China and India: Cooperation and Competition

Briefing Paper
Gareth Price, May 2007

Strong economic growth in both India and China, and their improving diplomatic and trade relations, have led many to dub the two countries 'Chindia'. Both Chinese and Indian politicians focus on the countries' complementary industrial nature, particularly in the IT sector where India is said to have the software, China the hardware.
Both governments are committed to regional and sub-regional cooperation, and bilaterally both accord priority to resolving their border disputes as well as to their partnership in overseas investment, at times jointly bidding for energy projects.
Despite the rhetoric, similar regional and global interests mean the two countries are often in competition. The relationship is marred by ongoing border disputes and competing geopolitical and economic interests in third countries. These concerns manifest themselves in India's reluctance to admit Chinese firms into sensitive industries and China's ambivalence towards India's ambition to secure a permanent seat on the UN Security Council.
Environmental and water resource issues are likely to become a future cause of contention. Key Indian rivers have their sources in the Chinese Himalayas and many in India are concerned over China's management of these resources and its future intentions.
While trade relations are improving, the relationship is complex and steeped in historical mistrust. Competing interests, combined with concerns over longerterm ambitions, seem likely to hamper future cooperative relations.