Facing political issues and protecting national sovereignty: The Sino-Indian economic relations since 1947

This chapter looks into the evolution of the economic relation between China and India since their modern foundations. The questions addressed in this chapter is the following: can a flourishing economic relationship contribute to reducing political tensions? If not, can the economic relation and security concerns be de-hyphenated? We first analyse the bilateral trade and investments structure and flows, then discuss the obstacles to a deeper economic relation before present four areas where both countries can cooperate irrespective of political tensions. We find that bilateral trade and investment flows remain very small in comparison with the size and proximity of both the economies, and this relative underperformance has to be understood in the wider geopolitical context. This chapter contributes to a better understanding of (1) the economic ties between the two largest emerging economies; and (2) how the economy and security concerns influence each other in this particular case.