As India and China held fresh round of talks on the vexed boundary issue on Monday, Chinese Premier Wen Jiabao said bilateral ties were in 'good shape' since the enunciation of 'guiding principles' for the settlement of the problem.

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"Our bilateral ties are in good shape since last year when I visited India and we established the 'political parameters' and guiding principles for the settlement of the India-China boundary question," Wen told India's Special Representative for border talks and National Security Advisor M K Narayanan when the latter made a courtesy call on him.

"You are not only the Special Representative (for the India-China border talks) but also a friendship envoy," Wen, who returned on Sunday after a seven-nation official tour of Africa, told Narayanan.

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The Chinese premier said India and China have formed a strategic partnership last year during his visit to New Delhi and since then, frequent high-level exchanges have taken place which has boosted bilateral ties.

Earlier, Narayanan and his Chinese counterpart, Dai Bingguo held two rounds of talks here following their informal parleys in the northwestern city of Xian. The eighth round of border talks will conclude on Tuesday. Naryanan is also scheduled to meet Chinese Foreign Minister Li Zhaoxing.

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The new round of negotiations is taking place after the recent successful visit to China by Defence Minister Pranab Mukherjee as well as last week's historic agreement between India and China to reopen the Nathu La border trade point.

The Himalayan pass, which was a part of the famed Silk Road, was closed after the 1962 Indo-China war.

The on-going in-camera sessions of boundary negotiations would focus on resolving the boundary issue under the political parameters set during Wen's visit to New Delhi in April 2005, official sources said. The two sides formed the 'special representatives' mechanism in June 2003 during the visit of the then prime minister Atal Bihari Vajpayee to China.

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These guiding principles commit both India and China to arrive at a 'package settlement' of the boundary question in a spirit of mutual respect and mutual understanding, analysts said, adding that the early settlement would be beneficial for full blossoming of India-China relations.

The special representatives' work is essentially divided into three phases and the first phase was successfully completed with two sides agreeing on the political parameters and guiding principles for the settlement of the Indo-China boundary question in April 2005.

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The on going session is part of the second phase of the boundary negotiations during which the special representatives are expected to draw up an agreed framework for the resolution of the boundary based on the agreed political parameters and guiding principles.

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