India's Prime Minister Manmohan Singh (R) speaks beside China's President Hu Jintao during a joint address to the media in New Delhi November 21, 2006. India and China agreed on Tuesday to boost trade and renew efforts to solve their border dispute, adding there was enough room for the Asian giants to grow together while remaining sensitive to the other's concerns. [Reuters]

Investment Accord

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The investment agreement signed between the two nations "provides for a framework for bilateral investment flows,"according to a press release issued by the two. "This will send a positive signal to prospective Indian and Chinese investors."

Hu's visit is also aimed at the rest of the world, a Chinese's spokeswoman said.

"We hope the visit will increase confidence building between China and India and send a message internationally that the two countries are partners that will cooperate in development for the sake of peace in Asia and in the world,"said the Chinese foreign ministry's spokeswoman Jiang Yu at a press conference today in Beijing.

China will open a consulate in the eastern Indian city of Kolkata and India will open one in Guangzhou.

Dispute Settlement

Settling disputes and increasing confidence among companies to invest in each other's countries are key to better ties between China and India, whose combined gross domestic production in 2020 may eclipse that of the US now. Growing ties can also help Hu and Singh cooperate in securing oil and gas assets and improve the lives of more than a third of humanity staying in Asia.

Economic and political ties between the neighbors have been marred by territorial disputes and a war of about a month in 1962. The two nations are seeking to resolve differences and boost trade as their economies grow, fueled by consumption of their combined 2.4 billion people.

China's economy, the world's fastest-growing, may likely expand at more than 10 percent this year, according to a forecast by the People's Bank of China. India's economy may grow at an 8.5 percent pace in the year to March 31, according to government estimates.

There is "enough space"for both countries to develop, Singh said. Both countries are "satisfied with the growth momentum of their relationship,"Hu said, referring to it as one of "global significance."

The Chinese president said that settling the boundary dispute was a "common strategic objective"of the neighbors.

Resolving Differences

"Both sides are committed to resolving outstanding differences, including on the boundary question, through peaceful means and in a fair, reasonable, mutually acceptable and proactive manner, while ensuring that such differences are not allowed to affect the positive development of bilateral relations,"the joint declaration said.

India claims 38,000 square kilometers of Chinese-controlled territory in Kashmir, an area the size of Switzerland. China claims 90,000 square kilometers of land in Arunachal Pradesh, which is controlled by India.

The combined gross domestic production of China and India may be $16 trillion a year by 2020, according to an October report by CLSA titled "Chindia,"coined from the two country names. The two nations may account for 17 percent of world GDP by then, up from 7 percent now, it said.

"We are bearing witness to a unique and profound economic transformation that will continue to reshape the global economic and social landscape,"Jonathan Slone, CLSA's head of broking, wrote in the report.

Hu's visit follows a trip by Chinese Premier Wen Jiabao in April last year. During Wen's visit, the two countries concluded agreements to resolve historic rivalries and boost commercial ties between them.

Hu will visit Mumbai, India's financial capital, and Agra, home to the Taj Mahal, after he leaves New Delhi tomorrow.

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