Her comments on Taiwan's National Day came after China's President Xi Jinping promised to "fulfill reunification."
China condemned Ms. Tsai's speech, saying it "incited confrontation." Taiwan views itself as a sovereign state, while China regards it as a breakaway province.
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Beijing has not excluded the potential use of force to achieve unification. China has sent a record number of military jets into Taiwan's air defense zone in recent days. On Sunday, three Chinese planes, including two fighter jets, crossed into the area, Taiwan's defense ministry said.
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Ms. Tsai was re-elected by a landslide last year on a commitment to stand up to Beijing. In her speech on Sunday, she said Taiwan was "standing on democracy's first line of defence".
She said the island would not "act rashly" but bolster its defenses to "ensure that nobody can force Taiwan to take the path China has laid out for us".
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That path, she said, offered "neither a free and democratic way of life for Taiwan nor sovereignty" for its 23 million people.
"The more we achieve, the greater the pressure we face from China," she said.
She continued that China's military efforts into Taiwan's air defense zone seriously influenced national security and aviation safety and described the situation as "more complex and fluid than at any other point in the past 72 years".
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Ms. Tsai also repeated an offer to talk with Chinese leaders on an equal footing, a suggestion Beijing - which brands her a "separatist" - has so far declined.
Her speech was accompanied by a flypast of Taiwanese fighter jets.
One man following Ms. Tsai's speech told AFP news agency Taiwanese people could not accept a combination with China.
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"China is presently rather authoritarian. Especially under Xi Jinping, it's gotten worse. Reunification is not appropriate now," another said.
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On Saturday, China's President Xi said unification should be achieved peacefully, but suggested that the Chinese people had a "glorious tradition" of opposing separatism.
"The historical task of the complete reunification of the motherland... will definitely be fulfilled," he added.
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Following Ms Tsai's speech on Sunday, China's Taiwan Affairs Office said she had "advocated Taiwan independence, incited confrontation, cut apart history and disputed facts".
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Despite the recently heightened tensions, relations between China and Taiwan had not worsened to levels last seen in 1996 when China sought to interrupt presidential elections with missile tests, and the US sent aircraft carriers to the region to prevent them.