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Prime Minister Modi told President Xi that he has made efforts to improve ties with Islamabad but these efforts have been "derailed".
Prime Minister Narendra Modi on Thursday raised the issue of cross-border terrorism emanating from Pakistan during his talks with Chinese President Xi Jinping in Bishkek and said India expects "concrete action" by Islamabad to create an atmosphere free of terror for the resumption of dialogue.
Prime Minister Modi met President Xi on the sidelines of the Shanghai Cooperation Organisation Summit in Bishkek and discussed the full spectrum of bilateral relations.
This is the first meeting between the two leaders after Modi's re-election following the stunning victory of the BJP in the general elections last month.
The meeting also comes a month after the 1267 Al Qaeda Sanctions Committee of the powerful UN Security Council designated Pakistan-based terror group Jaish-e-Mohammed chief Masood Azhar as a global terrorist after China, Pakistan's closest ally, lifted its technical hold on the proposal to blacklist him.
Briefing the reporters after the meeting, Foreign Secretary Vijay Gokhale said that there was a brief discussion on Pakistan during the talks between the two leaders.
He said India has a consistent position with respect to Pakistan that it wants peaceful relations with Islamabad.
Gokhale said Prime Minister Modi told President Xi that he has made efforts to improve ties with Islamabad but these efforts have been "derailed".
"Pakistan needs to create an atmosphere free of terror, but at this stage we do not see it happening. We expect Islamabad to take concrete action" to resume talks, Gokhale quoted the prime minister as telling President Xi.
Modi's comments came ahead of President Xi's meeting with Pakistan Prime Minister Imran Khan, who is also in the Kyrgyz capital to attend the SCO summit.
Khan has twice written to Prime Minister Modi, seeking resumption of dialogue on all issues, including Kashmir.
Responding to Khan's overtures, Prime Minister Modi told his Pakistani counterpart that creating trust and an environment free of violence and terrorism was essential for fostering peace and prosperity in the region.
India has not been engaging with Pakistan since an attack on the Air Force base at Pathankot in January of 2016 by a Pakistan-based terror group, maintaining that talks and terror cannot go together.
Early this year, tensions flared up between India and Pakistan after a suicide bomber of Pakistan-based Jaish-e-Muhammed (JeM) killed 40 CRPF personnel in Kashmir's Pulwama district.
Amid mounting outrage, the Indian Air Force carried out a counter-terror operation, hitting the biggest JeM training camp in Balakot in Pakistan on February 26. The next day, Pakistan Air Force retaliated and downed a MiG-21 in an aerial combat and captured an IAF pilot, who was later handed over to India.
China played a role in easing tensions between New Delhi and Islamabad.
Meanwhile, Modi said he had an "extremely fruitful" meeting with Jinping during which they discussed the full spectrum of bilateral relations and vowed to work together to improve the economic and cultural ties.
"Had an extremely fruitful meeting with President Xi Jinping. Our talks included the full spectrum of India-China relations. We shall continue working together to improve economic and cultural ties between our nations," Modi tweeted.
The meeting began with Xi congratulating Modi over his election victory.
"On behalf of all Indians, I wish you a very happy birthday," Modi told Xi, greeting the Chinese leader who will turn 66 on June 15.
"As you said, in the days to come, we both can progress on several subjects. We both have a contemporary tenure to work more," he said.
"After our meeting in Wuhan, we have seen a new momentum and stability in our relations. There has been a rapid progress in the strategic communication between the two sides, leading to be more sensitive towards each other's concerns and interests. And there has been new areas for further cooperation since then," Modi told Xi.
The 2018 Wuhan summit between Modi and Xi was largely credited to have turned around the bilateral ties soured by the 73-day Doklam standoff, triggered by Chinese troops attempts to build a road close to Indian border in an area also claimed by Bhutan in 2017.
The two leaders have met more than 10 times in the last five years, including thrice after their informal summit in Wuhan.
Briefing the media after the talks, Foreign Secretary Vijay Gokhale said Prime Minister Modi specifically conveyed to President Xi and he agreed that both sides need to raise "our expectations from the relationship".
President Xi confirmed his readiness to visit India this year for the next informal summit.
The two sides agreed to celebrate the 70th anniversary of their diplomatic ties in a "fitting manner" by holding 70 events - 35 each - in both countries, Gokhale said.
Modi and Xi noted that they'll have more opportunities to meet at multilateral meetings, including at the G20 Summit in Osaka, Japan in June.
In a statement, the Chinese Foreign Ministry in Beijing said President Xi told Prime Minister Modi that India and China should deepen cooperation by properly handling differences and called for strengthening Confidence Building Measures to maintain stability at the border.
"China is ready to work with India to continuously advance the closer development partnership between the two countries," Xi said.
He urged the two sides to stick to the fundamental judgement that "China and India offer to each other chances for development, and do not pose each other threats."
Xi said both the countries should deepen mutual trust, focus on cooperation and properly handle differences, so as to make China-India relations a more positive asset and energy for the development of the two countries, the statement said.
On the vexed boundary issue, Xi said "we need to make good use of the meeting of the Special Representatives on the boundary issue and other mechanisms, strengthen Confidence-Building Measures and maintain stability at the border areas".
National Security Advisor Ajit Doval and Chinese Foreign Minister Wang Yi are the designated Special Representatives of the boundary dispute.
So far, the two countries have held 21 rounds of talks to resolve differences over the 3488-km long Line Actual Control.
Xi said India and China should uphold free trade, and multilateralism, without directly referring to Beijing's opposition to US President Donald Trump's protectionist policies and the ongoing China-US trade war.
"As important representatives of developing countries and emerging market economies, China and India should jointly uphold free trade, multilateralism and the right of developing countries to legitimate development," Xi said.
China and the US have been in an escalating conflict over trade for the past year. The scope of the battle has expanded in recent months as Washington has tightened trade restrictions on Chinese telecom giant Huawei.
"We need to expand cooperation channels, carry out cooperation in investment, production capacity and tourism, expand common interests, and jointly promote regional connectivity, including the development of the Bangladesh-China-India-Myanmar Economic Corridor so as to achieve better cooperation and common development," he said.
The mention of BCIM, which is part of China's multibillion dollar Belt and Road Initiative is regarded significant as it has not yet taken off unlike the China-Pakistan Economic Corridor and other corridors of the initiative.
Xi also pointed out that China and India are the only two emerging markets with a population of one billion in the world, both of which are at an important stage of rapid development.
Working together, China and India will not only boost each other's development, but also contribute to peace, stability and prosperity of Asia and the world at large, he said.