The spectre of a prolonged economic slump in the US and Europe has prompted the government and corporate India to sharpen their focus on economic ties with China. There could be no greater proof for this than the recently-constituted India-China CEO Forum which ended the exclusivity of the high-profile India-US grouping of industry captains formed in 2005.

And the interesting thing is that the real spur for a permanent CEO forum with the world’s fastest-growing major economy came from corporate India, not the government. New Delhi has long remained rather diffident about China’s potential as a lucrative trade and commercial partner for the country.

While Tatas, Mahindra & Mahindra, Bharat Forge and Sundram Fasteners have ramped up revenue from Chinese operations in recent years along with about hundred other Indian firms, Reliance ADAG and Bharati Airtel heralded a trend by clinching mega equipment purchase deals with Chinese firms in their quest for reducing costs. No wonder ADAG chairman Anil Ambani has been handpicked by the Prime Minister to be the co-chairman of the India-China CEO forum along with his Chinese counterpart.

Analysts reckon that mutual investments between the two Asian giants would help both countries mitigate risks to their respective economies from the global economic crisis that increasingly seem to last for a longer period. On its part, India is keen that Indian firms are allowed to bid for the large Chinese government contracts in areas like information technology, pharmaceuticals and healthcare sectors.

India-China trade ? which stood at over $60 billion in 2010-11 with Chinese exports to India accounting for two-thirds of that ? has been growing at three-four times that of India-US trade for the last five years. Of course, India is a bit worried over China’s $20 billion trade surplus with India and the fact that India’s exports to China consists predominantly of industrial raw materials like iron ore. But the growing profitability of Indian firms in China and the moves by Chinese power equipment manufacturers to set up units here could make economic engagement with China more beneficial for India in the coming years.

Last November, ADAG’s Reliance Power signed an $8.29-billion deal with China’s Shanghai Electric for the supply of 36 coal-fuelled power plants to be installed in India by the Chinese firm. Thanks to the deal financed by Chinese lenders, R-Power expects to cut costs significantly for power plants with combined capacity of 24,000 MW. The size of the Indian market could even impel Shanghai Electric to set up a manufacturing base in India, a move that is in sync with the Indian strategy of getting Chinese firms to invest in India, rather than just trade.

Recently, group firm RCom struck a $1.33-billion loan facility underwritten by Chinese banks for refinancing its purchase of 3G spectrum assets.

Similarly, in June this year, Bharti Airtel awarded a contract to Chinese telecom gearmaker Huawei Technologies to expand and manage its mobile network in Africa in a deal worth $400 million. As per the deal, the Huawei will design, upgrade and expand Bharti?s 2G and 3G mobile networks in Africa, besides managing operations and maintenance. Huawei is also one of the vendors selected by Bharti for its mobile network in Bangladesh.

Other Indian companies eyeing China?s rapidly expanding market for automobiles have reason to cheer too. While Tata Group?s overall revenues from China grew from $1 billion in 2007-08 to around $3.7 billion in 2010-11, M&M saw 18% growth in tractor sales in the country in 2010-11, and expects 12% growth over that this year. Bharat Forge?s joint venture with China?s FAW is doing well, too.

Apart from Ambani, the bilateral body of Indian and Chinese CEOs will also comprise Anand Mahindra (M&M), Tulsi Tanti (Suzlon), N Chandrasekharan (TCS), Yusuf Hamied (Cipla), Prashant Ruia (Essar Group), R Seshasayee (Ashok Leyland), Baba Kalyani (Bharat Forge), Gautam Adani (Adani Group), and SBI chairman Pratip Chaudhuri.