China offers India a ‘handshake across the Himalayas’

NEW DELHI (Reuters): India and China will study new ways to ease tensions along their ill-defined border, Chinese Premier Li Keqiang said on Monday, in his first foreign trip since taking office, which comes just weeks after a military stand-off between the Asian giants in the Himalayas.

The number two in the Chinese leadership offered New Delhi a ‘handshake across the Himalayas’ and said the world’s most populous nations could become a new engine for the global economy if they could avoid such irritants.

“Both sides believe that we need to improve the various border-related mechanisms that we have put into place and make them more efficient. We need to appropriately manage and resolve our differences,” Li said at a joint news conference with India’s Prime Minister Manmohan Singh, where both men appeared relaxed.

China and India disagree about large areas on their 4,000-km-long (2,500 mile) border and fought a brief but bloody war 50 years ago. While there has not been a shooting incident in decades, the long-running dispute gets in the way of improving economic relations between neighbours, who account for 40% of the world’s population, and whose fast growing markets stand in contrast to the stagnant economies of the West.

Bilateral trade reached US$ 66 billion last year but both sides believe the potential is much greater. In a joint statement that seemed to address Indian gripes about its US$ 29 billion deficit with China, they agreed to address the imbalance, with specific reference to pharmaceuticals, IT services and agriculture.

India’s Essar Group conglomerate is set to sign a US$ 1 billion loan deal with China’s China Development Bank and China’s largest oil and gas producer PetroChina during the trip, sources said. They said the loan would be backed by the supply of refined products to PetroChina. In an impromptu speech after an official welcome ceremony at India’s colonial-era presidential palace earlier on Monday, Li said he wanted to build trust and cooperation on his trip.

“World peace and regional stability cannot be a reality without strategic mutual trust between India and China. And likewise, the development and prosperity of the world cannot be a reality without the cooperation and simultaneous development of China and India,” he said. Li said he chose New Delhi as his first destination on the four-nation tour to show how important India is for China and also because he had fond memories of visiting as a Communist youth leader 27 years ago.

After India, Li is due to visit Pakistan, Switzerland and Germany and is likely to carry a message that China wants more open foreign relations and should not be seen as a threat. “We stand ready to embrace the world with a more open mind and hope that the world will view China with a calm frame of mind,” he wrote in a newspaper editorial published on Monday.