Both India and China are major factors behind the shifting of the global economic focus towards Asia, and are expected to play a significant role in making the 21st century largely about Asia. Together accounting for 2.5 billion people, China and India are today the engines of growth in the midst of rapid economic transformation in the global economy.

According to UK-based think-tank, Economist Intelligence Unit, India and China are expected to be comparatively less impacted by the ongoing global financial crisis. The two countries might slowdown, but will continue to grow rapidly vis-à-vis global standards. With the India growth story still standing of firm ground, sovereign wealth funds are likely to look at Indian companies.

An annual survey by Capgemini SA and Merrill Lynch revealed that in 2007, Indians and Chinese grew richer, resulting in the world's millionaires' count increasing by six per cent to 10.1 million. The total Indian count grew by 23 per cent and the Chinese count by 20 per cent, accounting for the highest gains in millionaires.

Furthermore, IT spending in both countries is expected to grow at about 10-16 per cent till 2010, beating developed markets, according to a study by consulting firm Zinnov. According to the study, India's IT spending is likely to grow between 17.6-24 per cent and China’s by around 10-13 per cent compared to the 3.3-6.5 per cent increase expected in global IT spending.

A Jones Lang LaSalle survey released in June 2008 stated that 83 per cent of multinational companies polled said they would increase or maintain current growth plans in Asia Pacific. The survey indicated that India, China and Vietnam remained the top destinations for growth plans in the region in 2008.

In 2007, India and China were the two key investment destinations within Asia for Temasek (Temasek Holdings is an investment company owned by the government of Singapore). The company generated record global profits of more than US$ 12 billion in 2007. Temasek India head, Manish Kejriwal, said "India cannot escape the global contagion but the impact will be different here. Despite all negative sentiments globally, India is still expected to grow by around 7 per cent so we are very positive on India." During 2007, an estimated US$ 1 billion was pumped into India by the firm through fresh deals and additional investments in existing portfolio firms such as ICICI Bank. Similarly, in July 2008, Nokia announced an additional US$ 150 million inflow into its private equity and venture capital arm to invest in the rapidly growing markets of India and China.

Trade

Trade has been the vital part of the burgeoning bilateral economic relationship between the two countries. Significant exports from India to China include cotton, organic chemicals, iron, steel and inorganic chemicals among others. Value added items form the bulk of Chinese exports to India, particularly machinery, including electrical machinery.

Bilateral trade has grown by over 10 times since 2000-01 – from just US$ 2.33 billion in 2000-01, to US$ 25.68 billion in 2006-07.

According to Mr Liang Shu He, Deputy Director-General of Foreign Trade Department in the Commerce Ministry of China, Sino-Indian bilateral trade continues to take rapid strides. The trade value in the first half of 2008 touched the US$ 29 billion mark, posting a 69 per cent jump over the corresponding period last year, and the two countries are well on their way to increase their bilateral trade to US$ 50 billion by 2009. By October 2008, bilateral trade between the countries had crossed US$ 37.9 billion, making China India’s largest trading partner. With the brisk pace at which the trade has been growing, it is likely to exceed US$ 40 billion by the end of 2008 and cross US$ 60 billion by 2010.

India and China completed a feasibility study in October 2008 on their proposed Free Trade Agreement (FTA) and the study now awaits the approval of the leaders of the two countries to take it to the next level.