With the recent subprime financial crisis in the U.S. it is evident that the U.S., China and India are dependant on each other. Although the subprime crisis was related to factors regarding monetary policy in the U.S., China and India have been negatively affected. China and India assumed that they would be immune to the after affects of the subprime financial crisis which took place in the U.S. housing sector. Unfortunately China and India have been greatly impacted by experiencing financial instability and experiencing a deep recession. China’s banks not being overly exposed to these toxic assets were supposed to be able to weather the storm and be a source for global liquidity. When U.S. imports of automobiles, electronics and machinery from China slowed down, their economy was disrupted. Similarly to the liquidity crisis taking place in the U.S., India is experiencing their own liquidity squeeze. The BSE was forced down when foreign portfolio investors withdrew over $11 billion dollars.
India, China and America are commonly described as emerging powers. Over the years China and India have become economic, political and military powers in the 21st century. The United States, China and India have a common interest in peace and prosperity. This relationship provides the U.S. with low cost consumer goods and advanced manufactured products to the India and China. Recently, more people have been viewing these relationships as a threat. However, the international division of labor has doubled regarding the number of workers participating in the world economy. In addition globalization, economic development and technological innovations have accelerated as a result of this trend. Unfortunately, the U.S. and China’s goals differ radically. The U.S. wants to expand international order by mutually advantageous trade between countries. In retrospect, China