Taiwan's embattled President Ma Ying-jeou defended his China-friendly policies Saturday in his last National Day speech, as thousands gathered in the capital Taipei.

Relations between Taiwan and Beijing have warmed since Ma took power in 2008, promising that closer ties would bring economic prosperity.

But public sentiment has turned against the ruling Kuomintang party (KMT) as fears grow of increased influence from Beijing and the island's economy stagnates.

Ma defended the rapprochement, saying it had turned the region from a "flashpoint" into an "avenue of peace".

"Every year during my two terms in office, the cross-strait situation has become progressively more peaceful and more stable," he told crowds outside the presidential office in Taipei celebrating the 104th anniversary of the establishment of the Republic of China.

It was his last National Day speech before he steps down next year after a maximum two terms.

The KMT suffered a rout at local elections last November, partly due to its China policy. The Beijing-sceptic opposition Democratic Progressive Party (DPP) is expected to win the presidency in January.

Ma expressed "deepest concern" over the future, urging the next president to stick to the "1992 consensus" - a tacit agreement between the KMT and Beijing which acknowledges there is "one China" but allows each side their own interpretation.

"If we diverge from it, relations will deteriorate. And if we oppose it, there will be turmoil in the Taiwan Strait," Ma warned.

Taiwan is self-ruled after a split with the mainland in 1949 following a civil warm, but China still considers the island part of its territory waiting to be reunified by force if necessary.

There are questions over how the DPP will approach China policy should it come to power, having alienated Beijing in the past.

DPP presidential candidate Tsai Ing-wen has repeatedly pledged to maintain the "status quo", but has been criticised by the KMT for failing to give details of her policy.

Ma denied the island's sovereignty had been eroded under his leadership.

He said: "The government's cross-strait policy is not biased towards mainland China while selling out Taiwan. Nor does it undermine our sovereignty."

Tsai attended the National Day celebrations -- the first DPP head to have done so.

DPP legislator Tien Chiu-chin termed it as "a gesture of reconciliation" with the ruling party.

Military fighter jets flew over the presidential office as part of the celebrations, leaving a trail of red, white and blue, while student groups and military bands paraded.

Security was tightened after police said they received an email warning of a terror attack on a subway station in the capital by somebody calling themselves a "holy warrior".

There were no reports of attempted attacks.