VATICAN CITY (Reuters) - The Vatican is hopeful it can improve ties with China after decades of tension, the Roman Catholic Church's highest-ranking diplomat said on Saturday, adding that warmer relations would benefit the whole world.

Beijing severed links with the Vatican in 1951 shortly after the Communist Party took power and launched a crackdown on organized religion, with China's new rulers setting up their own church and appointing bishops without the pope's backing.

After decades of mistrust, Pope Francis is pushing to improve relations and his secretary of state, Cardinal Pietro Parolin, sounded upbeat about the chances of success.

"There is much hope and expectation that there will be new developments and a new season in relations between the Holy Sea and China," he said in a speech in the northern Italian city of Pordenone, which was released to reporters in the Vatican.

"(This) will benefit not just Catholics in the land of Confucius, but the whole country, which boasts one of the greatest civilisations on the planet," he said.

"Dare I say, it would also be of benefit to an ordered, peaceful and fruitful cohabitation of peoples of all nations in a world, such as ours, which is lacerated by so many tensions and so many conflicts."

For the Vatican, a thaw in relations with China would offer the prospect of easing the plight of Christians on the mainland, who have often been persecuted by the authorities.

For China, good relations could burnish its international image and soften criticism of its human rights record.

The Vatican is the only Western state that does not have diplomatic ties with Beijing, maintaining instead formal relations with the Republic of China, Taiwan, which Beijing views as a renegade province.

Parolin made clear the Vatican wanted formal ties. "The new and hoped-for good relations with China, including diplomatic relations, God willing, are not an end in themselves," he said, reiterating that they would be good for world peace.

A Reuters investigation this year suggested the Vatican and China were working on a deal that would fall short of full diplomatic ties but would address key issues at the heart of the divide between the two sides.

"One has to be realistic and accept that there are a number of problems that need resolving between the Holy See and China and that often, because of their complexity, they can generate different points of view," Parolin said.

(Reporting by Crispian Balmer; editing by Andrew Roche)