India and China are now focusing on economic development, and are the two fastest-growing economies in the world. While there are areas of competition, the two do not compete head to head, with China specialising in low-cost manufacturing and India in providing low-cost services. There would appear to be much room for co-operation.

In fact, the whole thrust of the bilateral relationship has now turned to co-operation rather than competition. Trade between the two countries is about US$5 billion a year. This is likely to double, if not triple, in the next few years.

A recent study in Foreign Policy, Can India Overtake China?, by two academics - Professor Huang Yasheng at the Sloan School of Management at the Massachusetts Institute of Technology and Professor Tarun Khanna of Harvard Business School - explored the strengths and weaknesses of each country's developmental strategy.

Both countries rely to a large extent on a diaspora, with the Chinese diaspora playing a big role in channelling foreign direct investment into the country and the Indian diaspora helping in the development of knowledge-based industries. 'With the help of its diaspora, China has won the race to be the world's factory,' the authors say. 'With the help of its diaspora, India could become the world's technology lab.'

More importantly, they observe that the question is not about overtaking each other, but co-operating for mutual benefit.

To be sure, border disputes, which triggered a war in 1962, have not been resolved. However, in accordance with the June agreement, each country has appointed a senior official as its special representative to explore 'the framework of a boundary settlement'.

The Chinese have picked their most senior vice-foreign minister, Dai Bingguo, who was involved in shuttle diplomacy over the North Korea issue. The Indians have chosen National Security Adviser Brajesh Mishra. The appointment of such high-level officials suggests a political will by both sides to resolve the issues swiftly and amicably.

During Mr Vajpayee's visit, India publicly declared its recognition of Tibet as part of China. However, the Chinese reciprocal gesture was much more subtle. Instead of saying outright that they recognise Sikkim as part of India, they signed a border agreement with India in which one of the border posts is located in Sikkim, which was annexed in 1974. However, the Chinese foreign ministry still declares that it does not recognise Indian sovereignty over Sikkim.

This subtlety does not serve China's interests. In the eyes of the Indian public, India has done China a good turn and China should reciprocate by publicly recognising Sikkim as Indian territory.

Instead, the Chinese Foreign Ministry website unambiguously proclaims: 'The Chinese government does not recognise India's illegal annexation of Sikkim.'

In the real world, every country, except China and Myanmar, recognises Sikkim as part of India. If China were to make public its recognition of Sikkim as Indian territory, instead of doing so ambiguously and circuitously, it would win itself much goodwill among the Indian public. This half-hearted measure does no one, including China, any good.

As M.D. Nalapat, director of the School of Geopolitics at the Manipal Academy of Higher Education, said while in Hong Kong recently: 'Now is the time for China to take big leaps forward in its relations with India.'

Frank Ching is a Hong Kong-based journalist and commentator