NEW DELHI: The leaders of India and China on Saturday announced the setting up of a new mechanism that would work towards minimising the huge trade gap between the two countries -- one of the key takeaways from their second informal summit in Mamallapuram in southern India.

Chinese president Xi Jinping, in his meeting with Prime Minister Narendra Modi in the southern Indian coastal town of Mamallapuram, also sought greater engagement between the defence and military establishments of the two countries that, he said, would “enhance trust," foreign secretary Vijay Gokhale told reporters at a news conference on Saturday.

China has extended an invitation to the Indian defence minister to visit, Gokhale said.

Modi and Xi, meeting for the first time in the informal summit format since their talks in Wuhan last year, had “excellent discussions" and they agreed to continue with the practice of holding such informal summits.

Gokhale said that the two leaders were of the view that the informal summit provided a “very good platform" for them to engage with Xi endorsing the idea of the informal summit. As a result of the informal summit, strategic communication between the two countries had deepened and there had been an intensification in ties Modi and Xi had agreed, Gokhale said.

According to a report by Xinhua news agency, Xi in his talks with Modi said that the “next few years are the key period for China and India to realize national rejuvenation, and also the key period for the development of Sino-Indian relations."

“We should steer China-India relations, plan the 100-year-old plan of China-India relations from a strategic height and a long-term perspective, inject a strong endogenous impetus into the development of China-India relations, and work together to realize the great rejuvenation of the two major civilizations," Xi is said to have told Modi according to the Xinhua report.

Gokhale acknowledged that the relationship between India and China was not an easy one. But “that does not detract from the positive effect that an interpersonal relationship at the leadership level" have in building a larger relationship, he said.

It was important to note how the two leaders had managed the relationship and ensured there were no fundamental disruptions, he said in a response to a question on why the excellent rapport between the two leaders did not translate into better understanding and ties between the two countries.

Xi arrived in India on Friday with the two leaders holding several sessions of one to one conversations on Friday and Saturday. There was also a round of delegation level talks before Xi left for Nepal on Saturday afternoon.

Ties between India and China have been prickly over Beijing’s close relationship with Pakistan, an unsettled boundary issue and a ballooning trade gap between India and China that touched $ 57 billion last year. In 2017, the two countries were engaged a serious military face off lasting 73 days in Bhutan’s Doklam plateau. This was seen as a result of their unsettled boundary dispute dating back to the 1962 war between India and China.

Commenting on the discussions on trade, Gokhale said the two leaders had a “good conversation" on the subject. Xi on his part said China was ready to take “sincere action" to address India’s concerns on its massive trade deficit with China.

“One of the important understandings that the two leaders reached therefore was that a new mechanism will be established to discuss trade, investment and services. This will be at an elevated level" with Chinese vice premier level official heading the delegation from the Chinese side and Finance minister Nirmala Sitharaman leading the team from the Indian side, Gokhale said. Xi welcomed investments from India into China in the areas of pharmaceuticals and IT, Gohkale said. The two countries will also explore the possibility of establishing manufacturing partnerships through the new mechanism, the foreign secretary said. These could also be in third countries, he added later.

There was also a “brief discussion" on the Regional Comprehensive Economic Partnership agreement that countries of South east Asia, India, China, Japan, South Korea, Australia and New Zealand are negotiating and are expected to sign next month, Gokhale said.

Modi explained that India “looks forward" to the pact but was of the view that RCEP should ensure balanced flow of trade, services and investments, Gokhale said.

On military to military ties, Xi proposed a “stepping up of engagement in this area" which would enhance trust and confidence between the two militaries, Gokhale said adding that China had extended an invitation to Defence Minister Rajnath Singh to visit.

To boost people to people ties in a bid to broaden the partnership between the two countries, India and China have agreed to host 70 events next year to mark 70 years of the establishment of India-China diplomatic relations, he said.

The two leaders also discussed terrorism and radicalisation that they said were challenges faced by both countries without going into specifics.

There was no discussion on India scrapping an article of its constitution that gave special status to Kashmir that has been a trigger for some sharp exchanges between India and China in recent days. India says the matter is a purely internal issue while China and Pakistan have objected to the Indian action.

Gokhale said Xi had told Modi about a visit to China earlier this week by Pakistan prime minister Imran Khan and the Indian prime minister had listened to him.

Xi had said that he was very satisfied with the discussions and that he looked forward to hosting Modi for the next informal summit in China which is expected to held in the next one year.

“What has come out...is the role of the leadership of both sides in steering this relationship into a forward looking" trajectory, Gokhal said adding that the two leaders had spoken of the need to look forward.

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