Taiwan gave the green light Wednesday to a proposal to build the first undersea telecom cable directly linking the island with China, reflecting growing interdependence between the two sides.

"The cable will help reduce the cost of telecommunications between Taiwan and the mainland, currently done via routes crossing third territories like Japan," an official at the National Communications Commission told AFP.

The 220-kilometre (136-mile) undersea cable, which will link the coastal town of Tamshui in the north of the island and Fuzhou city in southeast China, is scheduled to be completed in the first quarter of 2012.

Chunghwa Telecom, Taiwan's leading telecom operator, will hold a 50 percent stake in the Tw$200 million ($6.94 million) project, while three Chinese firms will share the remainder.

Telecom demand between Taiwan and China has risen sharply, driven mostly by a corporate need for data transmissions.

"Audio is expected to account for no more than two percent of the cable's bandwidth," Chen Hui-yen, a manager at Chunghwa, told AFP.

Demand is expected to surge further in the years ahead as Chinese operators press for third-generation mobile communication.

A greater emphasis on "cloud computing" -- whereby shared resources, software, and information are hosted online -- will also boost the need for capacity.

The undersea cable project comes amid fast-warming ties between Taiwan and its former bitter rival China under Beijing-friendly President Ma Ying-jeou, who took office in May 2008 on promises to boost cross-strait economic ties.