China and India have pledged to increase economic and military ties following an official visit by Indian PM Manmohan Singh to Beijing.
Mr Singh was the first Indian PM to visit China for five years
Mr Singh and Chinese Premier Wen Jiabao signed a broad agreement to expand trade between their countries to $60bn (£30bn) by 2010.
The leaders also agreed to cooperate on further joint military exercises.
But India stressed that China would have to make concessions to address an increasing trading imbalance.
Mr Singh is on a three-day visit to Beijing, the first by an Indian prime minister in five years.
Following his meeting with Mr Wen, he described the agreement signed as "an important milestone in the evolution of our relations".
"It reflects not only our common perceptions but also our desire to purposefully cooperate in the future," Mr Singh told reporters.
China and India are two of the world's fastest growing economies and trade between them has risen rapidly in recent years, reaching over $30bn in 2007.
The countries will stage further joint military drills to those in 2007
India is concerned that this trade is skewed in China's favour but Mr Wen said he believed that the countries were "cooperative partners instead of competitive opponents".
"We should respect each other, understand each other, trust each other and work with each other for mutual benefit and win-win progress," he said.
"We should not ask who will outdo whom."
Mr Singh and Mr Wen also agreed to stage a second round of joint military exercises, following the first ever such manoeuvres in December 2007.
Additionally, they pledged to renew efforts to resolve a border dispute dating back to a short but bloody war in 1962 over Himalayan territory.
"Both sides reiterated their mutual commitment to maintaining peace and tranquillity in the border areas," said Mr Singh.
Analysts have said that there are still many barriers to overcome before the two economic powerhouses can fully trust each other.
But Indian Foreign Secretary Shivshankar Menon told Reuters news agency he felt positive about the talks.
"It's not that we've removed all the problems, but I think we know how to deal with them. We are managing them," he said.