Taiwan is welcome to participate in the Beijing-led Asian Infrastructure Bank (AIIB) if it does so "under an appropriate name", Chinese state media quoted officials as saying Wednesday.

Beijing regards Taiwan as part of its territory and opposes international recognition for the island, often curtailing its involvement in global agreements. The two split in 1949 at the end of the Chinese civil war.

But Taipei on Tuesday issued a letter of intent to join the AIIB, a Beijing initiative seen as a counterweight to the Washington-backed World Bank and the Japanese-led Asian Development Bank (ADB).

"The AIIB is open and inclusive," said Ma Xiaoguang, a spokesman for China's Taiwan Affairs Office, according to Beijing's official Xinhua news agency.

"We welcome Taiwan to participate in the AIIB under an appropriate name," he was quoted as saying.

On Tuesday, Beijing's foreign ministry spokeswoman Hua Chunying had appeared to rebuff the application, saying: "As for Taiwan joining, we maintain that we should avoid the 'two Chinas' and 'one China, one Taiwan' situation."

On Wednesday, Premier Mao Chih-kuo told a group of foreign media reporters that Taiwan would like to join the bank if it was not "belittled".

"The caucuses of the ruling and opposition parties in parliament reached an agreement yesterday saying Taiwan would like to apply to join AIIB if Taiwan is not belittled," he said.

"They demanded that the letter of intent be sent straight by the finance ministry to the AIIB preparatory committee, and the next developments would still require supervision of parliament," he added.

Taiwan is not a member of the United Nations, World Bank or International Monetary Fund but it has joined some international organisations under different names.

The International Olympic Committee refers to it as "Chinese Taipei", and it is known as the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu at the World Trade Organization.

It is a member of the ADB under the name "Taipei, China", while officially the government refers to itself as the Republic of China.

Tuesday was the deadline to apply to become one of the $50 billion bank's founding members and 48 countries sought to do so, including Britain, Germany, France and Italy, despite scepticism about the AIIB in Washington and Tokyo.

Last week Beijing's vice finance minister Shi Yaobin said it "welcomes all countries" to join the bank, which it has touted as a tool for financing regional development alongside other lenders such as the World Bank and ADB.

Taipei's plans to join the bank have faced opposition at home. Nearly 300 people gathered outside the Presidential Office late Tuesday to protest against the proposal.

Around 40 protesters linked hands and sat near the entrance to the presidential office, which is a restricted area, and refused to leave. They scuffled with police who tried to remove them and were eventually carried away one by one. No arrests were made.

"The Ma government is completely unwilling to communicate with the people and resolve their concerns, and continues to... sell out Taiwanese people's interests," protest group Black Island Youth Nation Front said.

The group was one of the leaders of the Sunflower Movement that occupied parliament for more than three weeks last year over a trade pact with China.