The five principles of peaceful co-existence (Panchsheel) were first propounded as the guiding principles for the newly formed nation of Indonesia in 1945. Taking the hint, Chinese premier Zhou Enlai and Indian PM Nehru came up with their own interpretations for guiding bilateral diplomacy.

The principles were formalised into a treaty in 1954 and included: mutual self respect, non-interference, non-aggression, mutual benefit and peaceful co-existence. However, both countries approached these principles from their differing perspectives.

China's Perspective

1. China hoped India would refrain from interfering in the Tibet issue (non-interference)
2. China hoped India would cede any territories that it got from the british raj
3. China hoped to contain Indian intervention in regional disputes (but this did not happen ex. Bangladesh 71', Sri Lanka '87 and Nepal continuing)
4. China hoped to correct its image in the region as a peaceful country after indulging in Korean and Vietnam wars
5. China wanted to wean off local powers from US support

India's Perspective

1. India was a young nation with an overbearing neighbour like china, it was natural to take this preemptive step towards peace
2. India sought to further consolidate its position as a Non Aligned Nation by making Panchsheel doctrine a cornerstone of its foreign policy
3. India assumed a treaty citing mutual-respect would keep China from claiming Aksai Chin and Arunachal pradesh
4. By concluding the treaty, India hoped to ward off US intervention for peace in the region.

The panchsheel was more of China's idea as a peace offensive and remains central in the history of bilateral relations. It's relevance however, has faded in the light of new globalised world order.