China and India: Economic Performance, Competition and Cooperation
T. N. Srinivasan*
China and India had similar development strategies prior to their breaking out of their
deliberate insulation from the world economy and the ushering in of market-oriented economic
reforms and liberalization. China began reforming its closed, centrally planned, non-market
economy in 1978. India always had a large private sector and functioning markets which were
subject to rigid state controls until the hesitant and piecemeal reforms of the 1980s. These
became systemic and far broader after India experienced a severe macroeconomic crisis in 1991.
The political environments under which reforms were initiated and implemented in the two
countries and their consequences were very different. India continues to be an open,
participatory, multiparty democracy, while China has an authoritarian, one party regime, though
it is liberalizing. After recounting the differing rationales as well as the similarities and
differences in the content of their reform agenda, I reviewed in Srinivasan (2002) the
achievements of reforms and remaining challenges, particularly regarding reforms of state-
owned enterprises (SOEs). I concluded with an analysis of the competition between China and
*Samuel C. Park, Jr. Professor of Economics, Yale University, New Haven, Connecticut, USA.
This paper draws on “China and India: Economic Performance, Competition and Cooperation,” which was
originally presented at a seminar on WTO Accession, Policy Reform and Poverty sponsored by the World Trade
Organization in Beijing, China in June 2002 and on Srinivasan (2004). I thank Jan Dutta, Frank Hsiao, Richard
Hooley, Will Martin and Jessica Wallack for their valuable comments.
India in world markets and the potential for their cooperation in the Doha Round of multilateral
trade negotiations under the auspices of the World Trade Organization (WTO).