New Delhi, January 24
India and China, the two nuclear neighbours who fought a war 43 years ago, today took a significant step forward in their relationship under transition from rivalry to partnership when they held their first-ever strategic dialogue here today.

They resolved to settle the vexed boundary dispute in a free, fair, reasonable and mutually satisfactory manner as Beijing conveyed to New Delhi its full ‘understanding’ of India's claim for a permanent seat in the UN Security Council.

Chinese Vice-Foreign Minister Wu Dawei and Indian Foreign Secretary Shyam Saran, leading their respective delegations, covered various issues, including international terrorism, non-proliferation and energy security in their strategic dialogue.

On the UN Security Council reforms, the Chinese side conveyed its understanding for India’s candidature for the permanent membership and indicated their support for India playing a more important role in the international affairs, including in the UN.

The importance of reforming international institutions, including the UN, was underlined.

The two countries shared the view that terrorism and the possibility of weapons of mass destruction and sensitive technologies falling in the hands of terrorists presented a grave threat and recognised the importance of international cooperation in meeting this threat. They also agreed that these dangers could not be tackled unilaterally.

Both sides noted with satisfaction that recent trends in the bilateral relations had been positive. Trade was growing rapidly and as per the preliminary figures for 2004, the annual trade volume had crossed $ 13 billion (US).

Both sides reiterated their desire to improve the relationship at all levels and in all areas while addressing the outstanding differences, including the boundary question.

There was no fixed agenda for the talks and the discussions were freewheeling. The need for such a dialogue was emphasised during the meeting of the Prime Minister with his Chinese counterpart Wen Jiabao on the sidelines of the India-ASEAN Summit in Laos in November last.

Today’s talks also prepared grounds for the visit of Mr Wen expected to take place in March.

During the meeting, detailed discussions took place on important regional and global issues that shape the present international environment. There was a broad convergence of views on these issues. Both sides also briefed each other on their respective foreign and security policies.

UN reforms, developments in Iraq and issues relating to Afghanistan, Iran and North Korea came up during the parleys.

Substantive discussions took place on bilateral relations, including on preparations for the forthcoming visit of China’s Premier Wen Jiabao to India later this year, the Ministry of External Affairs said. The two sides agreed to closely work together to ensure a substantive outcome of the visit.