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Long Live India-China Rivalry

India’s external affairs minister S M Krishna met with his Chinese counterpart yesterday, and then reassured everyone by saying: "India and China may be competitive in economic and trade areas, but they are not rivals. There is enough space for both India and China to grow."

No need to calm us down. India's rivalry with China is not a bad thing. Rivalry, as opposed to competition, connotes the importance of strategy. Two countries, or companies, can be competitors just by existing in the same competitive space. But two rivals make policies by considering each other’s moves.

Strategic policymaking between rivals, as I have argued in my book and elsewhere, makes government efficient and privileges pro-growth economic policies. In the 1970s, improvements in India’s bureaucracy and industrial policy owed much to rivalry with China. The pace and extent of India’s open-economy policies since 1991 have been influenced considerably by China’s policy path since 1978.

And in the end, all that has been a very good thing for the Indian economy. So, long live the rivalry.