BEIJING (TIP): Prime Minister Narendra Modi on May 14 received a warm welcome by Chinese President Xi Jinping in the ancient Xi’an City, the latter’s hometown, and the two leaders held discussions on mutual trust and boundary issues.

Modi’s three-day visit to China began with a cordial note as Xi set aside protocol by receiving a foreign dignitary outside Beijing, a gesture which Modi made last September by welcoming the Chinese President in Ahmedabad.

Even as mutual warmth was apparent, Modi raised the question of $46 billion investment by China in an economic corridor passing through Pakistan-occupied Kashmir, about which India had protested. The investments were announced during Xi’s visit to Pakistan last month.

He also expressed concern over the issuance of stapled visas by China to residents of Arunachal Pradesh, which the Chinese claim to be a part of southern Tibet, an assertion totally rejected by India.

Foreign Secretary S Jaishankar said the “very substantive talks” between the two leaders covered subjects ranging from political, economic and global issues like terrorism, UNSC reforms and India’s membership of Nuclear Suppliers Group. “There was a lot of discussion on strengthening trust and increasing convergence,” he said while briefing media on the 90-minute delegation-level talks without taking any questions.

He said the two leaders discussed the boundary issue, including peace and tranquility, besides trans-border rivers. The boundary issue has been a sticking point in the relations between the two countries and both are making efforts to settle it through Special Representatives’ talks.

The Special Representatives have held 18 rounds of discussions so far.

On the economic front, Modi and Xi discussed the issue of trade deficit, which is in favor of China to the tune of$38 billion, and ways to address it, Jaishankar said.

“This is the first time I have treated a foreign leader in my hometown,” Xi told Modi in his opening remarks, and hoped that the visit will push the bilateral strategic partnership to achieve new progress. “China-India relations are experiencing stable development and facing broad prospects,” he added. Xi also thanked Modi for the warm reception he received during his India visit in last September. “That left me with deep and good impression,” the Chinese President said.

Xi took Modi on a tour of iconic Giant Wild Goose Pagoda built in 652 AD in recognition of monk Hiuen Tsang’s 17-year-long journey to India and his efforts to popularize Buddhism in China.

The Prime Minister gifted a Bodhi sapling to the temple. In turn, the abbot of the monastery gifted to Modi a figurine of Hiuen Tsang, also known as Xuan Zang.

Modi began his day here with a visit to the famous Terracotta Warriors Museum.

On May 15, PM Modi will hold in  Beijing formal talks with his Chinese counterpart Li Keqiang and other leaders . Trade is a major focus of this visit and India and China are expected to sign 20 business deals worth about $10 billion. PM Modi will also meet Indian and Chinese CEOs and address Industry in Shanghai on Saturday.

Sources disclosed  that the trade imbalance will figure high on the agenda. The trade deficit between India and China increased about 34 per cent to $48.43 billion in 2014- 15 from $36.21 billion in the previous fiscal in China’s favor.