Taiwan's leader Tsai Ing-wen addresses during an inauguration ceremony in Taipei, Taiwan on May 20, 2016. Photo: Reuters
Tsai Ing-wen was sworn in as Taiwan's first female leader on Friday.
Tsai, 59, took the oath in front of the national flag, before being presented with the official seal.
She and outgoing leader Ma Ying-jeou then came out to wave at the crowds watching on screens outside the presidential office building.
The Democratic Progressive Party (DPP) led by Tsai has traditionally leaned towards independence from the mainland, and its landslide victory in the January elections has led to a cooling of relations with Beijing.
Tsai has said that she will preserve the status quo with the mainland, but that Beijing must respect Taiwan's democracy.
Obfuscating one-China policy
In her inaugural speech, Tsai omitted mentioning the one-China policy, a different attitude from that of the government of her predecessor Ma, who repeatedly endorsed the one-China principle and the 1992 Consensus.
The move is likely to anger Beijing, which claims the self-governing island as its own territory.
Tsai said in her speech that she respected the "joint acknowledgements and understandings" reached between the two sides at a landmark 1992 meeting seen by the mainland as underpinning all subsequent contacts and agreements.
The DPP refuses to acknowledge the 1992 Consensus, though, historically favoring formal independence, a prospect Beijing insists would herald a military response.
Still, Tsai pragmatically obfuscated this key point within the DPP's founding charter in the recent campaign.
Zhu Feng, dean of the Institute of International Relations at China's Nanjing University takes this as a sign "stability and workable communications" between the two sides will continue. "I don't think Tsai will suspend all the channels her predecessor has established," he said. "And I don't think Beijing will use the upper hand policy to tightly corner Taiwan."
In her speech, Tsai made no explicit mention of the concept that Taiwan is a part of China, which Beijing says is crucial to the entire relationship.
Tsai called for Taipei and Beijing to "set aside the baggage of history, and engage in positive dialogue, for the benefit of the people on both sides."
She said that her administration would "work to maintain peace and stability" in relations between the two sides. However, she added that Taiwan's democratic system and the will of its 23 million people must be respected in the course of cross-strait dialogue.
During Ma's eight years in power, Taiwan reached a series of economic and civil agreements significantly increasing interactions between the two sides.
Walking on tightrope
Tsai will have to balance two very different sets of expectations -- from those who voted for her and a Chinese leadership that wants the island on a tight leash.
Although she was given a strong mandate in the January elections, with her DPP gaining control of the executive and legislative branches of government, a souring relationship with Beijing could undermine her ability to accomplish what she has set out to do at home.
"It seems clear that China is pressuring the Tsai administration even before it has formally come to office," said Bruce Jacobs, a Taiwan specialist at Monash University in Australia.
Key will be how Tsai handles calls by Beijing to mention the one-China framework amid signs that Beijing has closed the door on "different interpretations" which in the past has given both sides deliberate ambiguity on questions of sovereignty.
Tsai, a soft-spoken US and UK-educated lawyer, is viewed as a pragmatic leader but will have her work cut out balancing the interests of the mainland, which is the island's biggest trading partner, the US, its key ally, and the diverse demands of the island's 23 million residents.
In particular, a younger generation fears a future under the influence of Beijing and doesn't want Taiwan to become another Chinese province.
"I don't think cross-strait relations are going to get any better in the near future," said Lin Fei-fan, a leader of the Sunflower Movement, when students stormed and occupied Taiwan's Legislature and Cabinet building in 2014.
"However, I have always believed that the key to peaceful co-existence doesn't lie with Taiwan, but rather with the Chinese Communist Party."
At home, Tsai will have to focus on how she will revive a moribund economy, a key concern of many of her supporters.
A challenge will be to maintain cordial relations with a vibrant—and skeptical—civil society while implementing economic policies that will inevitably create losers in some segments of society.