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Updated: Oct 13, 2019 22:51 IST

India and China on Saturday unveiled a new high-level mechanism to address trade-related concerns and boost commerce after an informal summit between Prime Minister Narendra Modi and Chinese President Xi Jinping agreed to consolidate strategic communications on issues ranging from defence to counterterrorism.

The Kashmir issue, the subject of a testy exchange between the two sides in the run-up to the second informal summit between the two leaders in the seaside resort in Tamil Nadu’s Mamallapuram, wasn’t raised or discussed, according to foreign secretary Vijay Gokhale.

The first informal summit, held in the Chinese city of Wuhan last year, had helped reset ties after the military face-off at Doklam in 2017, and Modi spoke about the “Chennai Connect” from the Mamallapuram summit marking a new era of cooperation between India and China.

Modi and Xi spent close to six hours in one-on-one conversations since the Chinese President arrived in Chennai on Friday, including 90 minutes of discussions on Saturday, and people familiar with the developments said the discussions focused on consolidating the strategic communications and guidance that had been a key outcome of the Wuhan summit.

Xi endorsed the idea of continuing with the informal summits and invited Modi to China for the next edition in 2020. Modi, who accepted the invitation, said in his opening remarks at the delegation-level talks that the Wuhan summit led to “increased stability and fresh momentum” in relations.

“We had decided that we will prudently manage our differences, and not allow them to become disputes, we will remain sensitive about each other’s concerns and that our relations will lead to peace and stability across the world,” Modi said.

“The Wuhan spirit gave a new momentum and trust to our relations. Today, our Chennai Connect will lead to the start of a new era of cooperation between the two countries,” he added.

An official who did not wish to be named said: “It was all about how differences shouldn’t be allowed to dominate the entire relationship... It was about putting ring fences around contentious issues.” Another person with direct knowledge of the discussions, who too spoke on condition of anonymity, said the Chinese side had apparently decided not to raise the Kashmir issue as the president had stated his position in public remarks and the joint release issued during Pakistan Prime Minister Imran Khan’s visit to Beijing this week.

Describing the discussions as “good and comfortable”, this person said: “There were no sharp edges in the meeting and everything was rounded.”

The two leaders agreed to set up the High-Level Economic and Trade Dialogue mechanism, to be led by finance minister Nirmala Sitharaman and vice premier Hu Chunhua, to enhance trade relations and discuss all related matters, including India’s concerns about the trade deficit of more than $50 billion.

Gokhale quoted Xi as saying that China is ready to take “sincere action” on India’s concerns and discuss a “concrete way” to reduce the trade deficit. Xi also welcomed Indian investments in sectors such as pharmaceuticals and IT. The two leaders also discussed mutual investments in specific sectors through a “manufacturing partnership” that will be shaped by the new mechanism.

Modi and Xi also spoke about strengthening a rules-based order for the global trading system with the WTO as its central pillar, and had a brief discussion on the Regional Comprehensive Economic Partnership (RCEP), a free trade pact being negotiated by the 10 Asean states and six other countries, including China and India. India, Modi said, is looking forward to RCEP but is keen to ensure the proposed agreement strikes a balance between trade in goods and services. Xi said China is ready to take Indian concerns into account in negotiations on RCEP.

Responding to a flurry of questions on China’s backing for Pakistan on the Kashmir issue, Gokhale said: “I would like to state quite categorically that this (Kashmir) issue was not raised and not discussed and, therefore, there is no question of my making any further comments on the matter.” He said the Indian government’s position on Kashmir was “very clear” that it is a “matter that concerns the internal affairs of the country”. The India-China relationship was not predicated on a single issue, he said in a reference to Pakistan.

Gokhale added: “Since Prime Minister Imran Khan had visited China, the president of China talked about his visit.” Xi had told Modi about the visit and the Indian premier had heard him out, he said, refusing to go into details. He responded to questions on whether the two leaders had discussed terror emanating from Pakistan by saying the two sides spoke broadly about working together to combat the global threat of terrorism, including from the Islamic State, without going into specifics of any kind.

A statement issued by India said both leaders considered terrorism a common threat and recognised the “importance of continuing to make joint efforts to ensure that the international community strengthens the framework against training, financing and supporting terrorist groups throughout the world and on a non-discriminatory basis”.

Xi referred to the need for greater engagements in defence and security when the two leaders made a brief review of exchanges in this field. Xi said enhanced exchanges in this field will increase mutual trust between the two militaries and also invited defence minister Rajnath Singh to visit China.

The two leaders exchanged views on the issue of boundary, reiterating their understanding that continuing efforts will be made to ensure peace along the border. They further agreed that both sides will continue to work on additional Confidence Building Measures in pursuit of the objective. The two sides also discussed climate change, the situation in Afghanistan and plans to celebrate the 70th anniversary of India-China relations in 2020 by organising 70 events, with each country hosting 35 events. The Indian statement added the two sides shared the common objective of working for a peaceful, secure and prosperous world in which all countries can pursue their development within a rules-based international order.