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Indian, Chinese leaders discuss economic cooperation while troops face off at unmarked border

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NEW DELHI — Indian and Chinese troops faced off at their countries' unmarked border in the Himalayas on Thursday as their leaders were promising to boost economic cooperation and substantially increase Chinese investment in India's infrastructure at a rare meeting.

The long-festering border dispute is a stark reminder of the complicated relationship between the Asian giants as they try to increase trade and investment.

After their talks, Indian Prime Minister Narendra Modi stood beside Chinese President Xi Jinping at a news conference and said he raised India's concerns about repeated incidents at the border. Both leaders said peace and stability along the border were necessary for economic growth and development in the region.

"Peace and tranquility in the border region constitutes an essential foundation for mutual trust and confidence for realizing the full potential of our relationship," Modi said.

Suspicions between the two countries — which between them have 2.6 billion people — date from a monthlong border war in 1962 that left about 2,000 soldiers dead. That conflict ended in a standoff with each side accusing the other of occupying its territory.

This week, Indian officials said Chinese soldiers entered the Ladakh region in Indian-held Kashmir and appeared to be building a road.

The lack of a clearly demarcated boundary in the barren Himalayan region has led to past accusations of troops crossing the border.

While analysts see little danger of a conventional war over the border, the frequent skirmishes make it difficult to achieve a lasting resolution. Little progress has been made despite several rounds of talks.

China claims about 90,000 square kilometers (35,000 square miles) of land in India's northeastern state of Arunachal Pradesh, while India says China is occupying 38,000 square kilometers (15,000 square miles) of territory on the Aksai Chin plateau.

Another cause for bitterness is China's deep ties with Pakistan, India's archrival.

Although the border dispute appeared to cast a shadow over the talks, several agreements were made. Xi and Modi decided to begin discussions on civil nuclear energy and signed a five-year economic and trade development plan. They also agreed to set up two Chinese industrial parks in India, and China promised to invest $20 billion in Indian infrastructure over the next five years.

PHOTO: Chinese President Xi Jinping inspects a guard of honor during a ceremonial reception in New Delhi, India, Thursday, Sept. 18, 2014. Xi and Indian Prime Minister Narendra Modi will hold talks aimed at boosting trade and Chinese investment even as their troops face-off along their disputed border in the Himalayas.  (AP Photo/Manish Swarup)
Chinese President Xi Jinping inspects a guard of honor during a ceremonial reception in New Delhi, India, Thursday, Sept. 18, 2014. Xi and Indian Prime Minister Narendra Modi will hold talks aimed at boosting trade and Chinese investment even as their troops face-off along their disputed border in the Himalayas. (AP Photo/Manish Swarup)

"We can bring prosperity to Asia, and we can create opportunities for the world," Xi said of the growing relationship between the two countries.

In a significant concession, China agreed to allow the opening of a more accessible route to Kailash Mansarovar, a Hindu pilgrimage site in the high Himalayas.

They also discussed a China-led proposal to develop an economic corridor that would link Bangladesh, China, India and Myanmar.

Xi is the first Chinese president to visit India in eight years, and Modi called their talks a "historic opportunity" and said "we can start a new era in our relations."

Trade between the countries totaled more than $70 billion in 2013. But India's trade deficit with China is about $40 billion and there are fears it could grow if China uses India to sell cheap manufactured goods in the future. The countries have set a trade target of $100 billion by 2015, but both sides still need to iron out wrinkles in their trade and tax policies to help achieve that goal.

During the talks, Modi raised India's concerns about the worsening trade imbalance and sought Xi's help in improving market access and investment opportunities for Indian companies in China.

Professor Sreeram Chaulia of the Jindal School of International Affairs in New Delhi downplayed the significance of the Chinese incursion in Ladakh, but said there was no simple way of resolving the long-standing dispute.

"This is not the first time, and it certainly will not be the last such face-off in this part of Ladakh, which is one of the less demarcated stretches of the border," Chaulia said. "There is no easy solution to such a complex border dispute and we are nowhere close to a resolution," Chaulia said.

Security was tight near the palatial building where the talks were held. But in a major embarrassment to the Delhi police, dozens of Tibetan protesters, mostly women, managed to stage a noisy protest outside the building after the two leaders began their meeting.

The protesters shouted "China: Hands off Tibet!" as police grappled with them, shoving them into buses.

Tibetan protests against China are common in India, and often increase during visits by Chinese leaders. The presence in India of the Tibetan spiritual leader, the Dalai Lama, remains a major irritant for China. India has allowed the Dalai Lama, who fled to India in the 1950s following a failed uprising in Tibet, to set up a government in exile in the northern Indian town of Dharmsala.

The Dalai Lama said Thursday that China could learn from India on how different ethnic and religious groups can live in harmony.

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Photo Gallery:
PHOTO: Chinese President Xi Jinping offers floral tribute along with his wife Peng Liyuan at Rajghat, the memorial to India's independence leader Mohandas Gandhi, more popularly called Mahatma Gandhi in New Delhi, India, Thursday, Sept. 18, 2014. Xi and Indian Prime Minister Narendra Modi will hold talks aimed at boosting trade and Chinese investment even as their troops face-off along their disputed border in the Himalayas.  (AP Photo/Saurabh Das)
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