India and China: Two Asian Giants

imagesBoth China and India house nearly 40 percent of approximately 7.5 billion of population worldwide and their combined economic might is 20 percent of GDP of all countries and clocking more than 7 percent of growth since several past years though western economies are growing at much lesser rate so no wonders the economic relationship between the two Asian Giants is very vibrant and yet prone to many pitfalls. The tug of war type of situation often rises due to certain deliberate infiltrations on the border by Chinese army and then subtle reaction by Indian forces followed by statements by leaders of both the countries.

The Growth of China is phenomenal which began under the rule of Deng Xiaoping in 1978 who introduced new market principles bringing agricultural reforms, inviting FDIs and permission for people to start businesses result of which is that private companies now contribute to 70 percent of GDP of China. West is definitely wary of the clout China is exercising in the Entire Asia and its continuous endeavor to build upon its regional hegemony to the International level including control on South China Sea and even part of Indian Ocean. In comparison to this the growth of India is seen as benign but steady. The economic liberalization began in 1991 when GDP per capita was mere $330 which now is approximately $1750 and still growing. It is almost certain that west especially US is supporting India so as to counter regional hegemony of China lest it graduate to super power sooner than later

The recent standoff between the two is because of road being built by China in the region which Bhutan claims to be part of their kingdom and they asked India to protect them. The root cause lies in construction of China-Pakistan Economic Corridor at the estimated cost of $50 billion which passes through the disputed territory (i.e. legally owned by India) of Pakistan-occupied Kashmir. Thus India accuses China of being insensitive towards the issue of sovereignty of India

In spite of all this India-China bilateral trade has grown many fold where Export from China grew by 500 % in last decade where as export from India grew by Just 25 percent. No wonder 50 5 of trade deficit of India is with Just one country that is China. Thus both countries should go by amicable approach and ensure further growth in mutual trade and also decrease the trade deficit between the two economies by working on sectors of Tourism and infrastructure.

Any delay in mending the ties will adversely affect the growth of both the countries which is on the down slide as per the recent statistical figures. It will also give chance to western countries to use this as a tool to prop up India against China and keep them occupied in building up defense at the cost of economic reforms. After all both countries maintain vast armies and to keep large army contingents at NEFA and Siachen Glacier does cost billions of dollars. And old saying of Hindi Cheeni Bhai Bhai is more relevant in the contemporary era

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