Introduction

China and India have strengthened their relationship during the last few years by encouraging cooperation on common interests. In fact, as the year of China-India Friendship and Cooperation, 2012 witnessed great momentum. As the two largest developing nations and two major Asian powers, Chinese President Hu Jintao said, China and India faced important development opportunities and China-India relations had great potential for further development. He indicated that China was willing to see a peaceful, developed and prosperous India, and was committed to building a more rigorous Sino-Indo relationship. He proposed dialogue and coordination on regional issues to safeguard peace and stability and promote common development in the region. In June 2012, Chinese Premier Wen Jiabao met his Indian counterpart Manmohan Singh in Rio de Janeiro and pointed out that during the last decade, China and India have established and developed a strategic and cooperative partnership, formulated several important dialogue mechanisms and maintained peace in the border region based on the Five Principles of Peaceful Coexistence. He also lauded the increasingly frequent people-to-people exchanges and the joint efforts in safeguarding the interests of developing countries on major international issues.

The trade volume between the two countries grew from $2.9 billion in 2000 to $61.7 billion in 2010, a 20-fold increase in 10 years. China has become the second biggest trading partner of India, and India is the tenth biggest trading partner of China. The increasing friendship between China and India, two of the most important economic communities in the world, has always attracted a lot of attention. This assumes greater importance especially in the context of the continuing high speed of economic engagement and possible competition in future. The tremendous demand for energy on both sides and their efforts to ensure a steady supply has become one of the main points of discussion in global economic and political forums. The Gulf region is set to remain their most important source of oil in the coming decades even as they are trying to look for alternative sources. In recent years they have stepped up their search for diversification of sources of import. Their relationships with the Gulf region, which is mired in religious and ethnic discord and is subject to foreign intervention, is also a subject of wide discussions at home and abroad. In China, developing relations with the Gulf region or the Middle East are not just an issue of economic growth, but of the longevity of the rule of the Communist Party, which depends on economic growth to bolster its legitimacy and maintain domestic stability. India, driven by great power aspirations and by strategic rivalry with China, is expanding its naval capabilities and security relationships throughout the Indian Ocean region and at the key points of entry into the Indian Ocean, including the Gulf.