Growing trade links ease longtime rivalry between India and China

Ask an Indian in New Delhi where the best restaurants can be found, and you are directed to several curry-and-tandoori places. Ask where hem likes to eat: ''Chinese restaurants.''

Indians are in competition with the Chinese - and fascinated by them. ''We are competitors - in every way,'' says Romesh Bhandari, secretary for economics in the Indian Ministry of External Affairs.

The rivalry has heated up across the bamboo curtain as both nations try to open up their economies for global markets. Foreign investors watch carefully to see which one will progress faster and make for the greater trade prospects.

With a larger number of people under age 15, India could surpass China in population within two decades. China, with an estimated 1 billion people, is heading for negative population growth, while India, with nearly 700 million, has hardly made a dent in fertility rates.

The two giants, however, have more in common than meets the eye. Both have self-contained and ancient civilizations. Both seek to be regional powers. Both launched themselves on the road to modernization about 1950, relying on five-year plans and the ideals of charismatic leaders (Mao Tse-tung, Jawaharlal Nehru, and Mahatma Gandhi). Both developed internal crises in the mid-1970s under a second generation of leaders. And both have recently taken renewed interest in each other.

India's hopes in the early 1950s for a postcolonial friendship were dashed by Peking's lack of interest in the nonaligned movement and the Chinese incursion across India's northeastern frontier in 1962.

The two nations restored relations in 1976 - only to start a new round of battles. India's 40 percent share of World Bank aid is now threatened by China's request for loans. Chinese textiles threaten India's. China is lining up foreign investment, especially Japanese, faster than India, and absorbing Western technology at a fast clip. And China has caught the eye of the world's tourists.

''Foreigners are fascinated by China, while they come here to see how we are muddling through,'' an Indian tourism official says.

Both nations command a tiny fraction of world exports in relation to their population. But, says Indian Finance Minister Pranab Mukherjee, ''If China opens up much more, it will have a shocking impact on India's future.''

The Himalayan tussle notwithstanding, bonds are growing between China and India. Since 1976, two-way trade has rocketed up to $70 million a year. In May, India won a global tender to build aluminum electrical conductors for China. A number of Indian multinational companies are looking at manufacturing in China. Indian advice on oil exploration has been sought by China, and Indian specialists are studying Chinese rail modernization.

In July, India asked China to join it in fixing prices on exports in which the two countries compete, such as jute, tea, textiles, and engineering items.

Diplomatic talks on the border dispute appear to be moving along. ''We have to face reality,'' said Indian Prime Minister Indira Gandhi in an interview. ''You cannot ignore any country of China's size and population.''

Who will win out on economic growth? China's gross national production has averaged out a little ahead of India's over the last few years. ''China's resources and people are more vast,'' says C. R. M. Rao of the Center for the Study of Developing Societies in New Delhi. ''But India has a jump on education and industry.''

''But without the handicap of India's caste system,'' he says, ''China may be more disciplined and progress faster.''