Bilateral economic relations amid trade and trust deficits
This chapter focuses on bilateral trade and investment relations between China and India. It shows that despite continuing strategic competition and mistrust between the two countries, economic factors are drawing them closer through the introduction of business interest groups and individuals as new stakeholders in the bilateral relationship. After providing a brief historical background to bilateral trade relations from the 1950s onward, the chapter examines the international trade data from 1995 to 2016 to reveal a complex picture. While the volume and value of bilateral trade have grown rapidly, the rising imbalance in trade continues to cast a shadow on bilateral relations. Some of the reasons for the large and widening trade deficit against India are explored. The chapter also looks at capital investment and identifies some of the challenges that continue to impede bilateral economic relations.