Seeking to allay India's concerns, China has offered to rename the China-Pakistan Economic Corridor (CPEC) which passes through PoK, insisting it was an economic cooperation and connectivity enhancement project devoid of "sovereignty issues".
It also strongly pushed for New Delhi's participation in the 'One Belt One Road' project.
Chinese ambassador to New Delhi Luo Zhaohui, while referring to frosty Indo-Pakistan ties, said China was willing to mediate to resolve the differences between the two countries if it was acceptable to both sides.
Referring to the CPEC, which is part of OBOR, he said China has no intention to get involved in the sovereignty and territorial disputes between India and Pakistan and that the project is for promoting economic cooperation and connectivity in the region.
"It has no connections to or impact on sovereignty issues. Even we can think about renaming the CPEC. China and India have had successful experience of delinking sovereignty disputes from bilateral relations before," he said in closed-door address to a think-tank on Friday.
India has been severely critical of the CPEC, saying the project violates its sovereignty as it runs through Pakistan-occupied Kashmir.
Luo said China is sincere in its intention to cooperate with India on the OBOR as it is "good for both of us."
Maintaining that China and India could be natural partners in connectivity and the OBOR, the Chinese ambassador said Indian economy was behind China by at least 13 years, suggesting New Delhi should grab economic opportunities offered by Beijing.
"Now the GDP of India is roughly that of China in 2004, some 13 years ago. China leads India by 13 years mainly because we started reform and opening up 13 years earlier," he said.
Referring to the view in India that China always puts Pakistan first when handling its relations with South Asian countries, he said the government always follows "China first" policy and that problems are dealt on merit.
"I want to tell you this is not true. Simply put, we always put China first and we deal with problems based on their own merits. Take Kashmir issue for example, we supported the relevant UN resolutions before 1990s. Then we supported a settlement through bilateral negotiation in line with the Simla Agreement. This is an example of China taking care of India's concern," he said.
On India's bid for the membership of the Nuclear Suppliers Group (NSG), he said, "We do not oppose any country's membership, believing that a standard for admission should be agreed upon first."
The envoy also proposed a four-point initiative to improve ties between India and China which includes aligning its 'OBOR' project with India's 'Act East Policy', and restarting negotiations on a free trade pact.
The proposal put forward by Luo includes starting negotiations on a 'China-India Treaty of Good Neighbourliness and Friendly Cooperation' and prioritising finding an early solution to the border dispute between the two countries.
"Firstly, start negotiation on a China-India Treaty of Good Neighbourliness and Friendly Cooperation. Secondly, restart negotiation of China-India Free Trade Agreement. Thirdly, strive for an early harvest on the border issue. Fourthly, actively explore the feasibility of aligning China's 'One Belt One Road Initiative' (OBOR) and India's 'Act East Policy'," he said.
He said good ties between India and China were conducive to regional stability.
The development of China, India, Pakistan and the stability of the whole region call for a stable and friendly environment, he said.
"Otherwise, how could we open up and develop? That's why we say we are willing to mediate when India and Pakistan have problems. But the precondition is that both India and Pakistan accept it. We do this only out of goodwill. We do hope that there is no problem at all," Luo said.
"When the Mumbai terrorist Attack on November 26, 2008, took place, I was Chinese Ambassador to Pakistan, and I did a lot of mediation at that time," he said.
On trade ties between the two countries, Luo said he was happy to see that China had contributed its share to India's development.
"Today, China is the second largest economy in the world, with a GDP of 11 trillion US dollars. China's development also benefited from India's participation," he said.
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