India’s Relations with China: The Good, the Bad and the (Potentially) Ugly

Later this month, Indian Prime Minister Manmohan Singh will travel to Beijing. The visit will cap a year that has been full of ups and downs in India’s relations with China. The tale of three trips is representative. One in May by Chinese Premier Li Keqiang, his first abroad, was intended to signal the importance Beijing placed in the Sino-Indian relationship. But it took place in the aftermath of—and some would say was overshadowed by—a border standoff between the two countries’ militaries. In July, the Indian defense minister visited Beijing to rebuild trust and defense ties. Media coverage, however, focused on warnings to India issued by a PLA general, which Chinese officials had to rush to dismiss.


And Singh will be travelling from a country that is largely preoccupied domestically. When discussions do turn to China, they have focused on concerns about Indian capacity vis-à-vis that country, Indian politicians accusing the government of being soft on China and Chinese scholars labeling India’s border infrastructure upgrades as provocative. These and other developments have highlighted what Indian policymakers acknowledge—that there are elements of cooperation, competition and concern in the China-India relationship.


There have been good signs for those interested in stable, cooperative Sino-Indian relations. In the spring, just after he’d formally taken office, Chinese President Xi Jinping proposed a five-point formula to improve ties between the two countries. “Positive vibes” were detected at Xi’s subsequent meeting with Singh on the sidelines of the BRICS summit in Durban in March. There have been numerous public Chinese declarations of the importance of the relationship—perhaps not seen since the first half of the 1950s. The Chinese ambassador to India unusually took to the editorial pages of an Indian newspaper to emphasize, “To strengthen good-neighbourly and friendly cooperation with India is China’s strategic choice and established policy which will not change.” Chinese officials have indicated that greater efforts should be made toward a boundary settlement. The two countries have strategic and economic dialogues in place. They restarted their defense dialogue earlier this year and are expected to resume joint military exercises shortly. China and India also have specialized dialogues on issues like Afghanistan, Central Asia and counterterrorism. The agreement to discuss Afghanistan was considered a departure from previous Chinese policy; Beijing had earlier been reluctant to add it to the agenda because it would have likely meant talking about Chinese ally Pakistan. Along with regional discussions, China and India have also cooperated in the multilateral realm, including on issues like trade and climate change.


Premier Li chose India as his first overseas stop, with the Chinese government indicating that the choice was very deliberate. Hosting an Indian youth delegation, Li put a personal spin on the choice, noting the “the seeds of friendship sown” when he visited India 27 years ago—a trip that he said left a “lasting impact.” During the May visit, he stressed the need to build trust and especially emphasized the economic benefits of greater ties.


Those economic ties have already grown. China is one of India’s largest trading partners. Bilateral trade in goods has gone from less than $3 billion in 2000 to $66.57 billion in 2012. While investments haven’t kept the same pace, they have also grown. In India, the interest in doing business with China is evident beyond the private sector and the central government—along with visits by a number of Indian CEOs, China has also seen visits from chief ministers of a number of Indians states, including Andhra Pradesh, Bihar, Karnataka and Madhya Pradesh. Narendra Modi, current chief minister of the state of Gujarat and prime ministerial candidate for the forthcoming national election for the BJP (India’s largest opposition party), has also traveled to China. While Modi has expressed hawkish views on China on the geopolitical front, he has expressed admiration for that country’s economic achievements.


The governments of both countries have reasons for wanting stable ties: the desire for a peaceful periphery in order to focus on domestic socio-economic objectives; the need for stability in South Asia, especially with the impending American drawdown of forces from Afghanistan; existing and potential economic ties; and the prospect for cooperation in the multilateral realm. For Delhi, in addition, a stable relationship with China opens up the possibility that Beijing might use its leverage with Islamabad to shape Pakistan’s behavior in a way that might benefit India. For Beijing, there’s desire to limit India’s burgeoning relationships with the United States and Japan, as well as with other countries in what Beijing considers its backyard. Moreover, as China is preoccupied with eastern maritime disputes and the North Korean situation, stable relations on its southern and southwestern flank would also help the Chinese leadership.


This year has, however, also shown how quickly the bad in the relationship can steal the spotlight from the good—with the potential to turn ugly. In April, less than two weeks after an Indian observer commented on the “upswing in relations” between China and India, their long-standing boundary dispute flared once again. While the two countries communicated through the crisis and resolved it diplomatically, and Li’s visit proceeded as planned, the border incident reinforced the mistrust that many in India feel toward China and its intentions. Furthermore, it was a reminder that despite increased engagement, bilateral differences have the potential to stall, if not reverse, progress toward more stable relations.


Differences are not restricted to the boundary dispute. Tibet remains a key source of tension between the two countries though the two countries have found a way to manage their differences on the issue for now. In addition, China’s relationship with Pakistan has been a major source of concern in India. Its role in strengthening Pakistan’s conventional, missile and nuclear capabilities is especially highlighted. India also disapproves of China’s assistance to Pakistan in developing projects and infrastructure in area disputed between India and Pakistan.


China’s growing political and economic ties with India’s neighbors are also a subject of concern. Delhi watches warily increasing Chinese interactions—political and commercial—with and involvement in countries like Afghanistan, Bangladesh, Myanmar, Nepal and Sri Lanka. Concern about a military dimension being added persists. Beijing’s increasing interest in operating in the Indian Ocean, which India has traditionally considered its backyard, has also not gone unnoticed. While China emphasizes that these activities have benign goals—economic development, security for its ships, etc.—some in India who tend to take a hawkish position are not convinced; others are taking a wait-and-see attitude. Even beyond the neighborhood, there are concerns about competition with China for markets, influence and resources across the globe.


Closer to home, water is the resource that has become the subject of tension—specifically Chinese dam construction on its side of the Brahmaputra River. Indian officials have publicly called for Beijing to reassure India on this matter. Domestic critics, however, perceive the Indian government as being too tolerant of the construction. They argue that China has not respected information sharing agreements on this front and warn of more ambitious Chinese river diversion plans.


Economic ties, which many envisioned as the driver of good Sino-Indian ties, have also not escaped trouble. Bilateral trade in goods actually fell almost 10 percent from 2011 to 2012. In India there’s much concern about the trade imbalance. The overall trade deficit has gone from $28 billion in 2010-2011 to $40.8 billion in 2012-2013. While investments have grown, they remain limited compared to the investment relationships that both China and India have with other countries. In India, there have also been complaints about market access in China and the treatment of Indian labor there, concern about Chinese investment in “strategic” sectors in India, accusations about visa abuses by Chinese companies and restrictions on Chinese labor. Indian companies also privately express concerns about cyber-espionage. Overall, reports of cyber-attacks on Indian government and military networks—allegedly emanating from China—have done nothing to decrease distrust that persists, especially among the public.


There is also an overall sense that China does not respect India and/or that it will seek to prevent India’s rise. As evidence, critics point not only to China’s relationship with Pakistan, which is seen as driven by a desire to keep India tied up in South Asia, but also note China’s reluctance to endorse India’s demand for a permanent seat on the U.N. Security Council or its objections to India being given membership in the Nuclear Suppliers Group.


Another overarching problem: the lack of trust in China and its intentions. This is especially evident among the public. According to a Pew poll last year, more Indians have an unfavorable view of China than a favorable view. In a more recent Lowy Institute poll, China ranked only second to Pakistan in terms of countries that people considered threatening to India, with 60 percent indicating China would be a major threat over the next decade (an additional 22 percent identified it as a minor threat). 73 percent of those surveyed identified “war with China” as a big threat over the next ten years. Almost three-quarters believed that China wants to dominate Asia. 58 percent felt that China’s growth had not been good for India. This reinforces what the Pew poll found last year. In that poll, two-thirds of urbanites who expressed an opinion on the subject believed that China’s growing economy was a bad thing.


Overcoming this mistrust continues to be a major obstacle. The legacy of history remains a problem. Every time there is a border incident it reinforces the narrative that has prevailed in many quarters in India since the 1962 China-India war: that China only understands strength; that while Beijing’s leaders say China and India “must shake hands,” they cannot be trusted—that one hand held out might just be a precursor to the other stabbing one in the back. This problem is made worse by limited connectivity and communications, and little knowledge about the other country—even though these have improved. Media coverage about China and the relationship can also get quite heated, with a tendency to focus on the negative. All these problems are exacerbated by the lack of transparency when it comes to Chinese decision-making. This has led to uncertainty about Chinese behavior and motivations, which was evident in the debate about why the border incident in April occurred—and this uncertainty exists even among policymakers.


Thus, Indian governments have tried to follow a multi-pronged strategy. The emphasis might have differed somewhat, but for the last two governments in India—one a coalition led by the BJP and the current one led by the Congress—the general approach towards China has been to co-operate, if possible, and to compete, if necessary. Indian officials have joined with Chinese counterparts to increase ties, build trust and improve communications. Simultaneously, policymakers note that competition in and of itself is not all bad. As former Indian Prime Minister Vajpayee noted in Beijing, “a sense of competition between two close and equal neighbours” might indeed be natural. There is also, however, a realization that beyond cooperation and competition, there is a potential for conflict. Thus, while hoping and working for the best, there has been some attention on planning and preparing for the worst—i.e. the possibility that China will emerge as an explicit threat. There is a desire to do this cautiously, however, with policymakers quite conscious of the potential for provocation, miscalculation and exacerbation of the security dilemma.


In practice, this overall approach has meant increasing engagement with China—political, economic and even military-to-military—at the bilateral, regional and multilateral levels. Simultaneously, this approach has translated to a series of actions including strengthening India’s military, as well as its border infrastructure and border regions, maintaining a nuclear deterrent, and consolidating or expanding ties and influence in India’s near abroad.


India has also tried to step up its game in China’s neighborhood. Indian policymakers underplay the strategic aspects and goals of India’s “Look East” policy—which the Indian foreign ministry describes as “oriented towards deepening India’s engagement with the countries of East and Southeast Asia”—and emphasize its cultural and economic aspects. However, these elements and the link to China have not been entirely missing in action. The Indian government and companies are increasingly interested and engaged in the region, especially focusing on countries like Indonesia, Japan, Singapore, Thailand and Vietnam. In recent months, India-Japan ties have probably been in the spotlight the most, with another round of the U.S.-India-Japan trilateral dialogue and Singh’s visit to Japan in May. India has also sought to be more engaged with multilateral fora in the region. Officials from some Southeast Asian countries, however, want India to do much more. Channeling some of their frustrations, Hillary Clinton, when she led the State Department, called for “India not just to look east, but to engage East and act East as well.”


Another key aspect of India’s approach has been the pursuit of closer relations with the United States. Of course, these ties with the United States are not solely driven by China. India indeed has no desire to make a choice between its relations with China and the United States. However, the United States plays a useful role as an offshore balancer. Furthermore, Indian policymakers believe that a strong U.S.-India relationship gives them leverage with China and sends a signal to that country. Some also note that China takes India more seriously because the United States does. India, however, still has doubts about U.S. reliability as a potential partner, especially given the level of Sino-U.S. engagement, and prefers to maintain a diversified portfolio of partnerships.


So, where do India’s relations with China go from here? In the near term, during the Prime Minister’s visit, the two sides might sign a border defense cooperation agreement. The accord would essentially be a way to manage rather than resolve the boundary question, which the Indian foreign secretary has noted continues to be “a particularly difficult issue.” The trans-border rivers question is also likely to be discussed. In addition, given the two countries’ priorities, bilateral and global economic and financial issues will be high on the agenda. Potentially, there also might be agreements that could facilitate greater people-to-people ties, including a cultural and visa pacts. Regionally, developments vis-à-vis Afghanistan and the Middle East that concern both governments are likely to be discussed. Finally, on the multilateral front, trade and climate change issues might be on the agenda, given upcoming international summits in those two areas.


As for the longer term, the scenarios usually outlined are deepening cooperation, increasing competition that might lead to conflict, or continuity with both competition and cooperation in evidence. There is a debate in India—inside and outside government—about China, which scenario might prevail, the future of the relationship and what approach to take with China. The differences are evident in the Lowy poll—almost equal numbers of those surveyed believe that India “should join with other countries to limit China’s influence” and “should cooperate with China to play a leading role in the world together.”


How the relationship plays out will depend on a number of internal, bilateral, regional and global factors. In the meantime, Shyam Saran, a former foreign secretary and currently chairman of the National Security Advisory Board, has called for India to manage relations with China “with prudence but firmness.” An air force chief described the way forward as “play cool and continue to develop capabilities.”