Iranian President Hassan Rouhani (R) and Chinese President Xi Jinping review an honour guard during the welcome ceremony at the Xijiao State Guesthouse in Shanghai, May 22, 2014. [Photo/Agencies]

SHANGHAI - Chinese President Xi Jinping held talks on Thursday with visiting Iranian counterpart Hassan Rouhani, both pledging to enhance bilateral ties.

Xi said China pays much attention to its relations with Iran and is ready to work with the Iranian side to bring the relationship to a new level.

The two sides should maintain high-level contact and promote exchanges between the two governments and parliaments as well as their localities and peoples to consolidate mutual understanding and trust, he said, also urging them to increase bilateral trade and cooperation in petroleum, gas and petrochemical sectors.

China welcomes Iran to actively participate in the construction of the Silk Road economic belt and the 21st century maritime Silk Road with cooperation in infrastructure construction and the launch of high-speed railway projects and economic parks, according to Xi.

China and Iran should step up security cooperation to combat terrorism, drug trade and transnational crime and boost cultural and people-to-people exchanges and tourism cooperation, he said.

Xi told Rouhani that China respects Iran's right of peaceful use of nuclear energy and has long believed that negotiations are the only right and effective way in tackling the Iranian nuclear issue.

The Chinese side hopes that all parties involved can make further efforts to reach a comprehensive agreement on the nuclear issue, the president said.

He added that China will beef up communication with Iran so as to play a constructive role in promoting the negotiation process.

Rouhani said Iran values its cooperation with China in trade, energy and transportation infrastructure and welcomes investment by Chinese businesses. He said Iran also supports cultural exchanges.

Rouhani is in China for a state visit between Tuesday and Thursday. He attended the fourth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) in Shanghai.

Iran is ready to strengthen coordination with China on the CICA platform and jointly combat terrorism and extremism to maintain regional stability, he said.

Rouhani believes Iran's legitimate right of peaceful use of nuclear energy should be guaranteed and that an early agreement on the nuclear issue through negotiations is conducive to all sides.

He said the Iranian side appreciates China's efforts in promoting negotiations and hopes that China will continue to play a positive role in helping work out an agreement.