13. India-China Economic Cooperation -- India and China Learning From Each Other: Reforms and Policies for Sustained Growth

The legacy of relations between India and China began to change in the 1980s, with the opening of both economies. As long as their relationship was seen through a geopolitical prism, it was easy for both countries to view it as a zero-sum game. With the shift in both countries from an import substitution to an export promotion strategy during the 1980s, the focus shifted gradually to economics. With the acceleration of globalization during the 1990s, the imperatives of global interdependence and an appreciation of the possibilities of mutual gain have also increased. This is particularly so in China, whose share of world trade is now about eight times that of India; they have similar shares of foreign direct investment (FDI) and capital f lows. Starting in 2000 these developments led to the establishment of an India-China Joint Study Group (JSG) on accelerating bilateral economic cooperation, of which I was a member as Director and Chief Executive of the Indian Council for Research on International Economic Relations (ICRIER). ICRIER also did a number of background studies for JSG, covering goods and services. After the presentation of this report to the two governments, the two countries formed an agreement for economic cooperation when Premier Wen Jiabao visited India in April 2005. However, the following discussion has nothing to do with that group or the government; these are my personal views.