India’s national interest demands better China ties. Don’t let West influence it

China’s dominant material position in global industry and trade make it an unavoidable factor in any rising power’s economic policies.

File photo of PM Narendra Modi and Chinese President Xi Jinping | Graham Crouch/Bloomberg

A flurry of high-level meetings in recent weeks hinted that Indian and Chinese leaders were exploring a way out of a four-year impasse on the Himalayan frontier. Since 2020, India-China relations have been in a state of mutual antipathy, uncertainty and minimal diplomatic engagement. After deadly clashes in June 2020, military forces on both sides have been deployed in close proximity to the border areas and on a scale unseen even during the Cold War era.

Yesterday, the Ministry of External Affairs of India (MEA) finally announced a breakthrough on the border standoff. New patrolling arrangements have been agreed to that would lead to a disengagement of military forces from the forward areas pertaining to the key friction points along the India-China border. It is expected that this process would eventually lead to a de-escalation and the return of military forces to their peacetime stations, thus, marking the end of the crisis.

The timing of this resolution is interesting for it is linked to major upheavals in world politics and economics that have shaped the broader context underlying the sudden success of Indian and Chinese negotiators in breaking the Gordian knot. 

Geopolitics

A rapidly evolving international order has prompted policymakers on both sides to imagine ways to transcend the stalemate. A key impetus is India-China relations are remarkably quiet compared to the turbulent and violent changes in the international system in the past few years. Ironically, even the abnormal state of India-China relations has been more peaceful, more stable, and more predictable than the relationship between other great powers. The US and Russia are embroiled in a devastating proxy war, which in many ways is worse than their ties during the Cold War. The US and China are mired in intense mutual distrust and uncertainty.

A key factor leading up to a reassessment in India’s calculus has been whether the US can continue to be leveraged to sustain the abnormal state of India-China relations. This is a question that Indian policymakers have regularly asked themselves since 2020. The answers are disconcerting today.  

A more transactional relationship with the US – more broadly and with respect to China – has been evident with each passing day. If it was conventional wisdom at one point in time to assert that the US held the keys to managing India’s China problem, this assumption is no longer obvious today. Washington has made it apparent that it sees India more as a useful instrument in a future confrontation with China than as a major power with legitimate geopolitical interests and aspirations of its own. 

This patronising attitude has unsettled many Indians who worry not just about the US being unable to back up the tough talk on China should a serious clash erupt in the Himalayas, but that India might find itself drawn into a deadly US-China military conflict in the Western Pacific region. To further complicate matters, the US has lost its military supremacy vis-à-vis China to enforce a security architecture in Asia without Beijing’s consent. The future incumbent in the White House cannot change these fundamental realities.  

If the US cannot alter the balance of power in India’s favour and risks bringing its unpredictable baggage and security flashpoints with China to negatively impact India-China ties, Indian policymakers must geopolitically insulate India-China ties to the maximum extent possible.

This is a hard security argument. India’s national interests demand a management of the China relationship that is in tune with a rapidly changing international environment.

Since the 1950s, there have been several moments where the larger geopolitical context shaped how the India-China rivalry played out in practice. There have been phases of détente, modus vivendi, cold war, controlled competition, peaceful competition and collaboration. While the structural reality of India-China problems was never entirely absent in these phases, both sides adapted and adjusted to the ebbs and flows of the world order. New Delhi and Beijing pragmatically managed their ties in far tenser and ideologically hostile phases than the present one, because it was in their self-interest to do so. This history of conflict, competition and cooperation management ought to provide contemporary policymakers with a sophisticated template to navigate the future months and years.

Geoeconomics  

The second factor that has led to a clear-eyed reassessment of the India-China relationship is the rapidly changing geoeconomic environment along with the tactical and even strategic necessity to reshape economic interdependence with China.

Globalisation that accompanied the previous phase of India-China relations was of a different character. National power accretion was not the central preoccupation of the economic policies of most rising powers. The focus was primarily on growth regardless of its qualitative aspects and regardless of its impact on industrial, technological advancement and employment generation. The collective West was also the dominant economic force in the world economy. However, that open and unequal international economic order is being displaced over the past decade by a fragmented, competitive and uncertain globalisation. Faced with a global power transition, major powers are resorting to industrial strategies, trade wars and economic sanctions – instruments that were prevalent in previous eras but had been thought to be obsolete in the ‘flat world’ model of the early 2000s.

India, therefore, cannot rely on a growth, modernisation and employment generation strategy in the hope that the external economic landscape will turn into a favourable one. Instead, it needs to script the next chapter of globalisation itself so the rules and norms reflect the interests of large developing economies, especially in light of the brazen misuse of global public goods by Western powers for their narrow geopolitical aims. With the West abdicating its role, India and China have positioned themselves as system stabilisers. That is one key reason to attempt to rediscover overlapping interests and pursue collaboration in defined areas with China. Imagine these areas as the future public goods through which economic interdependence in a multipolar world will flourish. Of course, there are other partners in this process of safeguarding and steering globalisation in an inclusive non-western direction. BRICS is the most obvious multilateral cooperation format today, but other options could emerge in the future.

Interlinked with the emerging global economic order are ground realities of trade, technology and investment flows. China’s dominant position in global industry and trade make it an indispensable factor in any rising power’s economic policies.

The questions before Indian policymakers are whether restricting economic ties with China have in any way influenced the troubled geopolitical side of the equation? And, whether inhibiting economic engagement has truly buttressed India’s comprehensive economic strength?

India has gained no advantage in geopolitical terms or in national economic terms. The economic veto has failed to induce or coerce China to make any geopolitical concessions. What has actually ensued in the past four years is economic ties by stealth without a systematic blueprint to outline a sector-wise and pan-India grand strategy for economic engagement with China. As a result, prior imbalances of trade and manufacturing asymmetries have with few exceptions remained largely unaddressed or have actually worsened.

The time is ripe for a more sophisticated approach to the economic side of the equation that is guided by hard economic plans to transform India’s domestic capacities. Although this is a gradual process, without crystal clarity and unambiguous signals on the policy intentions, no serious economic actors in either country will undertake the steps to respond to a fresh approach to economic interdependence.

It is a truism that global manufacturing supply chains without China’s involvement are simply a non-starter for the majority of industrial and consumer electronic industries. Even aspiring to localise a growing slice of global production chains means including Chinese companies, components and technologies in that process of national capacity building. There is no alternative. There might be much to learn from the ‘small yard, high fence’ US approach to China where controls and restrictions are pursued in selective critical areas with known security implications while a broader gamut of interdependence is left open to the organic interactions between economic actors across multiple countries and geographies. The ultimate policy for India, of course, cannot be a blanket one. It would include a range of stakeholders who can articulate the granular intricacies and aims for different sectors of the Indian economy.

As Modi and Xi finally break the ice at the BRICS summit this week in Kazan, Russia, the India-China relationship is poised for change. The crosstalk of the past four years, with diametrically opposing concepts regarding a détente, needs to be transcended by a dynamic approach that is realistic in its security goals, ambitious in its world order vision, positive-sum in its geoeconomic intent, and politically confident enough to account for the core national interests of both sides. Given the prevailing international conditions, the logic for a responsible and constructive competition between India and China is within reach and can be fleshed out in serious bilateral negotiations.

Zorawar Daulet Singh is an award winning author and strategic affairs expert based in New Delhi. He is author, most recently, of Powershift: India-China relations in a Multipolar World. He tweets @Z_DauletSingh. Views are personal.

(Edited by Ratan Priya)