This strategically significant lake is approximately 14,000 feet (4,267 meters) above sea level and spans the Ladakh region of India to the Chinese-controlled Tibet region, which is located in the Greater Kashmir region, which is owned by India, China and Pakistan.
The LAC marking the actual boundary crosses the lake.
At least 20 Indian soldiers were killed in that incident. China has never admitted that there were any casualties in this conflict.
In the joint statement, the two parties agreed to strengthen on-site communication to avoid misunderstandings or actions that “may complicate the situation”.
The statement also said that they also agreed not to take any unilateral actions that would change the local situation.
India and China have a 2,100-mile (3,379 km) border in the Himalayas, but both sides require territory on either side.
LAC was established after the Sino-Indian War in 1962 and appeared on the map, but India and China did not agree on its exact location, and both sides often accused each other of offside or seeking to expand their territory.
The two countries signed an agreement in 1996, which stipulates that neither party can fire within 2 kilometers (1.24 miles) of Latin America to “prevent dangerous military activities.”
CNN’s James Griffiths and Helen Regan contributed to this report.