Chinese and Indian officials have made progress in joint research on the feasibility of initiating a regional trade arrangement, China's Ministry of Commerce announced on Thursday.

The two sides met in Beijing for a two-day consultation, which ended on Wednesday, and reached a basic agreement on cargo and service trade, investment as well as trade and investment facilitating measures, said ministry spokesman Wang Xinpei.

The consultation was the fifth of its kind since March 2006, and the two countries planned to conclude the research at the sixth consultation meeting to be held in New Delhi by October, Wang said.

The two sides would then decide whether to start free trade agreement (FTA) negotiations.

The first four months had seen trade between China and India surge by 56.8 percent year-on-year, the highest among all the major trade partners of the world's fourth largest economy, to 11.4 billion US dollars, according to Chinese customs statistics.

The joint feasibility research was initiated in April 2005 by Chinese Premier Wen Jiabao and Indian Prime Minister Manmohan Singh. New Delhi has hosted the consultations twice and Beijing three times.

Pakistan, another rapidly developing South Asian country whose economy is enjoying an annual growth of between six and eight percent, reached a free trade agreement with China on Nov. 24, 2006.

China has learned the importance of regional free trade agreements. During the first three years after the North American Free Trade Agreement was signed by the United States, Canada and Mexico in 1994, Mexico saw its exports of men's shirts to the United States soar by 122.9 percent while those of China declined by 38.1 percent.

"If you are not part of regional trade arrangements, you stand to lose," Vice Minister of Commerce Yi Xiaozhun said.

China is in talks with 28 countries and regions on regional trade arrangements and has already clinched an FTA with Chile and a cargo trade agreement with the Association of Southeast Asian Nations (ASEAN).