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Since the late 1950s, relations between India and China have been fraught with tension and conflict. Yet the two countries have recently enjoyed a significant improvement in bilateral relations. In this article, we explore potential economic reasons for this rapprochement. We set out three possible mechanisms by which commercial interdependence could lead states toward peace, and then examine their operation in the India-China case. We conclude that the most likely explanation for the relational change is the concerted effort in both countries to be seen as responsible participants in the global economy. Thus, general economic prudence, rather than any specific bilateral factor, may be having a positive effect on the India-China relationship.