When Jairam Ramesh, a Congress party politician, coined the term Chindia some time in 2005, hopes were running high that a new era of amity was about to dawn between the two emerging powerhouses of Asia. Above all, the argument went, Chindia would come into being through closer economic co-operation and expanding trade ties. During a visit to New Delhi in April 2005, Wen Jiabao, Chinese premier, publicly lamented that trade between them represented only 5 per cent of their combined foreign trade and called for bilateral commerce, then worth just $13.6bn, to reach $20bn by 2008 and $30bn by 2010. Kamal Nath, then India's commerce minister, for his part, suggested that “within two or three years” China would displace the US as India's largest trading partner. Both men were bang on the money. By the end of 2009, two-way trade was valued at $43bn, in spite of a fall of 16 per cent on 2008 levels. China replaced the US as India's largest trading partner in 2007.
Yet, while the trading ties flourish, a broader rapprochement remains distant. That is still hostage to the countries' failure to resolve a longstanding border dispute, the cause of a brief but bloody war in 1962. Beijing claims 90,000 sq km in the Indian state of Arunachal Pradesh, bordering Bhutan and Tibet. India, meanwhile, says China is occupying 38,000 sq km of its territory in Kashmir, illegally ceded by Pakistan. This open sore one of several causing bilateral irritation,has the potential to flare up in unexpected places. with consequences for business and investors. . New Delhi's clumsy recent restrictions on the import of Chinese skilled labour, for example, amid mutterings about the security risk to strategic installations, has forced Chinese companies to suspend construction of power plants that India needs to plug its crippling energy deficit. Regional rivalry may yet turn the Chindia dream sour.