One of the characteristics of today’s Asia is its asymmetric rivalries, including Japan’s rivalry with China, China’s with the United States, Pakistan’s with India and India’s with China.

The India–China rivalry is particularly striking, featuring a heady mix of factors: border disputes, China–Pakistan relations, maritime competition, the India–US strategic partnership, allegations of support for insurgents (in both directions) and Chinese dams in the Mekong, to name just a few. Despite at least eight agreements since 1993 on boundary disputes and military confidence-building measures, most would characterise the relationship as one of competition and tension. It is certainly hard for Indian and Chinese commentators to discuss the relationship for a few minutes without one of these irritants coming up.

Given this, it came as a surprise that a recent dialogue including the two countries managed to focus on the potential for cooperation between these two powers as much as the undoubted competition between them. While it was admitted that ‘there are less than beautiful parts of the Sino–India relationship’, there was also a focus on the potential for cooperation.

In part, this could be the distinctive view from Kunming, the closest China comes to the Indian Ocean, and the capital of Yunnan, an underdeveloped province by Chinese standards. Yunnan is viewed as a key part of the national strategy of westward development: official policy has it as a ‘gateway’ or ‘bridgehead’ that needs to ‘go out’ and ‘open up’. This coincides neatly with India’s vision of ‘looking East’ and seeing its northeast as a ‘gate to the East’. The two countries have a mutual interest in co-developing the economies of the region.

The centrepiece of the co-development strategy is the Bangladesh–China–India–Myanmar (BCIM) economic corridor. BCIM started life in 1993 as the Kunming Initiative and has held 11 conferences over 14 years on trade and investment, cooperation, connectivity and exchange. In 2011 it was agreed to improve connectivity through the construction of the BCIM economic corridor, through railways, highways, personnel and information flows, tourism, energy links and people-to-people contact. There have been impressive results to date, with the Yunnan Academy of Social Sciences reporting that Yunnan’s trade with Bangladesh has increased from US$0.2 million to US$146 million, with India from US$0.6 million to US$841 million and with Myanmar from US$4 million to a whopping US$2 billion. Given that China’s and India’s economies don’t score highly on a complementarity index, these are impressive results.

There are a range of barriers being worked on: the negative impact of border control; the issue of visas and the perceived inequality of India’s tough visa rules; financing for infrastructure development; non-traditional security issues, such as piracy and environmental degradation; and technical challenges, such as rail and road building.

The economic benefits of cooperation are clear, and this gives a real incentive to work together. The question will be whether competition gets in the way: whether good relations are a prerequisite for trade and commerce, or the other way around. The region is hopeful of the latter and sees the BCIM corridor as a good test case.

China has outlined high ideals for the coming period of economic cooperation, such as a ‘new Asian century’, contrasted with the preceding American and European centuries, where Asian countries help each other out to a greater extent. Yunnan University of Finance and Economics Party Secretary Wang Rong has outlined his vision of a ‘new Asianism’, where dependence on outside powers is reduced and ‘peace and development in Asia are based on the joint efforts and mutual support of Asian countries’. Certainly India and China have their painful experiences with outside powers as something in common.

However, the issue will likely stand or fall on mutual self-interest. India must be aware that China has other alternatives for economic expansion, including the Pakistan–China economic corridor.

There is undoubtedly an immediate economic interest for China and India to support each other rather than compete in zero-sum rivalry. According to Indian prime minister Manmohan Singh: ‘there is enough space in the world for the development of both India and China and indeed, enough areas for India and China to cooperate’.

Melissa Conley Tyler is National Executive Director of the Australian Institute of International Affairs.

Aakriti Bachhawat is a research intern at the Australian Institute of International Affairs.

Originally Published in East Asia Forum, 16 January 2014, reprinted under creative commons licence