This paper analyses the integration of China and India into the global economy. To this end, it presents estimates from a gravity model to gauge the overall degree of their trade intensity and the depth of their bilateral trade linkages, as well as selected measures of revealed comparative advantage and economic distance. The paper also reviews the key characteristics of the two countriesu2019 domestic economies that are relevant to their global integration and analyses their financial linkages with the rest of the world. Four main fi ndings stand out. First, considering trade in goods, the overall degree of Chinau2019s trade intensity is higher than fundamentals would suggest, whereas the converse is true for India. Second, Chinese goods exports seem to compete increasingly with those of mature economies, while Indian exports remain more low-tech. Third, Chinau2019s exports of services tend to complement its exports of goods, while Indiau2019s exports are growing only in deregulated sectors, such as IT-related services. Last, Chinau2019s and Indiau2019s roles in the global financial system are still relatively limited and often complementary to their roles in global trade.
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