By James Pomfret

TAICHUNG, Taiwan (Reuters) - Taiwan's semi-rural central plains, dotted with rice paddies and brightly coloured temples, is the battleground in a presidential poll that will set the tone of the island's prickly relations with China for the next four years.

In the same way that Ohio is a vital swing state in U.S. presidential polls, Taichung city and a cluster of sleepy counties around it is a must-win region in a January election that could determine whether Taiwan again becomes a flashpoint.

President Ma Ying-jeou of the Kuomintang (KMT), or Nationalist party, is vying for a second term but faces a tough challenge from Tsai Ing-wen of the Democratic Progressive Party (DPP).

Ma has set aside traditional hostility toward China since his election in 2008 for a pragmatic policy of economic engagement. The DPP, on the other hand, is suspected of harboring ambitions for independence even though Tsai eschews, at least publicly, any talk of that.

Having nearly taken Taichung, which means "Taiwan's center," from the KMT in 2010 mayoral elections, the DPP sees the region as crucial for its hopes of winning back power.

"We can overcome all difficulties," Tsai told her cheering supporters at a recent rally in Changhua city, just to the west of Taichung.

China sees Taiwan, with its deep seam of nationalism and a thriving democracy, as a breakaway province to be reunited with the mainland, by force if necessary.

DPP supporters cherish their island's independence.

"We don't need China," said 61-year-old farmer Huang Yan-yan amid cries for an independent Taiwan at the rally of about 4,000 people, many blasting on hooters and waving flags.

"Taiwan is different from China. We Taiwanese have good hearts but the Chinese are aggressive."

Beijing sees its old nemesis, Ma's KMT, which fled to Taiwan from China in 1949 after losing a civil war to the communists, as a safer bet because of the economic rapprochement that Ma has championed.

Beijing views Tsai, a scholarly 55-year-old with a doctorate in law from the London School of Economics, with deep suspicion even though she has moved her once staunchly pro-independence party toward a more pragmatic stand.

For the United States, Taiwan's old friend and supplier of advanced weaponry, China-Taiwan stability is vital. Its willingness to defend the island is increasingly tempered by the reality of China's political and economic influence.

"China's problem is the world's problem," said Nathan Liu, an academic at Taiwan's Ming Chuan University. "China's rise has of course changed a lot of things ... if China has any different policy across the Taiwan Strait a lot of people will worry."

"PIVOTAL JUNCTURE"

Like most recent Taiwan presidential elections, a tight race is expected.

Voters are broadly split by an axis through the center of the island with the DPP, which emphasizes Taiwan's uniqueness and independence, strong in the largely agricultural south.

In the more developed north, the KMT is the main force.

Residents of Taichung, the biggest city in the central region, usually back the KMT while the inhabitants of the rural counties around it usually vote DPP.

In the 2004 and 2008 presidential elections, Taichung and neighboring Changhua and Yulin counties switched sides and both parties see the area as key for making gains this time.

"If the DPP can win in Changhua, then Tsai Ing-wen can win in the whole country," DPP legislator Chiang Chao-I shouted from the rally stage packed with supporters waving yellow banners.

The telegenic Ma is seen as a steady overseer of the economy and of ties with China but he has nevertheless seen his popularity slide as the island's wage gap widens and after his botched handling of a devastating typhoon in 2009.

"This is a battle more crucial than the first one," Jason Hu, the KMT mayor of Taichung told Reuters at his headquarters, referring to Ma's 2008 victory.

"The country's economy is recovering rapidly, international ties are also being restored, the mainland relationship is also at a pivotal juncture. If we're not elected it's not square one we're back to, it's ground zero ... especially with regard to the peace in the Taiwan Strait."

A recent National Chengchi University survey of 22,000 people found 52.8 percent back Ma versus 47.1 percent for Tsai.

As underdog, Tsai has been working tirelessly to raise her profile and get an early start in the campaign with a cross island tour from her ancestral village in the south up into KMT heartlands to the north and the capital Taipei.

"All our preparations in every electoral district are in place," said Tsai at a civic center in Yuanlin town during a campaign stop of her convoy of vehicles bedecked in yellow.

"We must continue to work hard to defeat those we're meant to defeat."

Much will depend on undecided women and first-time voters, who the DPP hopes to win over with a campaign built around the slogan: "Taiwan's First Woman President."

But both parties might face problems wooing apathetic voters worried about livelihoods. The export-reliant island is facing uncertainty with spending cuts in the world's major markets.

"I work this late every day. This is the life that I know," said an elderly oyster farmer trudging through mud flats on the Changhua county coast late one recent afternoon.

"Whoever gets elected is the same to me," added the women, her face wrapped in scarves as wind-turbines slowly turned on a rocky peninsula behind her.

"It doesn't make much difference to my life."

(Editing by Brian Rhoads and Robert Birsel)