The government has rejected a controversial proposal for easing limits on Taiwan investment in China, dashing hopes of further opening up to its longstanding mainland rival, officials said Wednesday.

Another proposal for the establishment of direct transport, commercial and postal links, which have been cut since 1949 at the end of a civil war, was also blocked, the Mainland Affairs Council (MAC) said in a statement.

"No consensus was reached during a panel discussion on the two proposals," meaning they would not be discussed in a national forum due to open Thursday, said the MAC, the island's top China policy decision-making body.

Dozens of scholars, government and political party officials, business groups and trade unions will take part in the two-day "Conference on Sustainable Growth in the Taiwan Economy" sponsored by the government.

As part of its preparations, a representative panel met to discuss what proposals could be submitted to the forum meeting.

Under current rules, a Taiwan company can invest in mainland China up to 40 percent of its net worth but business wants that relaxed given the ever closer economic ties between Taiwan and the mainland.

"It was a disappointment to investors as there had been expectations that the two proposals would be discussed during the (forum) meeting," said Bentham Hung, vice president of Fuh-Hwa Securities Investment and Trust.

The government led by the independence-leaning Democratic Progressive Party is reluctant to relax controls on China-bound investment, fearing that Taiwan would become hostage economically to its mainland rival if conflict were to break out between them.

According to Taiwan's Investment Commission, 34,746 China-bound projects worth 49.4 billion dollars have been authorized since Taipei allowed such direct investement in 1991 but other sources put the total at 100-150 billion dollars.

The MAC said the discussion panel had agreed that Taipei and Beijing should negotiate a cross-strait mechanism to make it easier for Taiwan financial institutions to serve Taiwan businesses on the mainland.

The panel also saw a need to study the idea of allowing representative offices of Taiwan banks in China to become proper branches and backed moves to move cautiously towards allowing more mainland Chinese products to be exported to Taiwan, it added.

Taiwan split from China in 1949 after a civil war and the two sides maintain their rivalry over to this day.