The dragon and the elephant: Moving towards common ground

Before China’s WTO membership in December 2001, there were fears that India would be fast turning into a major market for Chinese goods. This proved a misplaced apprehension. It is true that cheaper and better quality Chinese products have made some inroads into the Indian market; but it is also true that Chinese goods have not flooded the Indian market. Instead Indian firms have been encouraged to be more competitive.

Meanwhile, Chinese Vice President Hu Jianto took over the top post after President Jiang Zemin retired in March 2003. During Indian Prime Minister A.B.Vajpayee’s six-day China visit towards in June 2003, both countries moved to iron out their differences on border issues and gave a big push to bilateral trade through traditional routes (not just the border trade).

In May 2004 the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) lost power to the Congress-led United Progressive Alliance (UPA) and during the Chinese premier’s visit to India in April, he and India’s new Prime Minister, Manmohan Singh, signed a “strategic partnership for peace and prosperity”.

Both countries have been readjusting their policy towards the other from a purely strategic point of view and with the increase in the two-way trade have gradually been moving towards common ground. Both are conscious of each other’s rising power in economic growth in general, and particularly as a result of the rapid growth in the service sectors and the new economy fields, such as information, bio, space and nano-technologies, as well as in military modernisation. It will be interesting to see where the dragon and the elephant go from here.