US House Speaker Nancy Pelosi has addressed Taiwan's parliament, where she praised the territory as one of the "freest societies of the world", saying she wants to improve cooperation between Taipei and Washington.
Beijing demonstrated its anger with Ms Pelosi's presence on the island it says was part of China, and launched a burst of military activity in the surrounding waters.
China's leaders also summoned the US ambassador in Beijing, and announced the suspension of several agricultural imports from Taiwan.
Taiwan's President Tsai Ing-wen presented Ms Pelosi with a ribbon and medal representing the Order of Propitious Clouds with Special Grand Cordon, which Ms Pelosi described as "a symbol of America's strong and enduring friendship with Taiwan".
During her address, Ms Pelosi said she wanted to increase parliamentary exchanges with Taiwan, adding that she considered it a great honour to be referred to as a "good friend of Taiwan".
"We come in friendship. We thank you for your leadership. We want the world to recognise that," Ms Pelosi said.
"The story of Taiwan is an inspiration to all freedom-loving people in the United States and all around the world. Out of a crucible of challenge you have forged a flourishing democracy, one of the freest in the world, proudly to be led by a woman president."
Ms Tsai later shared photos of the meeting between the two politicians on social media, writing that Ms Pelosi's visit sent a message to the world that "democracies stand together in the face of common challenges".
Ms Pelosi described her visit as having three purposes: "One is security, security for our people, global security, two is economics, to spread as much prosperity as possible, and three is governments."
She said a US bill on computer chips — which would see big US investment in domestic semiconductor manufacturing and science research — was a good opportunity for more cooperation with Taiwan.
The US Speaker also commended Taiwan for its management of the COVID-19 pandemic.
She ended her speech by saying she was looking forward to learning from Taiwan and offering suggestions on topics such as climate change and health.
She was set to meet with human rights activists later in the day.
Earlier on Wednesday, China's customs department announced a suspension of imports of citrus fruits, chilled white striped hairtail and frozen horse mackerel from Taiwan, while its commerce ministry suspended export of natural sand to Taiwan.
Shortly after Ms Pelosi's arrival, China's military announced joint air and sea drills near Taiwan and test launches of conventional missiles in the sea east of Taiwan, with Chinese state news agency Xinhua describing live-fire drills and other exercises around Taiwan from Thursday to Sunday.
Chinese warplanes had buzzed the line dividing the Taiwan Strait ahead of Ms Pelosi's arrival.
The Chinese military said it was on high alert and would launch "targeted military operations" in response to her visit.
Taiwan's President responded firmly Wednesday to Beijing's military intimidation, saying the country would "not back down".
"We will firmly uphold our nation's sovereignty and continue to hold the line of defence for democracy," Ms Tsai said.
As the meeting took place, China's Foreign Ministry summoned the US ambassador to Beijing, Nicholas Burns, to protest against Ms Pelosi's visit to Taiwan.
The Chinese Vice Foreign Minister, Xie Feng, described the nature of Nancy Pelosi's visit as "vicious", vowing swift and severe consequences.
He warned that China would not sit idly by after previous warnings issued by Beijing prior to Ms Pelosi touching down in Taipei.
The US said the visit does not threaten China's sovereignty, nor mark a change in its One-China policy.
US warns China against escalatory action
The possibility of Ms Pelosi visiting Taiwan was raised with China last month during a G20 meeting in Bali between Secretary of State Antony Blinken and Chinese Foreign Minister Wang Yi, a senior US official said on Wednesday.
"The question is whether Beijing will try to use the trip as some kind of excuse to take steps that could be escalatory or that could somehow produce conflict," the US State Department official told reporters in Tokyo, adding that Beijing should not overreact to a trip that was neither unusual nor unprecedented.
"China should not use this as a pretext to continue what it's been doing, which is seeking to change the status quo with regard to Taiwan," the official said.
"And if any escalation or crisis were to somehow follow her visit, it would be on Beijing."
It comes as Taiwan's cabinet on Wednesday said the military had increased its alertness level.
The island's defence ministry said 21 Chinese aircraft entered its air defence identification zone on Tuesday, and that China was attempting to threaten key ports and cities with drills in the surrounding waters.
"The so-called drill areas are falling within the busiest international channels in the Indo-Pacific region," a senior Taiwan official familiar with its security planning told Reuters.
"We can see China's ambition: to make the Taiwan Strait non-international waters, as well as making the entire area west of the first island chain in the Western Pacific its sphere of influence," the person said.
Ms Pelosi is the highest-ranking US official to visit Taiwan in 25 years. Her trip comes amid deepening tensions between Washington and Beijing.
ABC/wires
