Engines of growth China and India are, today, in the midst of rapid economic transformation which has been having a positive impact on the global economy. Already, both countries are among the world's top five countries sharing about half of the world production.

They have also been major contributors in the global centre of economic gravity moving towards Asia, and are expected to play a significant role in making the twenty first century largely about Asia. Obviously, when countries of the size of China and India, together accounting for 2.5 billion people begin to unshackle their creative energies, it is bound to impact the whole world.

Trade

Trade has been the integral part of the burgeoning bilateral economic relationship between the two countries. Bilateral trade has grown by over ten times since 2000-01. From a mere US$ 2.33 billion in 2000-01 bilateral trade between two countries has reached US$ 25.68 billion in 2006-07.

India's exports to China, likewise, have almost grown ten-fold from US$ 831.3 million (accounting for 1.87 per cent of total exports) in 2000-01 to US$ 8290.7 million (accounting for 6.56 per cent of total exports) in 2006-07. The growth continues in 2007-08, with exports to China growing to US$ 3783.9 million during April-September, as against US$ 3445.5 million in the same period last fiscal.

Important exports from India to China include cotton, organic chemicals, iron, steel and inorganic chemicals among others.

Simultaneously, India's imports from China have increased from US$ 1502.2 million (accounting for 2.97 per cent of total imports) in 2000-01 to a whopping US$ 17399 million (accounting for 9.53 per cent of total imports) in 2006-07. Further, during April-September 2007-08, imports have increased by 56.83 per cent to US$ 12534.3 million against US$ 7992 million in the corresponding period last fiscal.

Imports from China are highest in the category of electrical machinery and equipment, organic chemicals, mineral fuels, oil and oil products.

In fact, this surge in bilateral trade between the two countries has resulted in China displacing US to become the number one trade partner of India. During April-September 2007-08, Indo-China trade was US$ 16.31 billion against the Indo-US bilateral trade level of US$ 16.29 billion. This is no mean achievement, considering the fact that, bilateral trade between India and China was only about one-fourth of Indo-US trade in 2001-02.

With such a rapid growth, the bilateral trade target of US$ 20 billion by 2008 was achieved well ahead of time. Also, the next Indo-China bilateral trade target of US$ 60 billion by 2010 is likely to easily achievable. Further, to cement the rapidly strengthening bilateral trade ties, both countries are planning to sign a Free Trade Area agreement at the earliest.