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The contemporary period is friendlier, yet tensions are never far from the surface. Even as both governments speak of peace and prosperity, China is establishing a "string of pearls" in the Indian Ocean, unsettling New Delhi, and India is talking oil and gas exploration in the South China Sea, angering Beijing. More to the point, the close economic ties between nations that often prevent conflict do not sufficiently exist between China and India. Chinese investment in India is about 0.05% of its worldwide total, while Indian FDI in China is so low that it does not appear on many charts. Bilateral trade is growing (especially Chinese exports to India), but it's still a small proportion of their global total. Given their size and footprint, the two are nowhere as connected as they should be. Astonishingly, just a few of the two countries' cities have direct flights.
Houses in Order
Before they rescue the world, China and India need to fix their own economies and societies. They are beset by some grim news. Growth is slowing, though in China's case that helps cool an overheated economy. In both countries, exports are sliding, inflation is at painful levels, income inequality is reaching chasm proportions, and injustices like land grabs are sparking widespread protests. Cronyism is a scourge. The two have lifted countless millions out of poverty (though China has done a better job), but countless other millions — youths, workers, farmers — remain marginalized and desperate for decent livelihoods. While China doesn't follow the rules, India has too many rules to follow. China is, if not at a tipping point, certainly at an inflection, struggling to contain asset bubbles and bad loans and to rebalance its economy away from state-directed investment to consumer-led growth. India's reputation, meanwhile, has been so dented by corruption that the country's top corporations have hired U.S. consultancy Bain to craft a "Credible India" campaign. Good luck.
Perception vs. Reality
At least India can count on a better image worldwide than China. Westerners in particular see the pair through a romantic and ideological prism. India is Gandhi, yoga, eat-pray-love. A gentle elephant; an exporter not of unfairly underpriced goods but articulate and urbane CEOs as at home in New York City as in Mumbai. China is "gutter oil"; the country you love to hate. Fiery dragon rather than cuddly panda. Mercantilist, rapacious, threatening; resented even as it is wooed.
There are two reasons for this dichotomy: Beijing's profile and swagger are bigger than New Delhi's, allowing India to escape the same scrutiny; and India is a democracy while China is an authoritarian state. All year, Beijing's leaders have systematically cracked down on political dissent and cyberspace activity; they would not have tolerated, for example, the Indian summer of anticorruption protests in New Delhi. (Remember Tiananmen?) Yet the hard truth is that India is not as free as it's made out to be. Democracy does not necessarily result in good governance. India's institutions are weak, human-rights abuses are not unknown, and money and power often buy impunity. "India's poor [have] a vote," writes author Aiyar, "but this [does] not always equal a voice." India even has its own Tibet: I don't mean Dharamsala but Kashmir.
Whose economic path, China's or India's — essentially, state capitalism vs. private enterprise — is sustainable? Which society is more durable? Which nation has a stronger sense of destiny? The entire planet wants and needs to know. In the following pages, TIME's Bill Powell and Michael Schuman face off to argue the case, respectively, for China and India as to whose template of change will prevail. It's not easy to pinpoint the killer app. But given a year of restless populaces worldwide, the winner may be the one providing the greater justice and dignity to the most people. On that score, it's still China 0, India 0.