is inevitable.

China has been ramping up military pressure to assert its sovereignty claims over democratically governed Taiwan, which on Jan. 13 holds presidential and parliamentary elections.

Xi's comments, in a New Year's Eve address, struck a stronger tone than the previous year where he said only that people on either side of the Taiwan Strait are "members of one and the same family".

Asked about Xi's speech at a New Year's press conference at the presidential office in Taipei, Tsai said the most important principle on what course to follow on relations with China was democracy.

"This is taking the joint will of Taiwan's people to make a decision. After all, we are a democratic country," she said.

China should respect the outcome of Taiwan's election and it is the responsibility of both sides to maintain peace and stability in the strait, Tsai added.

China has cast the election as a choice between war and peace and has refused multiple offers of talks by Tsai, believing she is a separatist.

Tsai has made bolstering and modernising Taiwan's defences a priority, including pushing an indigenous submarine programme.

"Everyone's home has locks on them, which is not to provoke the neighbours next door but to make yourself safer. This is the same for the doors to the country. Taiwan's people want peace, but we want peace with dignity," she said.

Taiwan's government has repeatedly warned China is trying to interfere in the election, whether by using fake news or military or trade pressure, and Tsai said she hoped people could be on alert for this.

After China accused Taiwan of erecting trade barriers and ended some tariff cuts for the island, China last week threatened further economic measures.

Tsai said Taiwan's companies must look globally and diversify.

"This is the correct path, rather than going back to the path of relying on China, especially as in China's unstable market there is unpredictable risk," she said.

"We have always welcomed healthy, orderly interactions across the strait, but trade and economic exchanges cannot become a political tool."

China has taken particular exception to current Vice President Lai Ching-te, the presidential candidate for Taiwan's ruling Democratic Party (DPP) and who is leading in opinion polls by varying margins, saying he is also a dangerous separatist.

Both the DPP and Taiwan's largest opposition party the Kuomintang say only the island's people can decide their future.

Tsai cannot stand again after two terms in office. She will step down in May when the next president is sworn in.