Joseph Nye: 'Chindia' remains a tale of two very different giants

Last year, the leaders of all five permanent members of the United Nations Security Council visited India, accompanied by delegations of business leaders.

The Indian economy has been growing at more than 8 per cent annually, making it attractive for trade and investment. When US president Barack Obama visited, he supported permanent membership of the UN Security Council for India. So did British Prime Minister David Cameron, French president Nicolas Sarkozy, and Russia's Dmitri Medvedev. But the last to visit, Chinese prime minister Wen Jiabao, said nothing about it.

Official pronouncements stress friendly relations between India and China - some analysts argue that the two giant, rapidly growing markets will become an economic "Chindia".

When Mr Wen visited several years ago, he signed a five-year strategic co-operation pact. India's prime minister, Manmohan Singh, said then: "India and China can together reshape the world order."

Such statements reflect a considerable change from the hostility that bedevilled Indian-Chinese relations following the two countries' 1962 war over a disputed border in the Himalayas. Nevertheless, strategic anxiety lurks below the surface, particularly in India.

China's GDP is three times that of India's, its growth rate is higher, and its defence budget has been increasing. The border dispute remains unsettled, and both countries vie for influence in neighbouring states. And, in recent years, China has worked behind the scenes to prevent permanent UN Security Council membership from conveying great-power status on India.

But talk of India as a future great power is unavoidable - its population of 1.2 billion is four times that of the US, and likely to surpass China's by 2025 - and some Indians predict a tri-polar world, anchored by the three, by mid-century.

For decades, India suffered from what some called the "Hindu rate of economic growth" of a little over 1 per cent per year. After independence in 1947, it followed an inward-looking policy that focused on heavy industry. But it turned out that the rate of economic growth owed less to Hindu culture than to imported British economic planning.

After market-oriented reforms in the early 1990s, growth rates soared, with projections of double-digit growth in the future. India has an emerging middle class of several hundred million, and English is an official language, spoken by up to 100 million people. Building on that, Indian information industries are able to play a major global role.

The country has significant "hard power" resources, with an estimated 60-70 nuclear weapons, intermediate-range missiles, a space programme, 1.3 million military personnel, and annual military expenditure of nearly $30 billion.In terms of "soft power", it has an established democracy, and a vibrant popular culture with transnational influence as well as an influential diaspora.

Yet at the same time, India remains very much an underdeveloped country, with hundreds of millions of illiterate, destitute citizens.

Compare India's GDP of $3.3 trillion to China's $5 trillion. And while 91 per cent of the Chinese population is literate and 43 per cent is urban, the numbers for India are only 61 per cent and 29 per cent.

India produces about twice as many engineering and computing graduates annually as America, but The Economist reports that "only 4.2 per cent are fit to work in a software product firm, and just 17.8 per cent are employable by an IT services company, even with six months' training".

A symptom of this is India's universities: the 2009 Asian University Rankings shows the top Indian institution to be the Indian Institute of Technology in Bombay - at number 30 in the list. Ten universities in China and Hong Kong are ranked higher. India is thus unlikely to develop the power resources to become an equal to China in the next decade or two.

And, while the two countries signed agreements in 1993 and 1996 that promised a peaceful settlement of the border dispute that led them to war in 1962, just prior to India's nuclear tests in March 1998, the country's defence minister described China as India's "potential enemy number one". Indian officials are generally discrete in public about relations with China, but in private their concerns remain intense.

• Joseph Nye is a professor at Harvard University.