India and China, by the end of the nineteenth century and the middle of the twentieth century, emerged as two independent Asian giants, eagerly rushing forward to make use of their relative resources and populations to give a boost to their economies. China and India chose to opt for completely different political doctrines post their independence. India had been quick in outstretching official recognition to the coming to light of People's Republic of China in 1949. Diplomatic relations were consented between the two on April 1, 1950. An important agreement was established in 1954, stating the five principles of Panchsheel, of peaceful co-existence. Although, this spirit of newly acquired friendship did not last long when Chinese maps were published showing portions of Indian territory as that of the Chinese.
India-China relations have never been particularly friendly and after the Sino-Indian War of 1962, these two nations have stayed fiercely competitive for the past five decades. Though there has been an increase in the cooperation in the cultural and economic field between the two countries, their relations remain uneasy and distrust still lives.
The expansion in bilateral trade and cooperation puts a veil of a strengthening peaceful relationship among the two, but looking deeper, it is evident that the two a natural rivals for economic, geostrategic and even ideological reasons. China's every move – the war of 1962, the borderline dispute, occupation of Tibet, as well as its firm principle of 'what's ours is ours, what's yours is negotiable' – has shown that it strives to be the only major power and hegemon in Asia.
BILATERAL TRADE AND ECONOMICS.
According to Angus Maddison, a British economist and international scholar on macroeconomic history of the world, "India and China were competing with each other in the first sixteen or seventeen centuries of the Christian era.