Institute Of Chinese Studies 

B-371 (3rd Floor)

Chittaranjan Park,

New Delhi-110019

Tel: +91-11-40564823

It was a productive period for China under the leadership of Jiang Zemin (1989-2002) when the country came out of its relative isolation after the Tiananmen protests and crackdown, mended relations with the US-led West, developed its linkages with the rest of the world, integrated with the global economy, joined the World Trade Organisation, completed the handover of Hong Kong, readied for its role as a major power, and put in place building blocks for the subsequent aggressive pursuit of its 'core interests' and power in the region and beyond. The rise of China became possible with the multi-fold expansion of its GDP and its progressive emergence as a leading trading nation and manufacturing hub, following up on the earlier policy of reform and opening up with some major initiatives like restructuring of the State-Owned Enterprises, dismantling of the welfare state, monetisation of land and co-option of the burgeoning class of private entrepreneurs in the ranks of the Communist Party of China. These policies also generated new challenges like endemic corruption and growing iniquities in the economy and society. It was also a period of expansion of ‘normal’ relations between India and China, building on the basic paradigm for the management of the relationship put in place in 1988, though there was a sharp but relatively short downturn in ties after India’s nuclear tests in 1998. Jiang Zemin visited India and major agreements were signed in 1993 and 1996 to ensure peace and tranquility in border areas. However, the search for a boundary settlement remained elusive and some of the underlying problems in the relationship, including China-Pakistan strategic linkages, deepened.

China’s pace of globalization grew rapidly under Jiang Zemin. Its share of global exports doubled within a decade as it became the world’s fourth largest trading country. FDI stock grew from US$ 60 billion to over US$ 500 billion. The foundation for expansion of China’s economic ties with India was also laid during this period. Origin of several asymmetries integral to India-China economic ties today such as India’s outsized trade deficit, disproportionate exports of low-value commodities from India and reliance on imports of higher value-added products from China can also be traced back to this period. The widening gap between economic indicators of the two countries despite simultaneous implementation of reforms highlight their respective comparative advantages. This period also holds lessons for India’s post-pandemic journey towards prominence in Global Value Chains.