By J.R. Wu and Faith Hung
TAIPEI (Reuters) - Tsai Ing-wen was sworn in as Taiwan's first woman president on Friday, with the export-driven economy on the ropes and wary Communist Party rulers in China watching for any move towards independence by an island it considers its own.
Tsai's Democratic Progressive Party (DPP) won parliamentary and presidential elections by a landslide in January on voter backlash against creeping dependence on China.
The DPP, which has traditionally favored independence from China, takes over after eight years under China-friendly Nationalist Ma Ying-jeou.
Wearing a cream blazer with dark trousers, Tsai pledged to defend the country and abide by the constitution of the Republic of China, Taiwan's formal name, as she took the oath of office, which was carried on live TV broadcast.
Tsai's inauguration speech at 11.10 am (0310 GMT) will be widely watched for any hint of anti-China sentiment, which could sour economic ties further.
"The favorable interaction will be broken," said Chang An-lo, a pro-unification leader, rallying about 400 supporters outside the DPP headquarters this week.
Taiwan's main index was up a bit in cautious trade ahead of her speech. It slid to over three month lows last week with foreign investors net selling shares this month so far on political and economic worries.
The trade-reliant economy, which counts China as its biggest trading partner, is struggling to shake off last year's recession as prolonged weakness in global demand weighs on Asian exporters.
China has not ruled out using force to bring Taiwan under its control. It is deeply distrustful of the DPP, whose charter includes a clause promoting "a sovereign and independent Republic of Taiwan".
Chiang Kai-shek's Nationalists fled to Taiwan after losing the civil war to the Communists in China in 1949. China has pressured the new Taiwan government to stick to the "one-China" principle agreed with the Nationalists.
That allows each side to interpret what "one China" means. The Communists say they rule all of China including Taiwan, while the Nationalists maintain Taipei is the ruler.
Tsai has said she will maintain the status quo, but stops short of referring to "one China".
During the inauguration ceremony, performers will pay tribute to demonstrations that have been key to the DPP's rise, including the 2014 Sunflower Movement protests.
The DPP is distrustful of growing economic dependence on China and champions Taiwan’s own history.
Tsai, partly of aboriginal descent, will take the stage in front of the presidential office, a life-size replica of which Taiwan has said has been built in China and used for attack practice.
"We have emphasized ... our hope that both sides will continue to show flexibility going forward in the name of maintaining peace and stability," said Daniel Kritenbrink, senior director for Asian Affairs at the White House's National Security Council, earlier this week.
The United States switched diplomatic recognition from Taiwan to China in 1979, but is also Taiwan's biggest ally and arms supplier.
(Additional reporting by David Brunnstrom in WASHINGTON; Editing by Nick Macfie and Michael Perry)