Bilateral trade between China and India hit an alltime record at USD 24.9 billion in 2006, exceeding the USD 20billion goal two years ahead of target, the Chinese Ministry of Commerce announced. The two Asian giants, both among the worlds fastest growing economies, signed an agreement in 2005, pledging to raise the bilateral trade volume to USD 20 billion by 2008. According to the Ministry, India was Chinas 10th largest trade partner in 2006, while Indian statistics showed China was Indias second largest trade partner after the US.

Trade between two neighbours has soared from USD 2.91 billion in 2000 to USD 18.7 billion in 2005, an average annual rise of 45 per cent. As a symbol of their closer trade ties, the two countries reopened crossborder trade at the Nathu La Pass in Sikkim in July last year, 44 years after the practice was suspended in the wake of a short border war. According to Goldman Sachs, India will overtake the US to become the worlds second largest economy, after China, by 2042.