Taiwan goes to the polls on Saturday in a knife-edge presidential election that could shape both the high-tech trading island's economic outlook and relations with Beijing and Washington.

President Ma Ying-jeou of the Beijing-friendly Kuomintang (KMT) party is facing off against the China-sceptic opposition's Tsai Ing-wen, who is bidding to become the first female leader of Taiwan's 23 million people.

The last surveys allowed to be published prior to the election showed the race was too close to call. Ma, 61, enjoyed a slender poll lead of three percentage points over the 55-year-old Tsai -- right on the margin of error.

And some analysts believe the independent candidacy of former KMT heavyweight James Soong could deprive the president of enough votes to allow a historic victory for Tsai, of the populist Democratic Progressive Party (DPP).

The election's reach extends far beyond Taiwan, which since the end of a civil war in 1949 has enjoyed de-facto independence but which formally styles itself the "Republic of China" and is allied militarily to the United States.

"This election is extremely important and will have both an immediate and a long-term impact on cross-strait relations and regional stability," George Tsai, an analyst at Chinese Culture University in Taipei, told AFP.

"It will also impact China's future development. If tension increases, China may have to divert some of its resources and attention away to deal with Taiwan," he said.

The Harvard-educated Ma was elected in a landslide four years ago on a promise of new prosperity fuelled by closer economic ties with mainland China.

He has delivered with a series of agreements, including a sweeping trade pact with China signed in 2010. But the benefits have accrued to big business and with economic growth slipping, ordinary Taiwanese appear unimpressed.

The campaign has been shaped by those economic anxieties in an export-reliant island that is home to many of the world's largest IT contract manufacturers, producing computers and other hardware for big names like Apple.

Ma's outreach to China has made the strategically vital Taiwan Straits area, which sits astride some of the world's major shipping lanes, more stable than at any other time in the past six decades.

Mainland China has never renounced its claim to the island and wants reunification, by war if necessary. Beijing is heading into a 10-yearly leadership change and with a presidential election also beckoning in the United States, neither country would relish regional instability from Taiwan.

Tsai has reportedly caused concern in both Washington and Beijing by suggesting she may not accept the longstanding formula in which Taiwan agrees, in a vague and non-committal way, to the idea that there is only one China.

This is of huge importance to mainland China, given its claim of sovereignty over the island, and to the United States, given its legal obligation to maintain Taiwan's ability to defend itself from any military intervention.

Ma's Beijing-friendly position is well known but "there is going to be more speculation" about Tsai's intentions should she win on Saturday, said Clayton Dube of the University of Southern California.

However, he added: "I think there will be greater uncertainty initially about Tsai, but I don't think there will be cause for alarm."

Suggesting a less confrontational approach, Tsai has backtracked on some China issues and no longer demands a referendum on the 2010 trade pact with the mainland.

"With the vote approaching and the race tight, Tsai has kept adjusting her appeal to sway wavering voters, especially first-time voters," said Wang Yeh-li, political science professor at National Taiwan University.

"As to Ma, he has also been moving closer to the middle since he was elected to the office in 2008."

The wild card on Saturday is Soong's electoral performance, given that he and Ma share the same support base in the nationalist and business-friendly KMT party.

"If Soong can obtain five to six percent of the ballots, then the impact on Ma could be massive," said Wang.

Voting runs from 0000 to 0800 GMT on Saturday and television exit polls will follow. An official result could come by 1400 GMT, but that will depend on how close the outcome is.