Anil Ambani was in ebullient mood last October when he arrived at a luxury hotel in Shanghai to sign one of the biggest business deals of the year. The Indian billionaire’s Reliance Power had just agreed to purchase $10bn of power generation equipment from the state-owned Shanghai Electric.

“It is the largest order in the history of the power sector,” proclaimed Mr Ambani, “and the largest single business relationship between India and China.”

The size of the deal was not its only notable aspect. Shanghai Electric was offering its equipment at about 30-40 per cent below the cost of an equivalent turbine from General Electric of the US. With the generous financing deal offered by China Development Bank and a group of other Chinese banks, the discount was in fact closer to 60 per cent.

Welcome to a new era of globalisation, China-style. As the financial crisis recedes, one of the big fears is that the process of increasingly closer links among big economies worldwide will go into reverse as governments and countries look inward. The message coming from the world’s second-largest economy for the past year has been clear: China wants to accelerate the integration of the global economy, but on its own terms.

Over the past few decades, China has benefited hugely by hitching itself to a process of globalisation where the rules were written in Washington and the American consumer was the buyer of last resort. China prospered by making first the socks, then the washing machines and finally the iPods sold at Walmart.

Continue reading on