Taiwan President Ma Ying-jeou Monday warned China not to humiliate the island in international forums and risk wiping out the mutual trust and goodwill built up over the past two years.
Ma's warning, made in an interview with Taiwan's state-controlled Central News Agency, marks the sternest reaction yet to a flare-up between China and Taiwan at the Tokyo International Film Festival last month.
Jiang Ping, the head of the Chinese delegation at the festival, set off consternation in Taiwan after saying the island should participate under the name "China Taiwan" or "Chinese Taipei."
"It took us a year and half to work out the Economic Cooperation Framework Agreement (ECFA), which has received widespread praise," Ma told the news agency.
"But another Jiang Ping incident or two could instantly wipe out the achievement."
Taipei and Beijing forged the historic ECFA in June in a significant step towards normalising economic ties.
The ECFA has been widely seen as the boldest step yet towards reconciliation between the rivals, who split after the end of a civil war in 1949.
China still considers Taiwan part of its territory although the island has governed itself since 1949.
The issue of what to call Taiwan may seem trivial to outsiders, but it is of crucial importance to both sides, since it signals whether the island is independent or a part of China.
Ma said Monday that despite the improved ties since he came to power in 2008, differences remain.
"The Jiang Ping incident is simply the tip of an iceberg," Ma said without elaborating.
He called on the two sides to set aside the existing sovereignty disputes and keep building mutual trust.
Taiwan's former vice president Lien Chan raised the issue at a meeting with China's President Hu Jintao on the sidelines of Asia-Pacific Economic Co-operation (APEC) summit in Japan at the weekend.
Hu did not give Lien any guarantees, merely saying "negotiations should be sought regarding Taiwan's participation in international affairs… so that disputes can be avoided," according to Taipei-based United Daily News.
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