TAIPEI (Reuters) -- Taiwan Premier Frank Hsieh, stepping down with the rest of his Cabinet, issued a warning to President Chen Shui-bian on Monday that his policies were not in sync with the wishes of the island's people.

Hsieh, the fourth premier to quit in Chen's nearly six-year administration, announced his decision to resign last Tuesday, weeks after the president signaled a tougher policy stance towards China.

"It's only reasonable that policies should have the support of over 75 percent of the people. But it doesn't appear that's the way it is now," Hsieh said in his Cabinet meeting.

"I think there is possibly a considerable shortfall between our policy execution and actions, and the expectations of the people," he said without elaborating.

Chen, struggling not to become a lame duck after the pro-independence Democratic Progressive Party (DPP) suffered a crushing defeat in local elections last month, has nominated a former aide, Su Tseng-chang, as the next premier.

Analysts said the appointment of the popular Su, formerly the DPP's chairman, was partly aimed at boosting Chen's record-low public support amid voter disappointment with his administration and a corruption scandal linked to another presidential aide.

One of the top causes of voter discontent is Chen's failure to improve ties with China, which views Taiwan as a breakaway province to be reunited with the mainland, by force if necessary.

Hsieh had preferred a more moderate approach towards China than Chen, analysts said, calling for the gradual opening of more economic links, such as direct air links to help business people cut costs.

Around one million Taiwan people live and work in China, and Taiwan companies are estimated to have invested over U.S.$100 billion in the mainland since the late 1980s.

But Chen signaled in his New Year's address that Taiwan's economy should not be too dependent on China, in comments widely perceived to herald a tightening of policy towards the mainland.

Under Taiwan's political system, the president appoints the premier, who forms the Cabinet. The president retains control of Taiwan's China and foreign policy.

Su has been relatively moderate in his public statements on China, having backed Chen's policies, but refrained from using harsh rhetoric against Beijing while serving as DPP chairman.

Analysts do not expect significant changes in policy after a new cabinet takes office, expected on Wednesday.

Taiwan media reported over the weekend that James Huang, Chen's current deputy chief of staff, would be appointed as foreign minister and tasked with protecting the island's diplomacy as China lures more allies away from Taiwan.

Taiwan's top China policymaker, Mainland Affairs Council Chairman Joseph Wu, and Minister of Defense Lee Jye will retain their posts, local papers said.