Limitations of India–China Economic Engagement

Abstract

The current global economic meltdown offers historic opportunities for China and India to catapult their respective positions in the international system. The increasing recognition of their roles in global academic debates, and more recently by the G20 summits, remain both the cause as also the consequence of their expanding mutual economic engagements. However, their border trade has fallen drastically from $ 52 billion for 2008 to $ 43 billion for 2009. This is result of their expanding trade deficit, abysmally low mutual investments, lacklustre border trade and stagnant border negotiations, all allude to their lack of appreciation of the systemic bottleneck threatening to undermine this most reliable pillar of their rapprochement. This calls for deeper and urgent examination of the structural bottlenecks so as to ensure their continued robust economic engagement which is essential if China and India have to play a pivotal role in regional and global economic stabilisation and upturn. Such an outcome remains intertwined with their own peaceful rise as major stakeholders of the rapidly transforming international system.