China, India and the International Economic Order

Julien Chaisse, Chinese University of Hong Kong

Abstract

In his historical analysis of the relations between economics, politics and society, Karl Polanyi drew attention to the gradual changes to the traditional market, which had historically existed as a meeting place for producers and consumers and, consequently, as a place to trade goods. The 19th century market evolved into an autonomous international system, independent from these social interactions, that began to challenge the role of the state. While it is true that states have since become economic territories, it is also true that globalisation has led to greater interdependence between states and between national economies. This interdependence is a major reason behind the re-emergence of India and China in the international economic order. Their contribution is of particular interest as it differs from that of the declining Western powers, and is significant not only economically and demographically, but also culturally. China and India are now major actors in multilateral organisations, despite not having played a major role in their establishment, and they have substantial interests in the economic regulation of trade and investment, and therefore great potential to impact international economic institutions through rule-making or participation in dispute settlement.