As India and China continued their in-camera negotiations on the vexed boundary issue, Prime Minister Manmohan Singh [Images] on Tuesday expressed confidence that the two neighbours can find a 'mutually satisfactory' solution to the border dispute.

The boundary between the two countries is peaceful, Dr Singh said addressing scholars at the Chinese Academy of Social Sciences, the premier think-tank of China.

"We are both determined to keep it so while our Special Representatives seek a settlement of the boundary question."

In April, 2005 during the visit of Premier Wen Jiabao to India, the two governments agreed on a set of Political Parameters and Guiding Principles for the settlement of the boundary question, Dr Singh recalled.

"We are confident that those principles will guide us to a mutually satisfactory solution of this issue. We have also agreed to set up a mechanism to look at trans-boundary rivers, and will make a success of its work."

He said India was satisfied with the results so far and were convinced that the potential for India-China relations was great and would be realised.

The Special Representatives of the two countries -- National Security Advisor M K Narayanan and Chinese Vice Foreign Minister Dai Bingguo -- are expected to take forward the dialogue process during informal negotiations in Beijing [Images].

Dr Singh and his Chinese counterpart Wen Jiabao had on Monday discussed the boundary question and reaffirmed that they are firmly committed to resolving outstanding differences through peaceful negotiations while ensuring that such differences are not allowed to affect the positive development of bilateral relations.

They said the two countries would seek a fair, reasonable and mutually acceptable solution to the boundary question and 'build a boundary of peace and friendship' on the basis of the Agreement on Political Parameters and Guiding Principles for the Settlement of the India-China Boundary Question concluded in April 2005.

India says China is illegally occupying 43,180 sq km of Jammu and Kashmir [Images] including 5,180 sq km illegally ceded to Beijing by Islamabad under the Sino-Pakistan boundary agreement in 1963. On the other hand, China accuses India of possessing some 90,000 sq km of Chinese territory, mostly in Arunachal Pradesh.