Prime Minister Lee Hsien Loong and China's President Xi Jinping yesterday noted the significant growth in ties since diplomatic relations were forged 25 years ago as both countries set out to explore new areas of cooperation.

These include social governance, finance, human resource development, education, cultural and people-to-people exchanges.

At their meeting yesterday, both PM Lee and Mr Xi expressed satisfaction with a newly inked agreement to start talks on an upgrade of the China-Singapore Free Trade Agreement.

Mr Lee also expressed confidence in the long-term outlook for China's economy and proposed expanding cooperation in capital markets, said a statement from the Ministry of Foreign Affairs (MFA).

On financial cooperation, both leaders agreed that yuan cooperation has been a highlight in bilateral relations, with great potential to grow further.

PM Lee expressed strong support for the inclusion of the yuan in the International Monetary Fund's Special Drawing Rights basket, reflecting its growing use as an international currency.

The two leaders also exchanged views on regional developments and agreed to strengthen collaboration between Asean and China.

Both sides will mark the 25th anniversary of dialogue relations next year. As the country coordinator for Asean-China dialogue relations, Singapore will work closely with both sides to strengthen ties, said the MFA statement.