Still pleasantly dazed by the U.S. offer to make it a "major world power" in a bid to rein in Chinese influence, New Delhi welcomed Wen who wants to, among other things, sign a free-trade deal with his southern neighbor.

"In order to move bilateral trade and economic ties to a new level, the establishment of a free-trade area has become a logical agenda item," Wen told the semi-official Press Trust of India in an interview published last Monday.

Trade between the two neighbors has grown 13 times during the past 10 years and touched $13.6 billion last year.

If India agrees, a free-trade zone will cover more than one-third of the Earth's population and bring together two of the world's fastest-growing economies.

Already, China is India's second-biggest trading partner after the United States.

There are disputes, too.

Details of disputed territory - the result of a brief war in 1962 between the two countries - are being discussed by the two sides. Then there is India's bid to gain a permanent, veto-wielding seat in the U.N. Security Council, a position China already enjoys.

The South Asian giant's recent $768.5 million defense spending plan is unlikely to have eased Chinese concerns heightened after Washington said last month it wanted to sell India high-tech defense equipment, give it access to nuclear technology and make it into a world power.

Wen's trip followed a visit last year to China by Prime Minister Atal Bihari Vajpayee, whose party is no longer in power.

During that visit India was able to get China to concede, though implicitly, that Sikkim, the Himalayan kingdom annexed by New Delhi in 1975, was part of India.

Chinese maps show the northeastern state as an independent country. In a previous deal, India accepted Chinese sovereignty over Tibet, which has been a bone of contention between the two sides since the Dalai Lama, Tibet's spiritual leader, and his followers fled in 1959 to India, where they still live.

China's official Xinhua news agency reported the two countries would outline principles to resolve the decades-old boundary dispute between them.

They were also likely to sign agreements to promote political, economic and cultural relations.

Perhaps the biggest reason Wen wants closer ties with India, a country whose former defense minister described China as the biggest threat to his country, is last month's decision by the Bush administration to agree to sell India's neighbor and rival, Pakistan, F16 fighter aircraft.

The criticism from India was muted because along with that agreement, U.S. officials offered India defense and high-tech cooperation.

The Bush administration offered India F16s, which its manufacturer Lockheed Martin said will be most-advanced plane in the world, F18s, and talks on "command and control, early warning and missile defense."

A U.S. official, speaking on condition of anonymity, said at the time Washington wanted to help New Delhi achieve its defense-related goals.

"Its goal is to help India become a major world power in the 21st century," the official said. "We understand fully the implications, including military implications, of that statement."

During a trip to India last month, U.S. Secretary of State Condoleezza Rice offered India additional incentives in the form of civilian nuclear technology, moving away from previous positions under which Washington had been reluctant to sell civilian nuclear technology to India because of proliferation concerns.

Rice told Indian media at the time that under the Next Steps in Strategic Partnership, or NSSP, dialogue between the two countries, the United States was prepared to discuss all issues, including the sale of civilian reactors.

Relations between the two countries were tense for much of the Cold War when Washington allied itself with Pakistan and India to the Soviet Union.

President Clinton's visit to the country in his second term opened up ties and President Bush has strengthened that relationship to include defense and technology cooperation.

Washington has wanted to emphasize that its relationship with India is distinct from its ties with Pakistan, a traditional ally and a key partner in the "war on terror."

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