History of China's Economic Relations with India: An Overview

The history of bilateral relations between China and India dates back to mid 1980s. The process of dialogue initiated by the governments of the two countries at that point of time was quite helpful in identifying the common trade interests. Efforts were initiated to make the most of their economic strengths so as to further the economic relations between India and China. In the year1984, China and India entered into a Trade Agreement, which provided them with the status of Most Favored Nation or MFN. It was in 1992 that the China and India got involved in a full-fledged bilateral trade relation. The year 1994 marked the beginning of a new era in the China-India economic relations. In this year a Double Taxation Avoidance Agreement was signed between India and China. The governments of both the countries also took the necessary initiative to turn into dialogue partners in the Association of Southeast Asian Nations (ASEAN).

Both India and China hold more or less same positions in the global economic scenario. This in turn has further enhanced the economic relations between the two countries. In 2003, Bangkok Agreement was signed between the two countries. Under this agreement both China and India offered some trade preferences to each other. India provided concessions on 188 products exported from China. On the other hand, China provided preferences on tariff for 217 products exported from India. The economic relations between the two nations is expected to improve aided by the flourishing IT and ITES sector, biotechnology industry, health sector, and financial sector. The bilateral trade between the two countries is expected to reach 20 billion US dollars by the year 2008. The projected figure for 2010 is 30 billion US dollars.
In 2003, China and India entered into an agreement to initiate open border trade via the Silk Route. The two countries have also shown interest to take part in a multilateral trade system as per the WTO commitments.

Around 90 Indian companies have set up braches in China. These companies mostly operate in the pharmaceutical sector, IT and ITES sector, and automotive industry. Some of these companies are Satyam, Wipro, TCS, Ranbaxy, and many more.
China has already been the top trading partner of India in the recent time. The economic relation between the two countries is considered to be one of the most significant bilateral relations in the contemporary global economic scenario and this trend is expected to continue in the years to come.