Thailand - India's Prime Minister Manmohan Singh rebuffed China's wishes that it bar the Dalai Lama from traveling to a disputed border area, telling Chinese Premier Wen Jiabao the Tibetan spiritual leader was an honored guest.

I explained to Premier Wen that the Dalai Lama is our honored guest. He is a religious leader. We do not allow the Tibetan refugees to indulge in political activities, Singh told reporters on Sunday, a day after he and Wen held bilateral talks.

The Dalai Lama plans to make a week-long visit to the Indian state of Arunachal Pradesh which borders China in early November. Singh visited the region earlier this month, also to China's displeasure.

Beijing reviles the Nobel laureate monk as a dangerous separatist, and has protested against the trip saying it was further proof of the Dalai Lama's scheming.

But India, which has been home to the exiled Dalai Lama since he fled a failed Tibetan uprising against Chinese rule in 1959, has cleared the visit.

Asked if the plan had changed for the Dalai Lama to travel there, Singh said he was not aware of his travel arrangements -- an apparent indication that he still had the green light.

The Indian newspaper The Hindu (www.hindu.com) reported on Sunday that China's embassy in New Delhi had asked the Ministry of External Affairs to prevent the Dalai Lama from visiting Arunachal Pradesh.

Singh said he and Wen, who met on the sidelines of an Asia-Pacific summit in Thailand, agreed that both China and India had an obligation to maintain peace and tranquility along the border.

The two sides have struggled to settle their decades-old border dispute. Each side claims vast swathes of the other's territory along their 3,500-km (2,173-mile) Himalayan boundary.

China lays claim to 90,000 sq km of land on the eastern sector of the border in the Indian state of Arunachal Pradesh. India says China occupies 38,000 square km (15,000 square miles) of territory in Aksai Chin plateau.

India and China fought a short border war in 1962 and, despite burgeoning trade in recent years, mistrust remains.

Some view China-India rivalry in the context of who will lead Asia. A calibrated escalation of the border dispute may also reflect Beijing's wider concern about a younger, restive generation of Tibetans the Dalai Lama does not control.

But the two countries have more at stake now than ever, with mutual trade expected to pass $60 billion next year, a 30-fold increase since 2000.

(Editing by Jeremy Laurence)

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