India, China bid to ease border row for broader ties

New Delhi (CNN) -- Locked in a long-running border dispute, India and China Tuesday agreed to set up a new system aimed at maintaining peace along their treacherous Himalayan boundary.

Called a "working mechanism for consultation and coordination on India-China border affairs," the system will be composed of civilian, military and diplomatic officials from both sides, the Asian neighbors said in a joint statement in New Delhi.

The statement came after the second day of delegation-level talks led by China's state councilor Dai Bingguo and Indian national security adviser Shivshankar Menon.

"The working mechanism will address issues and situations that may arise in the border areas that affect the maintenance of peace and tranquility and will work actively toward maintaining the friendly atmosphere between the two countries," it said.

The two nuclear-capable nations, armed with heavy military power, stated that peace was "very significant" for "mutual trust and security."

In the past too, both countries had signed several agreements to ward off tensions along their contentious borders.

Ahead of the talks that began Monday, Dai noted in an article in an Indian publication that both nations were required to tap what he called a huge potential for cooperation.

"We are now in the second decade of the 21st century. Looking ahead, China-India relations have huge potential and broad space for cooperation," he wrote in the Hindu newspaper.

"What we face is a golden period to grow China-India relations. The world has enough space for China and India to achieve common development, as there are so many areas for us to work together," Dai added in the column.

Fifty years ago, the two Asian giants fought a brief but bitter border war.

Both sides accuse each other of occupying parts of its territory along the Himalayas.

New Delhi, for example, regards Arunachal Pradesh along Tibet as its "integral" and inalienable" part of India. China lays claim to 90,000 square km (34,750 square miles) of land in that mountainous region governed by India.

India accuses Beijing of "occupying" about 38,000 square km (14,670 square miles) in the Kashmir region. India also alleges Pakistan has ceded 5,180 km (3,220 miles) in Kashmir to China.

India's refuge for the Dalai Lama has also been a major irritant in its ties with China, which calls the exiled Tibetan spiritual leader a "splittist" -- a charge he denies.

Still, commerce between the two rising economies has flourished over the years.

Bilateral trade, wrote Dai, has jumped 20-fold in the past decade to $61.7 billion in 2010.

"As neighbors and two big countries with a combined population of 2.5 billion, China and India can join hands, seize the historic opportunity, and work together to further advance our friendship and cooperation," he said.