BEIJING - Chinese and Indian leaders agreed Monday to a second round of joint military exercises and raised their target for two-way trade by billions of dollars, underscoring growing interaction between the two Asian giants and rising economic powers.

Prime Minister Manmohan Singh's three-day visit to China, the first by an Indian prime minister in five years, lends new vitality to the sometimes strained relationship between the two, whose booming economies are increasingly driving world trade. Together, their population of nearly 2.4 billion accounts for one-third of humanity.

"We attach the highest priority to developing the co-operative and beneficial partnership relationship with China," Singh said at the beginning of talks with Chinese Premier Wen Jiabao.

"Frequent meetings at the summit level have contributed greatly to the development of our two nations. They have served to demonstrate to the world our combined determination to forge a relationship of mutual understanding, cooperation and trust," Singh said.

Following the talks at the Great Hall of the People, the seat of the national legislature in central Beijing, the two signed a document setting out their shared vision for future growth in ties and reiterated their commitment to resolving a long-standing boundary dispute.

The countries fought a short but bloody border war in 1962 and 11 rounds of talks on settling the frontier have made scant progress.

The new target calls for two-way trade to reach US$60 billion by 2010, up from the former target of $40 billion. Bilateral trade grew to $37 billion last year, with the balance heavily in China's favour.

Joint military drills would be held in India, although neither man provided specific dates. They would follow first-ever joint exercises held in China at the end of last year.

Their booming economies and growing regional influence has caused some to see China and India as potential competitors. China's economy is growing at about 11 per cent, and India's at about nine per cent, two of the fastest economic growth rates in the world.

New Delhi has expressed concern about China's cultivation of relations with Myanmar, Pakistan and other Indian neighbours, while Beijing is believed to be watching developments in New Delhi's increasingly close relationship with Washington.

However, Wen portrayed the nations as complimentary, saying their development and growing national strength presented "opportunities for us to deepen our bilateral relations."

"We expressed satisfaction with the sound momentum of China-India relations, believing that China and India are partners - not rivals," Wen said.

"We should respect each other, understand each other, trust each other and work with each other for mutual benefit and win-win progress. We should not ask who will outdo whom," he said.

The meeting took place after representatives of some of India's biggest companies attended a business conference in Beijing, including salt-to-software conglomerate Tata Group, steel maker ArcelorMittal SA, and Jet Airways, which is seeking to open service on a Mumbai-Shanghai-San Francisco route. China is India's second-largest trading partner.