China and India can develop a very "ambitious" relationship if the two giant neighbors work together to deal with challenges and issues between them, India's new ambassador to China told China Daily.

In his first interview with Chinese media since taking office, S. Jaishankar also brushed aside media reports of conflict along the border as "sensational" and "alarmist".

The ambassador said he is upbeat about the momentum in the development of Sino-Indian relations, describing it as a "very good story" characterized by booming trade, regular contacts between State leaders as well as rising interaction between the two peoples and even the armed forces of the two countries.

China is India's largest trading partner, and bilateral trade is set to surpass $60 billion next year - a 30-fold jump from 2000.

"This is a relationship very open both in terms of what we can do and also in terms of the progress we can make," Jaishankar said.

He recalled that the two countries had set a trade target of $40 billion for 2010 during President Hu Jintao's visit to India in November 2006. "But we met the target much faster than we had expected," he said.

The top envoy presented his credentials to President Hu on Aug 28.

The ambassador added that he did not want to define what specific progress he expected to see in bilateral ties because "I don't want to limit my ambitions".

"Once we have discovered the virtues of working with each other, there is really no limit to our cooperation," Jaishankar said.

Despite the headway made in trade, he admits that there are challenges to be dealt with to take the current level of cooperation to a higher level. "A good story can always be improved, or better told. That is part of the task while I am here," he said.

One of the biggest challenges, he said, is to improve understanding between the two peoples, which he said is not on par with the ever-closer links being forged between the two countries. "The public perception and the media perception (in the two countries) are still a little bit behind the reality in relations," he said.

Jaishankar suggested that the sense of ownership of this relationship should be broadened to include not only governments, but also more people, organizations and "stakeholders" spanning a wider spectrum of society. Only then can the two countries keep their relations "stable and predictable".

The substance of the relationship should be enriched, he said, suggesting the basket of India's exports to China be widened. India mostly exports raw materials and commodities, such as leather and jewelry to China, while China's main exports include petrochemical products, textiles and machinery.

As for the problems in bilateral relations, he said it is "natural" for countries that have genuine and substantial relations with each other to face a lot of these.

He refused to call such problems "irritants", and instead termed them as "issues".

"Only when you have real relations, you have issues," he said, adding that sometimes issues don't necessarily imply something bad.

Issues, sometimes, can spring from progress. "Today our trade is big, but we also have trade issues," he said, pointing out that it is not reasonable to expect that "we agree on everything".

The most important thing is how constructively the two countries can deal with such issues, he said.

Regarding rampant reports, by a section of media in both countries, about tensions along the border, Jaishankar said people should not take these too seriously. "I also read those media reports. Their basic concept is flawed," he said.

He said it is the nature of the news business to focus on "what makes news", and anything "sensational and alarmist makes news".

In India, he said, it is impossible for the government to control what the media report, adding that some 30 TV channels fiercely fight for higher audience ratings with deadlines being set by the minute.

"But if it is not accurate, the governments have the obligation to correct the picture, as we often do".

There have been reports of military deployments along the common border. In late August, Indian media reported that the two countries' armies were locked in "sporadic exchanges of fire" in Sikkim, where they share a high-altitude border. China's Foreign Ministry spokeswoman later termed as "groundless" these reports of the skirmishes.