Burying the hatchet

At the end of formal talks between Prime Minister Manmohan Singh and his counterpart Li Keqian, India and China signed eight bilateral agreements, including key pacts in trans-border river management and trade on Monday, May 20.

The Chinese premier, who is on his first overseas trip since taking office, held his first round of talks with Singh. His visit comes just after a recent flare up of tension in disputed territory on the shared border.

Both sides resorted to aggressive posturing when a handful of People's Liberation Army soldiers set up camp on a remote spot 18 kilometers into the Daulat Beg Oldi (DBG) sector of Ladakh in Jammu and Kashmir, which India regards as its side of the Line of Actual Control (LAC). The issue was finally resolved after much saber-rattling.

Building trust

Playing down the event, Manmohan Singh said despite differences in the past, both countries shared a mutually beneficial relationship.

"We have had our differences in more recent times but have built a mutually beneficial relationship. The basis for continued growth is peace on our borders. While seeking early resolution of border, peace must be preserved," the Prime Minister said at a joint press conference.

Similarly, Li said, "We do not deny there are problems between the two sides. Both believe that with regard to the boundary, both have kept peace in the border areas. We are friendly neighbors and will do nothing that will damage the interest of the other side. Without common development of India and China, Asia will not become strong and the world will not be a better place."

"World peace cannot be a reality without strategic cooperation between India and China. On the basis of mutual understanding, we can promote a healthy and sound relationship," Li added.

Trade over territory

During talks, both leaders agreed on a roadmap to reach a "dynamic balance" in bilateral trade and also agreed to "consider the potential for a bilateral Regional Trade Arrangement."

Economics took priority over the territorial dispute, according to Srikanth Kondapalli, professor in Chinese studies at Delhi's Jawaharlal Nehru University, because the intensifying euro zone and global financial crises meant it was necessary for Li to "diversify markets to developing countries, including India."

"China's economy has declined in the last few years from double-digit growth rates to about seven percent last year," he told DW.

China is now India's largest trading partner and some analysts say focusing on that will be beneficial to bilateral relations.

"The fact that this trip has happened is important. It is a victory of the diplomatic and political overtures and will propel ties despite the irritants that exist," Alka Acharya, a China expert at the Jawaharlal Nehru University in New Delhi, told DW.

"We have to take comfort from the positives of this visit and move ahead. This is regime change in China and we have to advance ties."

Li is heading an 80-member delegation that includes Foreign Minister Wang Yi. On Tuesday, he will go to Mumbai before continuing on to Pakistan, Switzerland and Germany.