Unlike the situation with Japan, India has faced direct conflicts with China, especially since 2020 over regions like Ladakh, Sikkim, and indirectly, Arunachal Pradesh. There have been casualties on both sides. China has constructed a series of bunkers, tunnels, and fortified villages. In response, India has stationed about 100,000 soldiers near the frontline and has been improving its infrastructure to support these troops.
When Prime Minister Narendra Modi visits Arunachal Pradesh, an area that has been part of India since the British defined its borders in 1914, it upsets the Chinese government. Beijing continues to see this region as Chinese territory because it has never agreed to the border line drawn in 1914.
This situation can be described as a “hot peace.” Public opinion in India has shifted similarly to that in Japan, growing less favorable towards China. In response, New Delhi has increasingly sought partnerships with Western countries such as the United States, France, and Israel to modernize its military, moving away from its traditional reliance on Russian arms.
Despite tensions, China and India have never fully severed their ties. India has taken measures to reduce Chinese influence in its critical infrastructure and society. This includes banning Chinese companies from port and rail projects, blocking Chinese apps, excluding Chinese telecom firms from Indian contracts, and rejecting large automotive investments from companies like BYD and Great Wall Motors. However, these actions have not affected the broader trade and investment relationship between the two countries.
BYD stands for “Build Your Dreams.” It is a Chinese company that is one of the largest manufacturers of electric vehicles (EVs) and batteries in the world. BYD also produces a range of other products including buses, trucks, bicycles, and electronic components. The company has been actively expanding its global presence, including attempts to invest in automotive markets outside of China.
Great Wall Motors is a Chinese automobile manufacturer headquartered in Baoding, Hebei, China. The company is named after the Great Wall of China and is China’s largest producer of SUVs and pickup trucks. It also produces cars under various brand names, including Haval and WEY, which are well-known for their SUVs, and it has ventured into the electric vehicle market with its brand Ora. Great Wall Motors has been expanding internationally, including attempts to enter and invest in markets outside of China.
In the fiscal year ending March 31, 2022, trade between India and China exceeded $136 billion, but it resulted in a large and growing trade deficit for India of $100 billion. Indian exports declined, while imports from China continued to increase. Despite not being able to manufacture locally, BYD is still keen to sell its cars in the Indian market. Indian officials have expressed a willingness to accept Chinese investments, suggesting at the Davos meeting in January 2024 that they might be more open to such investments if tensions at the border decrease.
The long-term benefits for both China and India are uncertain. China’s attitude resembles the old fable about the fox who, unable to reach some grapes, decides they must be sour anyway. Chinese experts on India and the Global Times, which broadcasts views for an international audience, often describe India as a poor place for investment. They emphasize the complications involved in doing business there.
The phrase “China’s attitude resembles the old fable about the fox who, unable to reach some grapes, decides they must be sour anyway” means that China is acting like the fox in the story who couldn’t get the grapes he wanted, so he just said they weren’t good in the first place. In this context, it suggests that if China faces difficulties or cannot achieve something in India, it might downplay the importance or value of that opportunity, claiming it wasn’t worth pursuing after all.
Some analysts outside of China, as reported by The Diplomat, believe that China’s aggressive actions across three border areas have prompted India to strengthen its ties with the United States and form a solid strategic relationship with France. This partnership with France is particularly notable because it involves fewer restrictions on buying weapons. However, this pattern of behavior from China, leading to increased alliances against it, is seen across Asia. Despite this, China seems to overlook such developments, including the formation of groups like the Quad and AUKUS, the increase in Japan’s military budget, and European strategies in the Indo-Pacific that exclude China.
China’s aggressive actions across three border areas with India typically refer to:
1. Ladakh: This region has been a flashpoint, most notably since the clashes that began in May 2020. The standoff and skirmishes in this area have led to heightened tensions and military deployments from both India and China.
2. Sikkim: This area has seen periodic tensions and military stand-offs, including notable incidents where troops from both sides have engaged in altercations.
3. Arunachal Pradesh : China claims this Indian state as part of its territory, referring to it as South Tibet. This claim leads to recurrent tensions, including objections to Indian leaders’ visits and infrastructure developments in the area.
These regions are significant due to their strategic locations and the historical context of the border disputes between India and China, which stem from differing perceptions of the actual line of control.
Xi Jinping’s leadership in China operates under the belief that democracies will gradually lose their resolve, a factor they consider more important than current power dynamics. China has increased its defense budget by 7.2 percent, which is notable given that its economy is growing at a rate of less than 5 percent, alongside some price deflation. This year, military spending is particularly high. With a navy that includes 450 ships and enhanced capabilities extending across the Indian Ocean, plus a significant military base in Djibouti, China is positioning itself as a leading strategic power. While the U.S. Navy remains a formidable force, China aims to challenge it in the coming years.
When it’s said that “China operates under the belief that democracies will gradually lose their resolve,” it means that China thinks governments in democratic countries will eventually become less determined or less strong in their decisions and actions. This belief is based on the idea that the constant need for political approval and public consensus in democracies can lead to delays and difficulties in making bold or consistent policies, especially over long periods. China expects that over time, these democratic governments might not stick to their decisions or might change their policies due to public or political pressure.
The border situation is especially critical for India for several reasons. Firstly, China’s strategy of making fake withdrawals only to then strengthen their presence has created new conditions on the ground that are difficult to undo.
Second, since March 2020, China had even more opportunities to advance. The gap in strength between the Chinese and Indian armies is even more obvious than the difference between their navies. Hindered by poor supply lines, India’s military could have faced even greater defeats. Such a significant defeat would have been disastrous for a government that relies on public support, especially with an opposition eager to take advantage. However, Xi Jinping, who is careful and strategic in his decisions, chose not to exploit this advantage to its fullest.
India is gradually working to lessen its weaknesses along the border. This effort is a key reason behind its push to enhance its military capabilities, through both local production and acquiring arms from Western countries. Prime Minister Modi also has to consider India’s ongoing, though decreasing, reliance on Russian weapons and ammunition.
India’s diplomatic actions and stance towards China’s challenges have been influenced by all these factors, while also acknowledging India’s historical preference for neutrality. As explained by India’s Foreign Minister Subrahmanyam Jaishankar, his strategy of “multi-alignment” aims to leverage Western support while keeping doors open for partnerships with others, including Russia and potentially China if there’s a chance for dialogue. This approach aligns well with France, which also values “strategic autonomy” and aims to be a “balancing power.” This shared perspective has facilitated stronger ties between India and France.
The strategy of multi-alignment also helps India maintain its ability to influence countries in the so-called Global South. Many of these countries, including India, often see the Russian conflict in Ukraine as a European issue. However, there aren’t many countries willing to support India over China if a conflict were to arise in the Himalayas.
India rarely seeks outright diplomatic backing for its stance on border disputes. Instead, it prioritizes maintaining its flexibility and focuses on forming practical agreements with appropriate partners. Additionally, on major issues like Gaza and the Red Sea, India has stepped back from vocal allies like South Africa and played a significant role in ensuring the free movement of ships. Recently, India has also cut back on its Russian oil purchases and reportedly declined to switch to making payments in Chinese yuan (renminbi).
In a move that shows its increasing effort to work with Asian allies to counter China’s aggressive behavior, the Biden administration has, on its own accord, officially recognized Arunachal Pradesh as part of India for the first time. It has also clearly opposed any one-sided actions or invasions past the Line of Actual Control (LAC).
Despite uncertainties about how long these commitments will last given the unpredictable nature of American politics, this is still a diplomatic win for India. With challenging conditions along the Himalayan border, India is managing to secure support while maintaining a balanced diplomatic stance on various issues. As India approaches a national election, it is navigating these challenges effectively. Unless China delivers any unexpected strategic moves, India should emerge stronger from this period.
India’s ongoing tensions with China are leading to a strengthening relationship with the European Union and its member countries. Issues like diversifying supply chains and the dangers of economic pressure are key factors bringing Europe and India closer together. Both regions share concerns about China under Xi Jinping’s leadership, particularly its military actions and potential challenges to global security. The critical question for EU-India relations is how to transform this mutual understanding of risks into actual opportunities. This remains an important area yet to be fully explored.
(The author Girish Linganna of this article is a Defence, Aerospace & Political Analyst based in Bengaluru. He is also Director of ADD Engineering Components, India, Pvt. Ltd, a subsidiary of ADD Engineering GmbH, Germany. You can reach out to him at: [email protected])
(Views expressed in the article are of author’s own and do not reflect the editorial stance of Business Upturn)
