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China Trends #19 - The Hot Peace between China and India

China Trends #19 - The Hot Peace between China and India
 François Godement
Special Advisor and Resident Senior Fellow - U.S. and Asia
 Mathieu Duchâtel
Resident Senior Fellow and Director of International Studies
 Manoj Kewalramani
Fellow on China Studies and Chairperson of the Indo-Pacific Studies Programme at the Takshashila Institution
 Jabin T. Jacob
Associate Professor at Shiv Nadar Institution of Eminence’s Department of International Relations and Governance Studies
 Pierre Pinhas
Project Officer - Asia Program

By François Godement

Relations between China and Japan have often been characterized as a "cold peace" (冷和平). As such, they have been stormy enough to create a massive rejection of China from Japan’s public opinion, and a solidification of the US-Japan alliance, which is about to enter a new stage. Yet, economic relations have always been strong, with a degree of dependence of Japanese firms on China, and a Chinese reliance on Japan’s market as well.

Not so with India. Flashes of actual conflict have happened, none as protracted as the triple challenge from China over Ladakh, Sikkim and, indirectly, Arunachal Pradesh since 2020. Soldiers from both sides have died in combat. China has built a network of bunkers, tunnels and fortified villages. India has mobilized 100,000 soldiers close to the front line and worked on its own logistical infrastructure. Even a visit by Prime Minister Narendra Modi to Arunachal Pradesh, a region that has been India’s since the British drew up the McMahon line in 1914, is enough to incur the ire of the Chinese government: it reminds India that this is Chinese land, as successive governments in Beijing never accepted the 1914 delimitation.

Therefore, this is at best a hot peace. India’s public opinion has gone the way of Japan’s, and New Delhi has increasingly turned westward – towards the United States, France, and others such as Israel – to supplement the aging Russian armament connection.

Relations between China and India have never completely broken down.

Yet, relations between China and India have never completely broken down. Certainly, India has taken steps to limit the China-risk in its infrastructure and society – banning China from ports and rail construction, prohibiting Chinese apps, keeping Chinese telecoms out of Indian procurement, and rebuffing plans for massive BYD and Great Wall Motors automobile investments.

This does not apply, however, to the overall trade and investment relationship. Bilateral trade passed $136 billion (€122 billion) in the fiscal year ending on March 31st, 2022, with a huge and rising deficit of $100 billion (€91 billion) for India. In fact, Indian exports crashed while China’s sales to India continued their rise. And certainly, BYD is now happy to sell on the Indian market the cars it cannot build locally. Indian officials claim to be open to Chinese investments, hinting most recently in January 2024 at Davos that the openness may increase as the border becomes more quiet.

The potential long-term gains for either China or India are not clear. China seems to take a line from the Fontaine fable where the fox, unable to catch attractive grapes, proclaimed that "they were too sour anyway". China’s India experts and the Global Times, the mouthpiece for foreign consumption, proclaim that India is "a graveyard for investment", and they hype the known complexity of doing business there. Some non-Chinese analysts will argue that China’s belligerent behavior, on three border theaters, has pushed India to further embrace a quasi-alliance (准同盟) with the United States, and a very strong strategic partnership with France that implies less conditionality on weapon procurement. But this is a result that Xi Jinping’s China has produced all over Asia. China does not seem to take actual notice of such developments as the Quad, AUKUS, a rising Japanese military budget or the Indo-Pacific designs of Europeans that leave China aside.

Xi’s China believes in the slow erosion of will in democracies, and that factor seems to weigh more than the present power balance. China’s new defense budget leap at + 7,2% is significant, while the real economy certainly grows at less than 5% with slow price deflation: it is a banner year for Chinese military procurement.

Xi’s China believes in the slow erosion of will in democracies, and that factor seems to weigh more than the present power balance.

Considering its 450 ships, with increased projection across the Indian Ocean and a large base in Djibouti, China is becoming strategically pre-eminent against all except the United States Navy, and even there, it can hope to match it in the near future.

The situation at the border is maybe even more critical for India, due to several reasons. First, China’s tactics of erosion, with fake withdrawals followed by consolidation, have created facts on the ground that will be hard to erase. Second, it can be argued that for several years after March 2020, China had even more room to move forward. The balance of power between Chinese and Indian ground forces is even more flagrant than those of their navies. India’s military, hampered by long and weak logistical lines, could have indeed been defeated even further. A humiliation of this magnitude would have been a catastrophe for a government that is dependent on popular votes, with an opposition ready to pounce. A patient player who calculates his risks, Xi Jinping did not push his advantage that far. Slowly but surely, India is working to reduce its vulnerability behind the border, and this is of course the basic argument behind its own armament drive, whether it is Made in India or procured from the West. Narendra Modi has also had to factor in the continuing dependence, even if dwindling, on Russian weapons and munitions.

All of the above has dictated India’s diplomatic response and posture to the challenges from China, while paying tribute to India’s history of neutralism. As India’s Foreign Minister Subrahmanyam Jaishankar skillfully put it, his concept of "multi-alignment" reflects a desire to combine the benefits of Western support while remaining open to other partners – including Russia, and potentially China should the opportunity for negotiations arise.

The relationship with France, also preoccupied with "strategic autonomy" and seeking to be "a power for equilibrium" (une puissance d’équilibre), has been made easier by this thread that the two countries have in common.

The relationship with France, also preoccupied with "strategic autonomy" and seeking to be "a power for equilibrium" (une puissance d’équilibre), has been made easier by this thread that the two countries have in common. It also preserves the chances for India to exercise influence over the so-called "Global South". There is no shortage of countries, including India, that tend to view the Russian war on Ukraine as "a conflict among Europeans". But, conversely, there is not a long list of nations ready to side with India over China in a conflict over the Himalayas.

In fact, India hardly requests direct diplomatic support for its position over the border issue. Clearly, it wants to preserve at all costs its freedom of maneuver, and prefers to rely on concrete deals with suitable partners. Yet, on significant issues such as Gaza and the Red Sea, India has disengaged from vocal partners such as South Africa and made a notable contribution to restoring freedom of navigation. And it has most recently diminished its purchases of Russian oil, reportedly refusing to switch to payments in renminbi.

In a sign of its intensifying bid with Asian allies to collectively contain China’s aggressive attitude, the Biden administration, apparently on its own initiative, has formally declared for the first time its recognition of Arunachal Pradesh as an Indian territory, and simultaneously its opposition to any unilateral move or incursion beyond the Line of Actual Control (LAC).

Despite doubts on the longevity of such statements in a volatile American political climate, this is an achievement for India’s diplomacy. Faced with a dire situation over the Himalayas, seeking support while maintaining the appearance of a balancing diplomacy on many issues, it is now pulling through these difficulties on the eve of a national election. Barring any strategic surprise from China, it should find itself stronger after this stage.

India’s predicament of confrontation with China creates growing convergence with the European Union and its Member States. Economic security issues, such as the diversification of supply chains or the risks of economic coercion, clearly bring Europe and India closer.

India’s predicament of confrontation with China creates growing convergence with the European Union and its Member States.

Uncertainties regarding Xi Jinping’s China, its use of military power and the extent to which it will directly challenge the international security order are clearly shared concerns in Europe and India. How to turn this shared risk assessment into real opportunities – the untapped potential question – is a pressing issue for EU-India relations.

Copyright image : Deshakalyan CHOWDHURY / AFP

"Generally Stable": The Sino-Indian Border Issue Seen from Beijing

By Mathieu Duchâtel

Chinese officials and experts like to describe the Sino-Indian border as "generally stable". Mathieu Duchâtel looks into recent Chinese commentaries regarding the state of the border tensions, and their impact on the broader China-India relationship. The Chinese advocate decoupling the border dispute from other issues in bilateral relations, and sometimes refer to Rajiv Gandhi’s 1988 China trip as an example of how confrontation should be circumvented. They blame tensions on Prime Minister Modi’s grand strategy, and on the influence of Hindu nationalism on foreign policy. Their suggestions to improve the bilateral relationship are all based on the assumption that the border question can be temporarily ignored. This runs frontally counter the Indian position that a return to the 2020 status quo ante is a prerequisite for normalizing ties.

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Supply Chain and Market Scale: India as the Next China?

By Manoj Kewalramani

Is India really an economic alternative to China? Chinese analysts tend to view the Indian economy primarily from the perspective of strategic competition with the United States and the worsening of bilateral ties with China. Their primary statement is that while the United States and other Western countries are working to prop up India as an alternative to China as the world’s factory, India is unlikely to replicate or replace China’s centrality in global supply chains. Moreover, the general consensus appears to be that the promise of India is likely to remain a chimera, owing to structural issues. Behind this condescension, Manoj Kewalramani underlines the anger and growing frustration of Chinese enterprises currently losing market access to India and to its investment ecosystem.

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China’s Undeclared Competition with India in Regional and Global Institutions

By Jabin T. Jacob

Was Xi’s absence at the G20 summit hosted by India the sign of a growing rivalry in multilateral groupings? India-China bilateral relations are indeed at their most difficult point in decades. China moreover violated a number of bilateral treaties when it conducted a series of incursions across the eastern section of the disputed boundary in the summer of 2020. And yet, China will not admit that it is in competition with India. Jabin T. Jacob argues that admitting to the existence of such strategic competition would be incompatible with the CCP’s narrative of China being the only superpower, on par with the United States, and Beijing the most obvious representative of the Global South. Despite this general posture, Chinese experts concede some successes to India’s diplomacy in regional and global institutions, and see a rising "strategic self-confidence" from India.

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About China Trends

China Trends seeks understanding of China from Chinese language sources. In an era where the international news cycle is often about China, having a reality check on Chinese expressions often provides for more in-depth analysis of the logic at work in policies, and needed information about policy debates where they exist. China Trends is a quarterly publication by Institut Montaigne’s Asia Program, with each issue focusing on a single theme.

The introduction article to this edition of China Trends by François Godement was also published by The Diplomat.

China Trends #19 - The Hot Peace between China and India (22 pages)Download
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