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The Rapidly Deepening India-China Economic Relationship

Author

Listed:
  • John Whalley
  • Tanmaya Shekhar
Abstract
In this paper we focus on the rapidly deepening bilateral India-China economic relationship. Each is deeply integrating into the global economy through trade and FDI inflows, China is seen as primarily manufacturing-lead growth with India as service-lead growth (see Rodrick & Subramanian (2006)). An alternative view is that India is effectively a lagged version of China, and the two have to be considered a joint global presence. India and China are thus viewed in the literature in different comparative mode. That their bilateral closeness is deepening is evident in a number of areas. On the trade front, India-China bilateral trade has increased by a factor of 33 between 1995 and 2007, and this growth has occurred at an accelerating rate. This compares with a 7 fold increase in the China’s overall trade this period. With bilateral FDI the increase is even more dramatic, around 90 fold over the same period, but admittedly from a small base. And while strategic issues remain between India and China since they are complicated by the relationships of each other with Pakistan, on bilateral economic policy coordination there has also been considerable joint movement towards joint positions. There has been a feasibility study for a possible India-China FTA. They have also jointly agreed a bilateral pact on climate policy underpinning their joint negotiating stance in Copenhagen in 2009 on a post Kyoto global climate regime; and in international forums such as the WTO (and specifically in the Doha Round) both countries have supported each others’ positions, and especially so in key meetings such as in July 2008 in Geneva.

Suggested Citation

  • John Whalley & Tanmaya Shekhar, 2010. "The Rapidly Deepening India-China Economic Relationship," CESifo Working Paper Series 3183, CESifo.
    • Handle: RePEc:ces:ceswps:_3183
    as

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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp3183.pdf
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    References listed on IDEAS

    as
    1. Srinivasan, T. N., 2004. "China and India: economic performance, competition and cooperation: an update," Journal of Asian Economics, Elsevier, vol. 15(4), pages 613-636, August.
    2. Dani Rodrik & Arvind Subramanian, 2005. "From "Hindu Growth" to Productivity Surge: The Mystery of the Indian Growth Transition," IMF Staff Papers, Palgrave Macmillan, vol. 52(2), pages 193-228, September.
    3. Arvind Virmani, 2005. "Tripolar century: USA, China and India," Indian Council for Research on International Economic Relations, New Delhi Working Papers 160, Indian Council for Research on International Economic Relations, New Delhi, India.
    4. Wei, Wenhui, 2005. "China and India: Any difference in their FDI performances?," Journal of Asian Economics, Elsevier, vol. 16(4), pages 719-736, August.
    5. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
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    Cited by:

    1. Elsayyad, May & Konrad, Kai A., 2012. "Fighting multiple tax havens," Journal of International Economics, Elsevier, vol. 86(2), pages 295-305.

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    More about this item

    Keywords

    India; China; deepening; trade; FDI; policy coordination;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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