I saw the Indian hit movie 3 Idiots recently in an unusual location: a cineplex in Hong Kong. Very rarely do Bollywood flicks make the city’s commercial circuit — the conventional wisdom holds that they do not appeal to local audiences. Yet my Sunday morning matinee was 80% filled, mostly with Chinese of all ages. Some took the movie at face value: the zany antics of Indian college kids. But the majority of viewers, it seemed to me, got the universal moral about breaking free from social straitjackets. They laughed when they were meant to, and didn’t when they weren’t. While the foreign 3 Idiots was a box-office monster, 1911, a China-backed war docudrama starring hometown celebrity Jackie Chan, bombed. Go figure: India 1, China 0.

Introducing India’s 3 Idiots to a Chinese audience won’t make the cut of epic attempts to break down barriers between cultures. But it does tap into a spreading consciousness that China and India and their people share a special place among today’s nations — a tandem locomotive pulling the global economy while much of the rest of the world is a train wreck. You’ve heard the drumbeat: stupendous growth rates; ever richer consumers; geopolitical clout — a new order trumpeted by mega-events and extravagant slogans like the 2008 Summer Olympics in Beijing and “Incredible India” at Davos. “The rise of India and China,” writes Robyn Meredith in her seminal book, The Elephant and the Dragon, “has caused the entire earth’s economic and political landscape to shift before our eyes.” Indian politician Jairam Ramesh sums up the phenomenon in a neologism: Chindia.

With Western economies reeling, the world is looking especially to China and India as saviors — whether it’s buying Italian bonds or Italian bags. The E.U. is even begging Beijing to help bail out its euro-zone bailout fund. But that’s only one side of the coin. There’s a duality to China and India, a blend of reality and myth, internally as well as between them. China and India have an arabesque relationship. These two giants on the cusp of superpower-hood are more rivals than partners. Despite their achievements, they face enormous challenges. And though they add up to nearly 40% of the world’s 7 billion population, they still live pretty much in parallel universes. Chinese and Indians, writes Indian journalist Pallavi Aiyar in her perceptive book, Smoke and Mirrors: An Experience of China, are “largely culturally untranslatable to each other.”

Rivals or Allies?
As a Gujarati born, raised and living in overwhelmingly Cantonese Hong Kong — both tribes are brash and materialistic — I have long been privy to what local Chinese and Indians think of the other. It used to be downright ugly. Perceptions and attitudes, liberally spiced with racial epithets, went broadly like this: to the Chinese, the Indians were poor, superstitious and dirty; to the Indians, the Chinese were crass, godless — and dirty. Hong Kong is no microcosm of Chindia, but it reflects how, just as China and India have changed, so have the stereotypes. If before I were assumed by the Chinese to be someone’s chauffeur, now I am a tech entrepreneur or investment banker. Local Indians see China afresh too, but often in just two superficial dimensions: wealth and might. My 17-year-old son’s peers are only half-joking when they tell him that, because he is half Chinese, half Indian, he has it made. (See photos of the making of modern India.)

If only it were that simple. In her book, Meredith quotes Indian tycoon Ratan Tata saying, “China is the factory of the world; India can be the knowledge center of this region … If we orient ourselves to working together, we could be a formidable force of two nations.” That’s ambitious — and perhaps unrealistic. China and India were once soul mates — through the migration of Buddhism some 2,000 years ago. Later, the Indian monk Bodhidharma traveled to China to spread the message of Zen. Prominent Chinese went the other way: the devout pilgrim Xuanzang, later immortalized in the classic Ming novel Journey to the West, and the great explorer Admiral Zheng He. It was a time of mutual discovery. By the 17th century, the Middle Kingdom and the subcontinent were the planet’s trading powers. They then got caught up in their own worlds of feudalism and colonialism — a decaying dynasty in China, the British Raj in India — followed by decades of serial revolution and fervent socialism. Modern relations between the two countries were marked mostly by suspicion — and the occasional border war.

The contemporary period is friendlier, yet tensions are never far from the surface. Even as both governments speak of peace and prosperity, China is establishing a “string of pearls” in the Indian Ocean, unsettling New Delhi, and India is talking oil and gas exploration in the South China Sea, angering Beijing. More to the point, the close economic ties between nations that often prevent conflict do not sufficiently exist between China and India. Chinese investment in India is about 0.05% of its worldwide total, while Indian FDI in China is so low that it does not appear on many charts. Bilateral trade is growing (especially Chinese exports to India), but it’s still a small proportion of their global total. Given their size and footprint, the two are nowhere as connected as they should be. Astonishingly, just a few of the two countries’ cities have direct flights.

Houses in Order
Before they rescue the world, china and India need to fix their own economies and societies. They are beset by some grim news. Growth is slowing, though in China’s case that helps cool an overheated economy. In both countries, exports are sliding, inflation is at painful levels, income inequality is reaching chasm proportions, and injustices like land grabs are sparking widespread protests. Cronyism is a scourge. The two have lifted countless millions out of poverty (though China has done a better job), but countless other millions — youths, workers, farmers — remain marginalized and desperate for decent livelihoods. While China doesn’t follow the rules, India has too many rules to follow. China is, if not at a tipping point, certainly at an inflection, struggling to contain asset bubbles and bad loans and to rebalance its economy away from state-directed investment to consumer-led growth. India’s reputation, meanwhile, has been so dented by corruption that the country’s top corporations have hired U.S. consultancy Bain to craft a “Credible India” campaign. Good luck.

Perception vs. Reality
At least India can count on a better image worldwide than China. Westerners in particular see the pair through a romantic and ideological prism. India is Gandhi, yoga, eat-pray-love. A gentle elephant; an exporter not of unfairly underpriced goods but articulate and urbane CEOs as at home in New York City as in Mumbai. China is “gutter oil”; the country you love to hate. Fiery dragon rather than cuddly panda. Mercantilist, rapacious, threatening; resented even as it is wooed.

There are two reasons for this dichotomy: Beijing’s profile and swagger are bigger than New Delhi’s, allowing India to escape the same scrutiny; and India is a democracy while China is an authoritarian state. All year, Beijing’s leaders have systematically cracked down on political dissent and cyberspace activity; they would not have tolerated, for example, the Indian summer of anticorruption protests in New Delhi. (Remember Tiananmen?) Yet the hard truth is that India is not as free as it’s made out to be. Democracy does not necessarily result in good governance. India’s institutions are weak, human-rights abuses are not unknown, and money and power often buy impunity. “India’s poor [have] a vote,” writes author Aiyar, “but this [does] not always equal a voice.” India even has its own Tibet: I don’t mean Dharamsala but Kashmir.

Whose economic path, China’s or India’s — essentially, state capitalism vs. private enterprise — is sustainable? Which society is more durable? Which nation has a stronger sense of destiny? The entire planet wants and needs to know. In the following pages, TIME’s Bill Powell and Michael Schuman face off to argue the case, respectively, for China and India as to whose template of change will prevail. It’s not easy to pinpoint the killer app. But given a year of restless populaces worldwide, the winner may be the one providing the greater justice and dignity to the most people. On that score, it’s still China 0, India 0.