(b)The nuclear explosions by India in May 1998.
There have been some changes as well as shifts in this perception since late 1980s. Officially, India and China do not consider each other as security threat. However security issues still keep on influencing Sino - Indian relations. The Chinese experts on international affairs feels that there has been a major shift in the China's assessment of India which is based on the following facts :-
(a)India's rapid economic growth and increasing influence in international affairs.
(b)China accords highest priority to relations with India as it falls in four major categories of countries that is developing country, neighbouring country, rising power and influential player in world affairs.
(c)Chinese foreign affair expert state that, China has realised that relation with India will be critical to stability in Asia.
Of late bilateral relations between India and China were poised to enter vibrant and dynamic phase which is based on the common recognition of the fact that growth, development of both would make positive impact on regional and global peace, security and stability. China becomes the focal point of Indian "Look East policy". The bilateral trade between the two countries has already crossed US $ 50 billion mark and is likely to exceed US $ 100 billion mark by 2015  . China became the largest trading partner of India. Experts believe that India and China needs to work closely to avoid potential points of conflict. The scope for bilateral trade which needs to be further exploited by both India and China, exists in following sectors :-
(a)Textile and apparel sector.
(b)Leather, chemical and dyes.
(c)Industry and manufacturing.
(d)Marine, tea and coffee.
(e)IT, telecommunication, Pharmaceutical and shipping industry.
(g)Plastics, organic chemicals and cotton.
(h)Steel and cement.
Bilateral trade is hugely skewed in favour of China, which enjoys a surplus of US $ 24 billion. During the recent visit of Chinese premier Wen Jiabao in Dec 2010, China agreed to reduce the trade deficit by providing increased access to Indian industries in IT, pharmaceuticals and agricultural sector. The visit will give a boost to the bilateral trade between the two countries. Both countries agreed to improve economic co-operation in infrastructure, IT, telecommunication, banking and environment protection. Agreement also reached to give increased access to Chinese companies in Road, railways and manufacturing sector. During the summit both sides signed six agreements in the fields of banking, green technologies, media, water resources and culture. China has agreed to improve market access for Indian industry and offer more platforms for Indian products in Chinese market. Though both countries accounts for 10 % of global output, the bilateral trade is just 0.2 %. Hence there exist scope for increase in bilateral trade. Though the bilateral trade between the two countries is rising, India and China needs to evolve a mature relationship. The challenges that both countries face which affects the bilateral trade between the two countries are :-(责任编辑：BUG)