By Ethirajan Anbarasan BBC News

Neither China nor India are talking hostilities any more

Asian giants, China and India, begin four days of talks on Saturday in which they will seek to reach agreement on how to solve their protracted border disputes.

During Chinese Premier Wen Jiabao's visit to India, the two sides are widely expected to agree on "political guiding principles" in resolving their long-standing border differences.

The guiding principles would then be the basis for their border talks in coming years.

China and India have been holding talks at different levels for the past 17 years to settle their border dispute, which resulted in a bitter conflict in 1962.

Economic engagements may be influencing political initiatives in the future Swaran Singh, China expert

While India claims areas of Aksai Chin in the western sector, China terms the north-eastern Indian state of Arunachal Pradesh as a disputed territory.

While no major breakthrough has been achieved in solving the dispute, analysts say both countries have come a long way in improving their ties over the past four decades.

"India has now moved from a legalistic position and is now trying to find a political solution to the border issue. This is a fundamental change," says Swaran Singh, a China expert at Delhi's Jawaharlal Nehru University.

Historical claims

India said China was occupying its territories in Kashmir illegally and wanted Beijing to vacate from Aksai Chin in accordance with international agreements.

China said it wanted a negotiated settlement on disputed territories.

Now both sides seem to have moved from their historical claims.

As part of the guiding principles they are expected to maintain the existing status quo on the borders - such as not disturbing the population on both sides.

If the negotiations are successful, the feeling is that the Line of Actual Control (LAC) could possibly be converted to the international border.

In the late 1980s, then Indian Prime Minister Rajiv Gandhi visited China and since then both countries have taken bold steps to resolve the issue through phased negotiations and to enhance economic co-operation.

Joint Working Groups were set up to discuss border issues and high level political visits have taken place.

Irritants

Both countries have also signed agreements to maintain peace on their 4,500 km-long border.

However, irritants in bilateral ties remained in the form of Chinese suspicions about Delhi's nuclear programme and the activities of the Tibetan spiritual leader, the Dalai Lama, in India.

Indian warships have paid visits to Chinese navy ports

Delhi argued that China was arming and assisting Pakistan's nuclear and missile programmes.

But the tensions have considerably reduced in the past 10 years, with both sides taking various confidence-building measures.

Political issues may dominate Mr Wen's current visit to Delhi but it seems fast-growing trade ties may be pushing the two sides together.

India's bilateral trade with China touched $13.6bn last year with the balance of trade reportedly favouring Delhi.

The two sides were surprised with the growth in bilateral trade as it was a mere $1bn a decade ago.

Experts say with this rate of growth, China may soon overtake the US as India's largest trading partner. Indo-US trade stood at about $20bn in 2004.

Indian entrepreneurs are also keenly watching China's rapid economic growth and they want to reap the benefits for their manufacturing and service industries.

Tibetan exiles have protested in the past against the border talks

Indian investments in China crossed $100m last year.

On the other hand, China feels the Indian economy is not opening up to Chinese investments, which remain at a mere $20m.

With the Indian side now favouring 100% foreign investment in the construction sector, Beijing hopes to increase its presence in India.

From the Chinese perspective, trade with India may not be a priority compared to trade with the US, European Union and Japan.

But there are other implications.

After developing its coastal regions, Beijing is now heavily engaged in developing its backward western regions - focusing on interior provinces closer to India.

Peace on the Indian borders will help.

Both sides now feel it will be mutually beneficial to enhance bilateral economic co-operation.