The presidents of China and Vietnam set up a hot-line to defuse territorial disputes and expanded a 2006 agreement to jointly explore for oil in the Gulf of Tonkin, as the two nations seek to strengthen economic ties.

Vietnam Oil and Gas Group’s agreement with China National Offshore Oil Corp., announced during President Truong Tan Sang’s visit to Beijing today, expands the exploration area to 4,000 square kilometers (2,500 miles) and extends the plan through 2016, the Vietnam government said on its website.

The agreement and hotline aim to calm tensions after disputes in the waters strained ties between the neighbors and sparked protests in Hanoi. Sang is seeking to spur an economy that grew at the slowest pace in 13 years and narrow China’s trade surplus, which hit $11 billion from January through May.

“It seems China and Vietnam are bending over backward to make this positive,” said Carlyle Thayer, an emeritus professor at the Australian Defense Force Academy in Canberra. “There are some significant issues, the trading debt Vietnam has and illegal Chinese workers.”

The two nations’ agriculture ministers signed an agreement to establish the hot-line. No details were provided. In his meeting with Sang yesterday, Chinese President Xi Jinping said the two sides should seek a political solution to their territorial dispute.

Competition for fish, gas and oil has intensified between China and other Asian countries, with Vietnam and the Philippines rejecting China’s maritime claims as a basis for joint development of oil and gas reserves in areas south of the Gulf of Tonkin. Last month Vietnam demanded compensation after a Chinese ship rammed a fishing boat off its coast.

Vietnam Fishermen

In March, Vietnam accused a Chinese ship of firing on fishermen near the Paracel Islands, which China has controlled since a battle with Vietnam in 1974. Vietnam and China also separately claim some of the Spratly Islands area.

Sang emphasized “the issue of fishing, which is closely related to the livelihood and interests of millions of Vietnamese fishermen,” the government website reported.

The government website also reported Sang sought Chinese investment in infrastructure, manufacturing and technology projects to boost Vietnam’s economy.