SHANGHAI -- Chinese President Hu Jintao met his Iranian counterpart Mahmud Ahmadinejad in Shanghai Friday to exchange views on bilateral relations and the Iranian nuclear issue.

Hu said the Chinese government attaches great importance to developing friendly cooperative relations with Iran and wishes to continuously expand bilateral cooperation.

Iran's President Mahmoud Ahmadinejad (L) meets China's President Hu Jintao before their bilateral meeting at the Xijiao State Guest House in Shanghai June 16, 2006. [Reuters]

He proposed the two countries enhance political consultation, intensify traditional friendship and continue contacts and communication in diverse forms and at all levels.

China and Iran should deepen economic cooperation, achieve mutual benefit, maintain rapid growth in bilateral trade, and actively nurture new areas for economic cooperation, Hu told Ahmadinejad.

Meanwhile, the two countries should push forward dialogues between their different civilizations, enhance exchanges in cultural sectors, seek mutual respect and common development, refer to each other's experiences and encourage more friendly contacts between the two peoples, he added.

Ahmadinejad echoed Hu's proposals, saying the Iranian side is willing to intensify cooperation with China in diverse sectors including energy, transportation, telecommunication, power industry and shipbuilding.

He agreed that further cultural and sports exchanges and dialogues between their different civilizations would help enhance understanding between the two peoples.

Regarding the Iranian nuclear issue, Hu said China understands Iran's concern over its right to the peaceful use of nuclear power, upholds the international non-proliferation system and insists the Iranian nuclear issue should be settled properly through talks.

At present, the critical point in the Iranian nuclear issue is to build mutual trust between Iran and the international community, said Hu.

A package of incentives raised by China, Russia, the United States and Europe has provided a new opportunity for the settlement of the issue. The Chinese president said he hoped the Iranian side would earnestly study and actively respond to these incentives and seek an earlier resumption of the nuclear talks.

"The Chinese side is willing to maintain close communication with Iran and all other parties concerned and play a constructive role in seeking a proper solution to the Iranian nuclear issue," Hu said.

Ahmadinejad said his country is willing to maintain peace and stability in the region and the world at large. All the Iranian nuclear programs are peaceful and Iran does not need, nor does it seek to, develop nuclear weapons, he said.

Iran is willing to solve the nuclear issue peacefully through consultation, said the president. He added the EU's proposal is better than before and has provided new opportunities for resumption of talks. "We're studying the proposal and will respond in the near future."

The two presidents spoke highly of bilateral ties 35 years after their countries forged diplomatic relations.

"China and Iran are both developing countries and the two peoples have a long history of friendly exchanges," said Hu. "We have reached wide consensus in international affairs and maintained close consultation and coordination on UN reform and human rights issues."

Meanwhile, the two countries have reported robust trade growth and their economic and technological cooperation has proven fruitful, he said.

Ahmadinejad is in Shanghai for the annual summit meeting of the Shanghai Cooperation Organization held on Thursday. Iran is an observer of the organization that groups China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan.