India and China’s Volatile New Status Quo

In early January, Chinese Foreign Minister Wang Yi spoke at a symposium on the country’s foreign relations. The speech touched upon the churn in China’s ties with several countries. While India was not included in that list, the Sino-Indian relationship remained abnormal since their standoff in Eastern Ladakh in April-May 2020. It bears repeating that this would have repercussions for Southeast Asia and the wider region.

In terms of military ties, there have been 20 rounds of Corps Commander-level talks since the standoff. Thus far, disengagement — the first step in what is likely to be a long-drawn process that would include de-escalation — has taken place along five specific friction points. However, there remain at least two key areas, Depsang and Demchok, that have eluded resolution. In total, both sides have forward deployed at least 50,000 troops in the region. In addition, recent reports of clashes between the two forces in 2022 indicate that a three-phase resolution is unlikely in the immediate future. Rebuilding lost trust will be a far more enduring challenge. Despite this, the Indian armed forces have participated in several multilateral drills with Chinese forces throughout the period of the standoff.

While both countries continue to engage and even collaborate when their interests coincide at multinational forums, high-level political engagement is in a state of suspended animation. First, both countries have experienced simultaneous expansion in their respective interests and capabilities. Second, while both countries have risen, there now exists a deep power asymmetry between them. Third, Sino-U.S. strategic competition and deepening India-U.S. ties weigh heavily on the relationship.

There has been no direct formal dialogue between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping since the summit meeting in Mamallapuram in October 2019. The two conversations between them since have been brief and described as informal. China has not had an ambassador stationed in India since October 2022. Over the past year, Beijing has sought to rebalance ties with key states like the U.S., Australia, and Japan. However, there has been no similar outreach to India. Xi Jinping’s decision to skip the G20 summit in New Delhi in September 2023 was a case in point.

Likewise, the people-to-people relationship between the two sides has deteriorated. The pandemic disrupted travel. But more significantly, the past four years of friction and political discord have resulted in a worsening of mutual perceptions. At its height towards the end of the 2000s, China’s favourability rating among Indians was around 40 per cent; the latest Pew survey in 2023 put this at 26 per cent, with negative opinions about China in India rising from 46 per cent in 2019 to 67 per cent in 2023. Indian media coverage continues to view China from the lens of the country being a threat. Likewise, in China, India is increasingly being viewed from a threat-prism. This is evident in the coverage of India in Chinese state media and in increasingly negative assessments by Chinese analysts. These views tend to trickle down to the broader public. For instance, a 2023 survey by Tsinghua University found that merely 8 per cent of Chinese people had a favourable opinion of India, and around 32 per cent felt that India had a significant impact on China’s security. The mutual expulsion of journalists by the two countries in 2023 was an outcome of this erosion of trust.

Amid all this, the trade relationship between the two countries has been seen as a silver lining. Bilateral trade for the first 11 months of 2023 grew 0.8 per cent to US$124 billion. This, however, does not imply a healthy state of affairs. First, Chinese exports to India constituted an overwhelming majority, accounting for over 86 per cent of bilateral trade. This lop-sided trade equation is as much an outcome of structural factors as it is of Chinese protectionism, inhibiting the import of Indian pharmaceuticals, IT goods and services imports. Second, while acknowledging the dependence on China for certain key commodities, Indian policymakers have been working towards a de-risking strategy. This has included changes in tariffs with regard to certain imports, anti-dumping investigations into Chinese products, restrictions on Chinese telecom giants from participating in India’s 5G deployment and deepening dialogue on critical technologies and supply chains with like-minded partners from the Quadrilateral Security Dialogue (which comprises Australia, Japan, India and the U.S.). Third, there has been an intensification of scrutiny of Chinese investments and firms operating in India. The most recent example was the arrest of the interim CEO of Vivo-India, Hong Xuquan, in December 2023. This is related to a money laundering probe.

Finally, there is growing competition for influence between the two sides along their respective peripheries, including Southeast Asia and in the broader Global South. Over the past three decades, India and China have witnessed simultaneous expansion in their respective interests and capabilities, leading to new sources of friction. This has been evident in New Delhi’s frustration with Beijing’s deepening engagement with states in the Indian subcontinent and the Indian Ocean region. Likewise, Beijing views India’s engagement with the U.S. within the ambit of the Indo-Pacific concept with a deep sense of suspicion.

The deeper challenge, however, is one of strategic perceptions. New Delhi believes that while Beijing talks about shaping a new multipolar world order, it desires unipolarity in Asia … Beijing, meanwhile, tends to view Indian foreign policy largely through the prism of its strategic competition with the U.S. instead of viewing it as an independent actor

Given the current state of affairs, it is difficult to envision an immediate upswing in the India-China relationship, particularly with the upcoming elections in India. A return to stability in the relationship will require sustained high-level engagement, along with the addressing of difficult issues, starting with restoring the pre-April 2020 status quo along the Line of Actual Control in Eastern Ladakh. That would provide a starting point to rebuild political and social trust.

The deeper challenge, however, is one of strategic perceptions. New Delhi believes that while Beijing talks about shaping a new multipolar world order, it desires unipolarity in Asia. This is an unacceptable proposition from India’s perspective. Beijing, meanwhile, tends to view Indian foreign policy largely through the prism of its strategic competition with the U.S. instead of viewing it as an independent actor whose policies are driven by its strategic interests. Such a situation does not lend itself to engendering stability.

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