Beijing (CNN) When millions of Chinese Catholics celebrate Easter this weekend, the future relationship between China and the Vatican is likely to be weighing heavily on their minds.

After decades of bitter disagreement, Beijing and the Holy See appear to be on the cusp of a historic accord to resolve one of the thorniest issues between the two -- a development that is dividing the church's followers in China and beyond.

Negotiations on who gets to appoint bishops in China have reached "final stages," state media quoted a Chinese bishop saying Wednesday.

Beijing has long insisted on having the final say on all bishop appointments in mainland China, while the Holy See maintains that only the Pope has such authority.

A Vatican spokesman said Thursday a deal was "not imminent."

A Chinese Catholic arrives to attend a church service at the East Cathedral in Beijing on February 19, 2013.

Divided loyalties

The People's Republic of China severed diplomatic ties with the Vatican in 1951 after an alleged, and often discredited, assassination plot against Chinese leaders involving a Catholic priest.

The ruling and officially atheist Communist Party had long portrayed foreign religious institutions such as the Catholic Church as hostile forces responsible for the country's suffering and humiliation during the late 19th and early 20th centuries.

Despite a constitutional guarantee of religious freedom, Beijing only officially permits Catholics to worship under the direction of the Patriotic Catholic Association, which does not recognize papal authority.

Clergy and believers who remain loyal to the Pope and resist government control have faced harassment, persecution or imprisonment, forcing many to practice their faith clandestinely.

Officially, there are about 6 million Catholics in China. The number could be almost double that when counting followers in the underground church, according to a researcher with the Holy Spirit Study Center in Hong Kong.

This photo taken on May 11, 2016 shows a priest about to start a mass at the Catholic church in Dingan, in China's southern Guangxi region.

Warming ties

Faced with declining church attendance in the West, the Holy See is eager to promote Catholicism in the developing world.

Gaining official access to China, whose population of 1.4 billion people is slightly larger than the total number of Catholics worldwide, seems simply irresistible.

With its growing global economic and political clout, China is also keen to mend fences with one of the world's most influential institutions to buttress its own international image.

Beijing has long set two conditions for the restoration of diplomatic relations, demanding the Holy See abide by the "one China" policy and "not interfere in China's religious affairs."

The Vatican currently maintain official ties with Taiwan, where the Chinese Nationalists fled after a bloody civil war in 1949. Officially known as the Republic of China, Taiwan is viewed as a breakaway province by Beijing -- which vows to take the self-ruled island back, by force if necessary.

"The Vatican has no scruples about abandoning Taiwan," said Cardinal Joseph Zen, former Bishop of Hong Kong and a vocal critic of the Beijing government.

"I think the Taiwan government is ready for any change ... the bishops already accept and understand."

Taiwanese Catholic priests pray for the late Pope John Paul II during a service in Taipei, April 3, 2005.

Sticking point

China's second condition has proven much harder for the Vatican to swallow.

Beijing wants final say on all bishops appointed in mainland China, while the Vatican says only the Pope has such power.

While past appointments have included names approved by both authorities, Beijing has also named bishops in direct opposition to the Pope's wishes, leading to clashes over their legitimacy.

A spokesman for China's Foreign Ministry denied knowledge of any ongoing talks between the two sides, while reiterating Beijing's general position on relations with the Holy See.

"We are willing to work with the Vatican to strive for the progress in our constructive dialogue and the improvement of our ties," Lu Kang told reporters Wednesday.

Still, even the possibility of a compromise has alarmed some church leaders, who are concerned if the Pope would have real veto power over Beijing's nominations -- or would simply "rubber-stamp" such submissions.

"We're worried that it's going to be a bad deal," said Cardinal Zen. "I suspect that the Beijing government just wants the Vatican to help them eliminate the underground."

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Dark future?

Already, reports have emerged about Vatican-appointed bishops being asked to step aside to make room for Beijing-sanctioned priests as part of an impending bilateral agreement.

Adding to the fear of underground Catholics in China, one of their bishops, who was previously detained by officials, recently vanished for two days ahead of Easter.

He later re-emerged and was allowed to quietly celebrate mass with his congregation following tense negotiations with the government.

Under President Xi Jinping, the most powerful Chinese leader in decades, the Beijing government has tightened its control over religion and cracked down hard on freedom of expression.

Xi just launched a massive government reorganization scheme, eliminating the State Administration for Religious Affairs and putting religious matters under the direct control of the Communist Party.

"Beijing doesn't care for any bad impressions outside China," Cardinal Zen said. "They are confident they can do anything because nobody dares criticize the Chinese government, even the Pope."