External Affairs Minister Yashwant Sinha on Saturday said India expected China as a 'friend' to show 'greater sensitivity' to its security needs.

"Some aspects of China's relations with Pakistan, including their nexus in nuclear and missile proliferation, however, continue to cause serious concern in India as they have a direct and negative bearing on our national security environment," he said while delivering the Admiral R D Katari memorial lecture in Delhi.

"We regard China as a friend and we expect friends to show greater sensitivity to our security concerns," Sinha said.

The minister's remarks come close on the heels of a CIA report to the US Congress contending that despite China's assurances that it would not help Pakistan in its nuclear programme, Beijing continues to provide nuclear weapon and ballistic missiles assistance to Islamabad.

Without naming Pakistan, the minister said there were some in the neighbourhood who sought to play their 'China connection' or 'China card' to 'counter' or even 'contain' India.

Sinha said the bankruptcy of this approach was becoming increasingly evident. "China cannot objectively be a competitor for India in South Asia. Destinies of the countries of South Asia are interlinked by the overwhelming logic of history, geography and economics," he said.

Maintaining that India does not judge its relationship with China in the context of its bilateral relations with any other country, whether in the region or outside it, he said,

"It also means that other countries need to adjust their own equations with both India and China to factor in the reality that it is no longer a matter of playing one against the other."

He felt the increasing cooperation between India and China in the multilateral arena would have a positive cascading effect on the region, especially on issues relating to the interests of developing countries.

Rejecting the notion that India's relations with the US could be used as a counterforce against China, he said these were based on outmoded concepts like balance of power.

"We value our relations with both China and the US and both have their own compelling logic," he said.

He also debunked the theory that India's 'Look East' policy of greater engagement with ASEAN was aimed at containing China.

Noting that India has entered Phase-II of this policy, he said this encompassed not only the ASEAN countries but also China, Japan and other countries of East Asia, including Australia and New Zealand.

Sinha said in the joint declaration signed in Beijing in June this year by Prime Minister Atal Bihari Vajpayee and his Chinese counterpart Wen Jiabao, the two sides had agreed to pay closer attention to each other's sensitivities and aspirations.

"We have taken a principled position on issues like Tibet and Taiwan, and our position is appreciated by China," he said.

"We are happy that the understanding reached during prime minister's visit to China started the process by which Sikkim will soon cease to be an issue in India-China relations," he added.

The minister also felt that the time has come to deal with outstanding issues in a determined manner 'without postponing tough decisions for the next generation'.

Referring to the appointment of special representatives to address the protracted boundary problem from a political perspective, he said a final resolution of the issue 'is a strategic objective and both countries should be ready to take some pragmatic decisions to achieve it'.

While India and China agree that their differences should not be allowed to affect the overall development of bilateral relations, there was little doubt that a boundary settlement would give a major boost to the relationship, he said.

"It will also send a powerful signal to the rest of the world that India and China have broken out of the shackles of the past," Sinha said.

Dismissing the theory that a conflict between India and China was inevitable, Sinha said New Delhi neither pursues nor makes policy towards China based on any such belief.

"India's approach to China is and will remain forward-looking and full of optimism. It will not be driven by a sense of either fear or envy. We are convinced that both countries can grow strong and prosperous in partnership rather than in conflict," he said.

While it could not be denied that the two countries were competitors, it was also clear that like the US and Europe, they could be both partners and competitors, he said.

The minister also laid special emphasis on the need for being more pro-active and ambitious in developing economic partnership by exploiting new opportunities created by globalisation.

On the economic front, he said while bilateral trade has shot up from around $200 million in the early 90s to $5 billion in 2002 and is expected to touch $7 billion this year, mutual economic stakes would be a factor of stability in a relationship which has seen many ups and downs in the past.

Stressing the two countries did not want to re-invent the confrontationist model of the cold war, he said they looked upon the next 20 years as a window of strategic opportunity to raise living standards of their people.

Observing that Vajpayee's 'historic' China visit marked the beginning of a new phase in Sino-India relationship, Sinha said the joint declaration sent a signal to Asia and the world that the two countries were committed to working more closely together, including through their common desire to strengthen the trend towards multi-polarity.

"We have not allowed our differences to define our relationship. It is a pragmatic model of inter-state relations, which has obvious relevance in other situations, including in our dealings with Pakistan," he said.

The minister said at the same time, they were fully aware that there was a 'deficit of trust', which needed to be addressed as they moved towards their shared vision of a constructive and cooperative partnership.

Noting that the two sides were engaged in the process of clarifying the Line of Actual Control (LAC), he said this needed to be expedited.

He stressed that peace and stability in the neighbourhood was of critical importance to both countries to pursue the goals of economic progress and prosperity and emergence of a plural and multifaceted society.