China and its southwestern neighbor Nepal on Tuesday agreed to lift their bilateral relationship to a higher level by establishing comprehensive and cooperative partnership.

Chinese Premier Wen Jiabao (R) shakes hands with Nepali Prime Minister Madhav Kumar Nepal at the Great Hall of the People in Beijing, capital of China, Dec. 29, 2009, photo from Xinhua.

The decision came when Chinese Premier Wen Jiabao and Nepali Prime Minister Madhav Kumar Nepal held talks following a red-carpet welcome ceremony for Nepal in the Great Hall of the People in downtown Beijing.

The newly-established comprehensive and cooperative partnership signals closer ties between China and Nepal, which used to enjoy good-neighborly partnership.

Wen and Nepal also witnessed a signing ceremony of two agreements on youth exchange and economic cooperation after their talks.

Nepal arrived in Lhasa, capital of southwest China's Tibet Autonomous Region Saturday, kicking off his six-day China tour, also the first official visit to China since he became prime minister of the Himalayan nation in May this year.

The Nepali prime minister arrived in Beijing Monday for talks and meetings with Chinese leaders.

In the one-hour talks, Premier Wen hailed the sound development of bilateral ties since China and Nepal forged diplomatic ties 54 years ago, saying the two countries have become good neighbors, friends and partners.

Under the new circumstances, it is in the fundamental interests of both countries and peoples to consolidate traditional friendship and deepen comprehensive cooperation, said Wen.

Wen urged the two countries to further enhance cooperation in various levels and promote non-governmental exchanges, youth exchanges in particular, in a bid to make the lasting friendship deeply rooted among the two peoples.

Chinese Premier Wen Jiabao (L, front) and Nepali Prime Minister Madhav Kumar Nepal (R, front) review the honor guard during a welcoming ceremony held for Nepal at the Great Hall of the People in Beijing, capital of China, Dec. 29, 2009, photo from Xinhua.

China will take measures to promote export of the Nepali products to China and encourage Chinese firms to participate in Nepal's infrastructure construction, said Wen, highlighting potential cooperation fields on such areas as mountain agriculture and animal husbandry, animal and plant quarantine and personnel training.

Wen said China respects the social system and development path chosen by the Nepali people, firmly supports the efforts Nepal has made for safeguarding sovereignty and territorial integrity, and will continue to provide assistance for Nepal's social and economic development.

The Nepali prime minister appreciated China's long-term assistance, saying the comprehensive and cooperative partnership means that the relations between Nepal and China will be pushed to a new height.

Nepal said his country would advance cooperation with China in a comprehensive manner and boost bilateral ties.

Nepal reiterated that his country would adhere to the one-China policy and believe Taiwan and Tibet are inalienable parts of the Chinese territory, adding Nepal would never allow any force to use Nepal's territory to conduct anti-China activities.

Nepal is due to meet with Chinese President Hu Jintao and top legislator Wu Bangguo respectively on Wednesday, and then fly to China's financial hub Shanghai, the last leg of his visit.

Chinese Premier Wen Jiabao (5th L) holds talks with Nepali Prime Minister Madhav Kumar Nepal (4th R) at the Great Hall of the People in Beijing, capital of China, Dec. 29, 2009, photo from Xinhua.