TAIPEI, Taiwan - The Dalai Lama led thousands of Taiwanese in a colorful prayer service for the survivors of Typhoon Morakot on Tuesday during a visit that has provoked an irritated but relatively measured response from China.

While Beijing cancelled an event meant to highlight improving relations between the sides and scrapped at least two planned exchanges, analysts said the mainland mostly appeared eager to protect the gains made during Taiwanese President Ma Ying-jeou's 15-month-old administration.

Since taking office, Ma has jettisoned his predecessor's anti-China policies, bringing Taiwan's economy ever closer to the mainland's, and speaking frequently in favour of a peace treaty with Beijing. As a result, relations between Taipei and Beijing are at their highest point since the two sides split amid civil war in 1949.

China reviles the Dalai Lama because he has a large international following and has managed to keep its heavy-handed rule over Tibet in the spotlight. It routinely condemns him as a "splittist" for his alleged support of Tibetan independence and protested his trip to Taiwan.

His arrival in Taiwan is particularly galling to China, because Beijing regards the island as part of its territory, and resents activity that highlights its lack of control over the island's politics.

On Tuesday, the spry-looking 74-year old told some 10,000 worshippers at a sports arena in the southern Taiwanese city of Kaohsiung that Morkaot's impact would not be permanent.

Wearing bright red and gold-colored robes and speaking with his characteristic energy, he assured the audience it was possible "to vanquish the atmosphere of the disaster," which took an estimated 670 lives when it struck Taiwan early last month.

The Dalai Lama is broadly respected on this mostly Buddhist island of 23 million people, and local media have given considerable attention to his visit.

Some pro-China demonstrators have protested his appearances, but they are in a distinct minority.

China itself has tried to focus its ire on Taiwan's opposition, which issued the invitation to the Tibetan spiritual leader. Ma signed off on the invitation, but in an apparent gesture of goodwill to China, he said he would not meet the spiritual leader.

On Sunday, the Chinese State Council's Taiwan Affairs Office said the visit was "bound to have a negative influence on the relations between the mainland and Taiwan" -- somewhat harsher than Beijing's reaction late last week.

A spokeswoman for Ma's Nationalist Party acknowledged Tuesday that the cancellation of two high-level visits by mainland officials to Taiwan and the nixing of ceremonies to celebrate expanded air service across the 160-kilometre-wide Taiwan Strait appeared to be related to the Dalai Lama's visit.

"We do not exclude the possibility that (they) could be linked," said Chen Shu-rong.

Still, China expert Chao Chun-shan of Taipei's Tamkang University said it was unlikely that Beijing would retaliate further because of the Dalai Lama's visit -- or that Ma would give it cause to do so.

"Both sides have showed restraint," he said. "Both have handled the crisis well so far. I don't think things will get out of control."

Added fellow China expert Yang Kai-huang of nearby Ming Chuan University: "The mainland's reaction was restrained. Actually, they could have acted much more harshly."