All the talk of addressing the global imbalances throws a spotlight on contrasting demographic trends in the world's two most populous nations -- China and India.

Prior to the financial crisis, India's annual growth rate of about 9 percent seemed positively moribund next to China's double-digit economic expansion. But purely on demographics, the dimming power of the US consumer could give India an edge over its neighbour in the longer run.

That's what India's trade minister Anand Sharma seemed to suggest last week when he reminded the audience at a London conference that the country had "20 percent of the world's children":

We know that when we talk about emerging countries the consumption patterns are different. Most of China's production is meant for (markets) abroad. India consumes two-thirds of what India produces.

Indeed, Goldman Sachs projects that India's middle class will outstrip China's by 2045. This is some 15 years after half of China's population becomes either too old or too young to be part of the workforce.

Beijing's mandarins are taking note of this monumental shift in dependency ratios. After decades of enforcing a 'one-child' policy in the face of an human rights outcry, China appears to be relaxing its stance on population control. Family-planning officials in Shanghai have begun to urge eligible couples to have two children.

BlackRock Asian equities portfolio manager Jing Ning says it's useful for investors to start thinking about this demographic shift. Healthcare providers, for instance, will look increasingly attractive investments.

"For the next 20 years, it will be critical for the government to reform its social welfare system," she said.

China and India are sitting down for another round of talks this week on their unsettled border, a nearly 50-year festering row that in recent months seems to have gotten worse.

China's Vice Foreign Minister Dai Bingguo and India's National Security Adviser M.K. Narayanan are unlikely to announce any agreement on the 3,500 km border, even a small one, but their talks this week may well signal how they intend to move forward on a relationship marked by a  deep, deep "trust deficit", as former Indian intelligence chief B. Raman puts it.

While the entire Himalayan border is disputed, including the Aksai Chin area, it is the row over large parts of India's Arunachal Pradesh in the eastern stretch of the mountains that has strained ties in recent months.

The Chinese, says Raman,  are demanding that at least the Tawang tract of Arunachal Pradesh, if not the whole of it, should be transferred to it.  They are apparently adamant that if that doesn't happen, there won't be any border settlement, he says.

India's position is that there can't be a transfer of populated areas in any border settlement. Tawang is a populated area, its citizens are Indians, New Delhi says.

So firmly have the Chinese dug their heels in, that they refused to endorse an Asian Development Bank  irrigation project in Arunachal Pradesh in June on grounds that it was its territory. Last month, India's Foreign Minister S. M. Krishna confirmed to parliament in a question-answer session media reports about the Chinese objection to the project which appeared to have stung India.

So where do they go from here ? India's decision to deploy additional troops along the border in Arunachal Pradesh and beef up its air defences in the region have deepened the sense of unease, more so by making a public announcement of the military moves.  It might be concerned about Chinese buildup in the area and of growing border violations, but to talk openly of the Chinese threat and moves to counter it hardly inspires confidence.

There is a history to this: in the months leading up to the 1962 war between the two countries, India, according to some people at least, took fairly strident positions in public against China, only to be humiliated in the brief conflict.

There are some signs of a calmer, more measured stance in New Delhi and Beijing ahead of this week's meeting in the Indian capital. There was no need to "demonise" China as a potential threat, India's top level cabinet committee on security headed by the prime minister concluded last weekend at a preparatory meeting, acording to a report in the Indian Express. But New Delhi will be watching China closely, it said.

Beijing for its part said the two countries must exercise the "greatest political wisdom" to arrive at border settlement. The People's Daily quoted China's ambassador to India Zhang Yan as saying: notwithstanding the "twists and turns" in ties, the two countries had the same responsibilities of developing their economies and improving people's lives.

Bilateral trade, as the People's Daily in a separate article notes, has flourished despite the strained political relationship. "China has become one of India's largest trade partners, and India is now one of the most vital investment and overseas project contracting markets for China," it says.

So is trade going to be the glue holding the world's two most populous nations together?

(Photographs of India's Manmohan Singh and China's Wen Jiabao and Nathu-La on the border between India and China)

China's troubled Xinjiang region shares borders with eight countries, which is perhaps one reason President Hu Jintao dropped out of the G8 summit to head home, underscoring the seriousness of the situation and the need to quickly bring the vast oil-rich region under control.

Xinjiang touches Russia, Pakistan, Afghanistan, India, Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan, besides the Tibet Autonomous Region.

China, as this piece for the Council on Foreign Relations points out, has long been concerned that these states on its periphery both in central and south Asia may be tempted to back a separatist movement in Xinjiang because of the Uighurs' cultural ties to its neighbours.

To that extent it has cultivated close ties with some of these neighbours, even trying to promote direct trade between Xinjiang and the provinces of neighbouring countries just over the border.

In April this year, the Xinjiang Uygur autonomous region signed an agreement to establish friendly provincial relations with Pakistan's North West Frontier Province, according to this report in the state-run China Daily.

The two sides agreed to explore partnership in oil and gas resources, bilateral trade and agriculture besides vowing to accelerate work on a long-planned direct rail link.

More importantly, Pakistan's ambassador to China, Masood Khan, who signed the agreement, said the two sides must deepen their partnership to oppose "terrorism, extremism and separatism."

Beijing's concerns over the instability in Pakistan especially in the NWFP spilling over into Xinjiang have frequently surfaced, although in perhaps characteristic style, they have gone about it in low-key manner, quite different from the Western approach.

In March this year, Xinjiang governor Nuer Baikeli, speaking on the margins of China's annual parliament meeting said his region faced threats from violence rippling across south and central Asia. Militant attacks in Pakistan and even the one in Mumbai and the violence in Afghanistan showed Xinjiang had reason to fear, he said.

The links go back to the Soviet occupation of Afghanistan. As the piece for the Council of Foreign Relations noted, many Uighurs travelled into Pakistan and Afghanistan in the 1980s and 90s, where they were exposed to Islamic extremism.

China has worried ever since about the militants slipping in and out Xinjiang.

Pakistan's Daily Times noted the Chinese concerns, but said Islamabad could only play a limited role given that it was itself fighting to regain control of its territory in the northwest from the militants.

[PHOTO: A boy runs past an overturned car just outside the Uighurs neighbourhood in Urumqi in China's Xinjiang Autonomous Region July 8, 2009. REUTERS/Nir Elias]

There is little doubt that the BRICs -- Brazil, Russia, India and China -- have become big players in Africa. According to Standard Bank of South Africa, BRIC trade with the continent has snowballed from just $16 billion in 2000 to $157 billion last year. That is a 33 percent compounded annual growth rate.

What is behind this? At one level, the BRICs, as they grow, are clearly recognising commercial and strategic opportunities in Africa. But Standard Bank reckons other, more individual, drivers are also at play.

In a new report, the bank looks at what each of the individual BRIC countries is trying to do. To whit:

-- Brazil's immediate intererest in Africa is securing access to natural resources, particularly oil. But is also motivated by a desire to create a new "Southern Axis" with itself at the forefront.

-- Russia is also interested in Africa's natural resources. But it faces a problem because of the sullied reputation of the Soviet Union during the Cold War. So Moscow has also embarked on a rebranding programme within the continent by ramping up its aid programmes.

-- India is attracted to Africa in part because of long historic ties. Commercial engagement, however, is also motivated by a need to guarantee the natural resources it needs for its own growth. Furthermore Africa is seen politically as a key ally in the pursuit of a competitive advantage over its Asian competitor China.

-- For China, Africa provides a long-term partner in its ongoing bid to gain global economic ascendancy, providing it with the resources, markets, geopolitical support, and, eventually, food and social security in the form of a growing and engaging diaspora.

A full copy of Standard Bank's report, which was written by Simon Freemantle and Jeremy Stevens, can be found here.

(Photo: Jeremy Gaunt)

While Indian Prime Minister Manmohan Singh's meeting with Pakistani President Asif Ali Zardari in Russia captured all the attention,  Singh's talks with Chinese President Hu Jintao may turn out to be just as important in easing off renewed pressure on the complex relationship between the world's rising powers.

India said this month it will bolster its defences on the unsettled China border, deploying up to 50,000 troops and its most latest Su-30 fighter aircraft at a base in the northeast.

While upgrading the defences has been a long-running objective, the timing seemed to suggest New Delhi's renewed fears of "strategic encirclement" by China by deepening ties with all of its neighbours, not just Pakistan but also Sri Lanka and Nepal.

The chief of the Indian air force, reflecting the anxieties in the security establishment, said China was a far bigger threat than Pakistan because so little was known about Beijing's combat capabilities.

Predictably enough, the Indian military moves and statements drew a strong response from China's official media warning that New Delhi's tough new posture was dangerous if it thought it would compel China to cave in. Beijing was in a different league, both in terms of national power, economic scale and global influence, the media said.

On Monday, Hu and Singh met on the sidelines of the Shanghai Cooperation Organisation and the BRIC meeting that followed in the Urals city of Yekaterinburg. Details from the meeting were sketchy, but the Press Trust of India said the two leaders supported an early meeting of a joint economic group to push trade ties. 

They also touched on the border dispute at the heart of the more than four decades of distrust, noting that top negotiators were due to meet in August. The People's Daily said Hu stressed on expanding economic cooperation and investment flows and aims to take bilateral trade to $60 billion in 2010. It stood at $51.8 billion in 2008, the paper said.

India's decision to attend the SCO, where it has observer status, was also a step forward. Since its inception the forum has been seen in India as China-centric with the main strategic objective of limiting U.S. dominance on China's periphery and in that way prevent the hemming-in of both China and Russia.

By attending the summit is New Dehi signalling its intention to engage China on a broad front and not shy away?

And did Beijing shift ground a bit by acceding to the declaration by the BRIC - Brazil, Russia, India and China - calling for U.N. reform and saying that the grouping understood and supported India and Brazil's aspirations to play a greater role in the United Nations.

Both Brazil and India are candidates for permanent members of the Security Council and Beijing has long been cold to the idea of at least its southern neighbour getting a place on the high table. It wasn't a ringing endorsement at Yekaterinburg but perhaps the first shuffling of chairs?

[Manmohan Singh and Hu Jintao at the SCO summit and a Chinese soldier at the border]

Power play in South Asia is always a delicate dance and anything that happens between India and China will likely play itself out across the region, not the least in Pakistan, Beijing's all weather friend.

And things are starting to move on the India-China front. We carried a report this weekabout India's plan to increase troop levels and build more airstrips in the remote state of Arunachal Pradesh, a territory disputed by China.  New Delhi planned to deploy two army divisions, the report quoted Arunachal governor J.J. Singh as saying.

Other reports in the Indian media said the air force was beefing up its base in Tejpur in the northeast with Su-30 fighter planes, the newest in its armoury. The HIndustan Times said it was part of a decision to move advanced assets close to the Chinese  border.  The IAF base in Tejpur which is in the state of Assam is within striking distance of the border with China in Arunachal Pradesh.

Arunachal evokes especially painful memories for India - for this is where the Chinese advanced deep inside, inflicting heavy casualties on poorly-equipped Indian soldiers in the 1962 war. The Chinese retreated but have refused to recognise Arunachal as part of India, and that along with other disputed stretches of their 3,000 km border has remained at the heart of more than four decades of distrust.

Indeed the renewed Indian defence deployment comes days after the air force chief said China posed a bigger and more potent threat than Pakistan.

And what of the Chinese? What do they have to say to the noises coming out of India?  While official China hasn't appeared to react publicly,  the Chinese media has responded. The Global Times said in a hard-hitting editorial the Indian government's tough new posture "is dangerous if it is based on the anticipation China will cave in".

China is in a different league, it says, by way of international influence, overall national power and economic scale and India's politicians don't seem to have realised this. On the contrary, they seem to think that they would be doing China a huge favour simply by not joining the so-called  “ring around China” established by the United States and Japan, it says.

China is not going to compromise on its border dispute with India, and it was up to New Delhi to figure out why it can't have stable relations with many of its neighbours such as Pakistan, Nepal and Sri Lanka while Beijing can, the Global Times says.

The Global Times is a popular tabloid and has been taking a strident tone on foreign policy issues. But it is published by the Communist Party mouthpiece, the People's Daily, and can't really be ignored.

Are we seeing the beginning of a more open, declared rivalry  between the world's two most populous countries? Where does Pakistan fit in all this? Is New Delhi going to organise its energies and defences to meet the perceived threat from China and leave Pakistan to figure out its own troubles?

And what of the Chinese? Are they going to turn up the heat on India? As this analysis notes, New Delhi is already wary of China's role in Pakistan, and now reinforcing its fear of strategic encirclement are Beijing's expanding ties with India's smaller neighbours such as Sri Lanka and Nepal.

 [Indian troops at the Indian-China trade route at Nathu-La; an Indian and a Chinese soldier also in Nathu-La] 

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India has been fretting for months that it could be pushed into the background by the United States' economic dependence on China and by the renewed focus on Pakistan by President Barack Obama's administration.  That anxiety appears to have increased lately -- perhaps because the end of the country's lengthy election campaign has opened up space to think more about the external environment -- and is focusing on China.

In an interview with the Hindustan Times, Indian Air Chief Marshal Fali Homi Major said China posed a greater threat than Pakistan.  “China is a totally different ballgame compared to Pakistan,” he was quoted as saying. “We know very little about the actual capabilities of China, their combat edge or how professional their military is … they are certainly a greater threat.”

The Mint newspaper followed up with a editorial calling China "perhaps the gravest external threat" to India's security. "That India is in an unstable neighbourhood is clearer than ever this summer," it said. "But troubles from Pakistan, Sri Lanka or Nepal pale when compared with China."

The increased anxiety has been driven by the end of the war in Sri Lanka, where the government's victory was attributed partly to a supply of Chinese weapons, and where China has been building a new port on the island's southern coast.

"This is part of a broad move by China into the Indian Ocean, which India has traditionally considered its sphere of influence," said British newspaper The Times. Chinese engineers are building another port at Gwadar in Pakistan; roads are being cut or improved through Burma to help trade routes between Yunnan province in China and the Indian Ocean; ties are being improved with island nations such as the Seychelles; surveillance stations are being sited or upgraded on Burmese islands."

But even without the Sri Lankan trigger, Indian analysts have suggested that India may no longer enjoy the favoured position that developed under former president George W. Bush, when Washington forged close ties with Delhi, in part as a counterweight to China.  Facing the twin challenges of financial crisis and a military stalemate in Afghanistan, the Obama administration is dependent on India's two main rivals -- China to pay for American debt and Pakistan to help it defeat the Taliban.

"The crux of the matter lies in the US's relationship with China," retired Indian diplomat M.K. Bhadrakumar wrote in the Asia Times. "At first glance, it may appear there is hardly any ellipsis between George W Bush's policy of engaging China in 'constructive, candid and cooperative' ties and Obama's search for a 'positive, cooperative and comprehensive' US-China partnership. But the reality is that the US today has a much greater need of strategic engagement with China and arguably to 'upgrade' the partnership in the direction of an elevated dialogue on global political issues."

"To be sure, China's global influence has increased and a full-blown US-China strategic partnership - as evident from the mere talk of an exclusive 'G-2' matrix - will figure on the radars of countries such as India (or Japan) as a high probability if not an inevitability. The Obama administration will have to work hard to reassure India that it is not being relegated to a subordinate status."

India's loss does not automatically mean Pakistan's gain.

Pakistan has traditionally regarded China as its most reliable ally. In the past, Sino-Indian rivalry has helped it to win military supplies from China along with financial and diplomatic support. But rivalry between its two giant neighbours has not necessarily always played in its favour. India developed nuclear weapons to counter China's nuclear capability.  Pakistan, according to the Pakistan Army's official website, saw this as "coercive diplomacy" targetting not China, but Pakistan, and began its own nuclear weapons programme after India carried out its first nuclear test in 1974.

Nor did Pakistan necessarily gain from India's defeat by China in a border war in 1962, which left India with an enduring anxiety about its long, unmarked borders. When it feared Pakistan was planning to take control of the mountains beyond Kashmir -- an area so remote that it had never been demarcated -- India sent troops to occupy the heights above the Siachen glacier in 1984. Although India had been burned by what it saw as Chinese encroachment in its border areas before the 1962 war, its actions on Siachen were directed against Pakistan. (Twenty-five years later, the Indian and Pakistan armies are still deployed on the heights above Siachen, with India commanding the higher positions.)

Nor does Pakistan automatically gain from ever-closer ties between the United States and China.

According to this McClatchy report, the Obama administration has appealed to China to provide training and even military equipment to help Pakistanis counter the growing militant threat. "The proposal is part of a broad push by Washington to enlist key allies of Pakistan in an effort to persuade Islamabad to step up its efforts against militants while supporting the fragile civilian government and its tottering economy." it says. Richard Holbrooke, the administration’s special representative for Pakistan and Afghanistan, had visited China and Saudi Arabia, another ally, in recent weeks as part of the effort, it said.

In the past, Pakistan prided itself as a go-between, facilitating the Cold War thaw in relations between the United States and communist China in the early 1970s.  That may seem like a long time ago, but in a region with a fierce attachment to history, is Pakistan really ready to have Washington and Beijing talk over its head about what is best for it?

(Photos: President Obama meets President Hu in London; and Indian soldiers in Siachen)

Afghanistan sits on one of the largest mineral deposits in the region, the country's mines minister told Reuters in an interview this month.

And the Chinese are already there, braving the Taliban upsurge and a slowing economy at home to invest in the vast Aynak copper field south of Kabul, reputed to hold one of the largest deposits of the metal in the world.

In what is the biggest foreign investment in Afghanistan, China  last year committed  nearly $2.9 billion to develop the Aynak field including the infrastructure  that must be built with it such as a power station to run the operation and a railroad to haul the tons of copper it hopes to extract.

Despite Afghanistan's deteriorating security including in Logar province which is where the Aynak reserves are located and which serves as one of the gateways  to Kabul,  China has said it will carry out the project, the Afghan mines minister Mohammad Ibrahim Adel said.

China Metallurgical Group,  the state-run firm which won the 30-year concesssion along with Jiangxi Copper Co, has already begun paving a dirt road near the mine, according to a report by McClatchy Newspapers this month. Interestingly, the report notes that the U.S. military, which has set up bases in the Logar area to strangle Taliban infiltration into Kabul, has ended up indirectly "providing security that will enable China to exploit one of the world's largest unexploited deposits of copper, earn tens of billions of dollars and feed its voracious appetite for raw materials."

China has operated in the shadows in Afghanistan, compared with Pakistan, India and Iran which  are engaged in a much more public battle for influence there.

The Chinese decision to invest in the copper reserves which were discovered back in 1974 could make a real difference to ordinary people. The government estimates the mine will directly employ 10,000 Afghans and indirectly employ 20,000 more. Further, the contract obliges the Chinese firm to build new living areas for workers and provide much needed infrastructure like roads, hospitals, schools, and electricity, along with the railroad.

Besides building influence in Afghanistan, the Chinese have long been suspected of playing a bigger game of securing cross-brder connections in Central Asia, Iran and South Asia to the warm waters of the Indian Ocean. The freight railroad that they envison will run through its western provinces to Tajikistan, Afghanistan, and then Pakistan.

One part of this grid may already be falling into place after Tajikistan announced last week that it had begun building a railroad to connect its capital Dushanbe to a bridge on the Afghan border. The immediate trigger for building the Afghan-Tajik link is because NATO is looking for a route through the former Soviet Union to move supplies to Afghanistan as an alternative to Pakistan.

But again, it also fits in nicely with China's own plans for connectivity in the region. Is it a  case of heads America loses, tails China wins ?

[Photo of women in Logar and Presidents Hu Jintao and Hamid Karzai]

Emerging market ministers, particularly those from the BRIC economies -- Brazil, Russia, India and China -- are painting this weekend's G20 meeting as a victory in dragging them out of the shadows of global policy-making.

The finance ministers' statement included the promise of more money for the International Monetary Fund and regional development banks, on whom struggling emerging economies rely for support.

It accelerated a review of IMF quotas by two years to 2011, which should give emerging economies more say in the running of the multilateral lender. It also suggested that the headship of IFIs -- international financial institutions -- would no longer be guaranteed to Americans or Europeans. 

BRIC countries even issued their own communique, ahead of the final statement. "There is a conclusion that has been reached in recent years, which is that the resolution to today's global problems is only possible with the participation of emerging countries," Brazil's central bank governor Henrique Meirelles told MacroScope.

 "There is a natural evolution of the decision-making process, which many important countries agree on, that decisions move from the G7 to the G20."

But were there actually any major concessions?  Tim Ash,  head of emerging Europe, Middle East and Africa research at RBS thinks not.

"Clearly they would like things to change, but I'm not sure that much has actually changed," he says.

In all the excitement over Michael Phelps and his bid for eight golds it’d be easy to overlook a few other extraordinary achievements at the Games today.

Amid the gold rush at the Water Cube, Rebecca Adlington won Britain’s first Olympic women’s swimming title in nearly half a century with a victory in the 400 metres freestyle that was every bit as exciting as the American relay win that kept Phelps’s hopes of eight golds alive.

As Derek Parr writes, Adlington, fourth at the final turn, hurtled down the last length to overhaul American Katie Hoff and clinch the gold by a tiny 0.07 seconds in four minutes 03.22 seconds.

Hoff clung on to take the silver in 4:03.29 while Joanne Jackson provided Britain with a second medal when she finished third in 4:03.52.

No prize on offer, but if you know who the last woman gold medallist for Britain was in swimming, show off your knowledge in the comments.

It’s been a great start to the Games for Britain, who got their first gold with Nicole Cooke’s win in the women’s road race event in the cycling on Sunday. As hosts of the next Games there will be a special focus on the Brits. I wonder how many medals they can win in Beijing to give a boost to preparation for London 2012. 

But if you think 48 years is a long time to wait for a gold, how about more than a century?

India, current population around 1.1 billion, had never won a gold medal at the Olympics in any individual event before Abhinav Bindra won in the men’s 10m air rifle on Monday.

“I can’t describe how happy I am,” the ever-calm Bindra told journalists. “It’s the thrill of my life. That’s about it.”

And don’t forget the other world records at the Water Cube today. In the same race that gave Phelps his second gold, Eamon Sullivan claimed the individual world record when he led the Australian team off on the first lap.

Japan’s Kosuke Kitajima justified his pre-race hype by shaving 0.22 seconds off the world record to win the 100 metre breaststroke and Zimbabwe’s Kirsty Coventry took 0.20 seconds off the world record for 100 metres backstroke during her semi-final.

All in all a belting morning, and we’ll be discussing it all later on our podcast.

PHOTOS (from the top): Rebecca Adlington (R) and Joanne Jackson hold up their medals from the 400 meters freestyle swimming final, August 11, 2008. REUTERS/Kai Pfaffenbach; Abhinav Bindra of India looks at his gold medal after the men’s 10m air rifle final shooting. REUTERS/Desmond Boylan