India China relationship is all about balancing historical ties, economic interests, and territorial disputes. Recent data from the Global Trade Research Initiative (GTRI) reveals a significant milestone: Chinese imports to India surpassed $100 billion in fiscal year 2024, solidifying China’s status as India’s largest trading partner.
This revelation comes amid heightened tensions, notably exemplified by India’s deployment of a record number of troops to the Ladakh border in response to perceived Chinese threats, as stated by India’s External Affairs Minister S. Jaishankar. United States intelligence agencies have warned of a potential armed conflict, as both nations bolster troop deployments along the disputed border.
Ongoing Military standoff
The India China relationship has been marred by conflicts largely stemming from disputes surrounding their 3,440-kilometer-long border. India faces a triple challenge from China in Ladakh, Sikkim, and indirectly in Arunachal Pradesh, which China claims as its territory. In June 2020, the Galwan Valley clash saw the opposing forces fight each other with sticks and clubs; at least 20 Indian soldiers and undisclosed number of Chinese soldiers died.
Diplomatically, India has emphasized the urgency of addressing the border situation, advocating for a restoration of the status quo ante along the Line of Actual Control (LAC) in eastern Ladakh. Despite military talks, tensions continue nearly four years later. Both nations are engaged in a race to bolster infrastructure along this contested border, with China investing in tunnels and bunkers, while India allocates substantial funds for road construction.
India has sanctioned the development of 113 roads in Arunachal Pradesh, Uttarakhand, and Sikkim to enhance connectivity. Currently, there are at least 168 villages along the border with China that do not have any road connectivity.
Alongside these developments at the border, public sentiment in India toward China has notably soured. A Pew Research Center survey published in the spring of 2023 indicated two-thirds of Indians – a historic high – hold an unfavorable view of China. Consequently, India has been gravitating toward closer ties with the United States, France, Japan, and Australia, exemplified by decisions such as the ban on Chinese apps, scrutiny of Chinese investments in Indian startups, and vocal opposition to China’s Belt and Road Initiative.
Despite these tensions, bilateral trade and investment between India and China persist. This paradoxical phenomenon is not unique to the China-India dynamic. Across the globe, nations often engage in trade with adversaries for political, economic, and even military reasons. Europe, for instance, continues to import natural gas from Russia amid the Russia-Ukraine conflict, and West Asian nations maintain trade relations with Israel despite their public support for Palestine.
In fiscal year 2023-24, bilateral trade between the two nations reached $118.4 billion, with India heavily reliant on China for critical products such as telecom and smartphone parts. India’s exports to China rose by 8.7 percent to $16.67 billion, while imports increased by 3.24 percent to $101.7 billion. Despite the geopolitical tensions, economic interdependence persists, underscoring the delicate balance between rivalry and cooperation.
India China relationship: Failed Expectations
The momentum for a breakthrough grew after Indian Prime Minister Narendra Modi and Chinese President Xi Jinping exchanged a handshake at the G-20 summit in Indonesia. Disengagement in certain border areas and the resolution of a clash at Yangtse seemed promising. However, Xi’s absence at the G-20 summit in Delhi and the lack of a definitive border agreement dampened hopes fo an improvement in India China relationship.
Fundamental Issues
At a deeper level, several factors continue to strain India China relationship:
India-U.S. Partnership: India’s alignment with the United States to counter China’s influence remains a sore point. As the Indo-Pacific region becomes a battleground for great power competition, both nations tread carefully.
Military Rivalry: The arms race between India and China persists. Their growing naval capabilities and territorial ambitions add tension to an already complex relationship.
South Asian Competition: China’s expanding footprint in Maldives raises concerns for India. The newly elected Maldivian President, Mohamed Muizzu, has further cemented the relationship with China. In January 2024, he made China the destination of his inaugural state visit, signing twenty agreements with Beijing covering financial and military assistance.
For China, the Maldives holds strategic importance due to its location along one of the busiest maritime trade routes in the Indian Ocean. Approximately 80 percent of Chinese oil imports flow through this crucial passage.
India has expressed growing concerns about China’s expanding presence in the Indian Ocean region. The development of Chinese-controlled ports and military facilities in countries like Sri Lanka, Pakistan, and the Maldives challenges India’s strategic interests and regional security. President Muizzu campaigned on an “India-Out” platform, citing economic overreliance on New Delhi. His party’s parliamentary majority in April 2024 further solidified his pro-China stance.
China has also expressed interest in infrastructure projects in Bhutan, potentially appealing to Bhutan’s desire for improved connectivity.
Election Year Dynamics
As India heads into its election year, Prime Minister Modi’s stance on China will likely remain unyielding. Checks on Chinese investments and efforts to build an anti-China economic supply chain network will shape India’s foreign policy approach in the Indo-Pacific.
In recent interviews, Modi has emphasized the importance of peaceful India China relationship. He refrains from directly commenting on territorial disputes but underscores the significance of bilateral ties for the entire region and the world. His words echo the delicate balancing act India must perform – asserting its sovereignty while avoiding escalation.
As Modi seeks a third term, his foreign policy decisions will resonate globally. The elections will determine whether Modi’s unyielding stance continues or if diplomatic shifts occur.
The CPEC and Military Power
- CPEC’s Significance: The CPEC, operational since 2015, is a flagship project of Chinese President Xi Jinping’s Belt and Road Initiative (BRI). It intertwines China and Pakistan’s economic development, linking the port of Gwadar in Pakistan’s Balochistan province to China’s Xinjiang region. This corridor not only facilitates trade but also enhances military cooperation between the two nations.
- Straddling India: With Chinese military power flowing into Pakistan, China effectively straddles India from multiple directions. This raises the specter of a ‘two-front’ war scenario, where India could face simultaneous aggression from both its western neighbor (Pakistan) and its northern neighbor (China).
- Kashmir and Regional Role: China’s position allows it to play a role in Kashmir and the broader South Asian region. Its support for Pakistan’s stance on Kashmir complicates India’s efforts to resolve the long-standing dispute. Beijing’s influence extends beyond economic ties, potentially impacting regional stability.
India opposes the extension of the China-Pakistan Economic Corridor (CPEC) for several reasons. First, the proposed extension passes through Pakistan-occupied Kashmir (PoK), which India considers part of its territory. India views any actions related to CPEC in this region as inherently illegal, illegitimate, and unacceptable.
Second, India firmly believes that connectivity initiatives should follow universally recognized international norms, including principles of openness, transparency, and financial responsibility. Third, India has consistently expressed concerns about China’s activities in areas illegally occupied by Pakistan in the Union Territories of Jammu & Kashmir and Ladakh. Overall, India emphasizes the importance of respecting sovereignty, equality, and territorial integrity of other nations in such projects.
China’s Assertiveness
- Changing Dynamics: Since 2015, China’s assertiveness toward India has grown. President Xi Jinping’s foreign policy reflects newfound confidence and a willingness to confront the United States. China’s comprehensive national strength, including economic, military, and technological prowess, emboldens its actions.
- BRI as a Priority: Despite global challenges, Xi Jinping remains committed to the BRI. China’s internal and external pressures have not diminished its focus on this ambitious initiative. The CPEC remains a linchpin in China’s strategic calculus.
- Maoist Echoes: Xi’s calls for the “rejuvenation of the great Chinese nation” and advocacy of a “common destiny for mankind” echo Mao Zedong’s revolutionary rhetoric. China’s assertiveness mirrors historical patterns, albeit in a modern context.
India’s Response
- Ladakh Standoff: The ongoing standoff between Indian and Chinese troops in Ladakh has roots in concerns over Aksai Chin and the CPEC route through Gilgit-Baltistan. The proximity of these regions to Pakistan adds complexity to the situation.
- Strategic Preparedness: India’s military readiness remains essential. Strengthening border infrastructure, bolstering defense capabilities, and maintaining diplomatic channels are vital components of India’s response.
The China-Pakistan nexus poses challenges for India’s security and regional stability as well as the India China relationship. As geopolitical dynamics evolve, India must navigate this complex landscape with strategic foresight, recognizing the potential threats posed by both neighbors.
While India and China have historical ties- thousands of years ago, India and China maintained peaceful relations. The ancient Silk Road facilitated trade and the spread of Buddhism from India to East Asia. In fact In 1950, India was among the first noncommunist countries to recognize the People’s Republic of China (PRC) as the legitimate government of both Mainland China and Taiwan.
Since then, China and India have become major regional powers in Asia, with growing diplomatic and economic influence. The India China relationship is multifaceted, with both cooperation and conflict. India faces a large trade deficit favoring China, and border disputes persist. Trade, territorial disputes, and military interactions continue to shape the bilateral dynamics. As the world watches, 2024 promises to be a year of challenges and opportunities in this complex relationship.
