India, China and Asean

In Post Cold War Era, China emerged as a new center of power which triggered many threatening cross currents to its Asian neighbours. ASEAN countries regarded India as a useful partner to balance China given former's nuclear capacity and its naval forces, the largest in the Indian Ocean. ASEAN showed rapid economic progress for its free market policy and India opened its door for foreign investment in 1991. The 1997–98 economic crisis disrupted many economies especially ASEAN but it did not affect China as brutally. While disappointed with SAARC's lack of economic progress India was drawn towards ASEAN. During 1990–2005 income generation rates were comparable between ASEAN and India. However, whether India could maintain a dynamic growth similar to ASEAN and China in coming years is still an open question. ASEAN has come to realize that strengthening of intra regional co-operation alone will not help them and that there is need for greater integration with the two emerging economic powers of this region - China and India. India, the proverbial late starter, is finally coming to grips to take advantage of the economic potential of ASEAN. On a net basis, ASEAN-6 is selling more to India than to China. This is not to dismiss China's importance - after all, its trade with ASEAN-6 is still five times larger than India-ASEAN-6 trade. Instead, it highlights India's growing importance as a driver of growth in emerging markets. The negative role of China with reference to India-ASEAN relations also needs to be examined as China has tried to undermine the smooth passage of ASEAN-India FTA. As China's perceptions and policies towards multilateralism changed from being cautious to being confident, China began to view India as a new contributor to East Asian cooperation, strengthening the trend of multipolarity in Asia and Asia-Pacific.