TAIPEI, Taiwan - Taiwan's new president yesterday tied improved political relations with China to Beijing's progress toward democracy - a condition the communist power may have trouble meeting.

The comments by Ma Ying-jeou in his inaugural address took place on a day of dramatic developments in Taipei, as prosecutors announced they were launching a corruption probe into departing President Chen Shui-bian's handling of a special presidential fund.

The inquiry concerns allegations that Chen was involved in the embezzlement of $484,000 from the fund, used to promote Taiwan's diplomacy.

Ma's rise is a break from the eight-year administration of Chen, whose pro-independence policies often led to friction with Beijing - and with the United States, Taiwan's most important foreign partner.

In his address, the new leader reaffirmed his campaign themes - a desire for more economic engagement with Beijing without renouncing Taiwan's sovereignty.

His comment on Chinese democracy stood out among a series of generally bullish statements on cross-strait trade prospects, because it appeared to raise the bar on a lessening of tensions.

Two hours later, Ma addressed a packed house of political leaders and representatives of Taiwan's dwindling band of diplomatic allies.

"We . . . hope that mainland China will continue to move toward freedom, democracy and prosperity for all the people," Ma said. "That would pave the way for long-term peaceful development of cross-strait relations."

Ma also said he wanted to strengthen U.S. ties.