Complex India-China relationship amidst shifting dynamics

India is navigating a delicate balancing act in its relations with China, marked by a mix of diplomatic caution and growing economic interdependence.

Officially, Indian diplomats maintain that a return to normalcy in bilateral relations is contingent upon resolving disputes along their Himalayan border—a stance rooted in the 2020 clash between Indian and Chinese troops.

Despite this, recent months have seen a subtle but significant shift towards improving relations through border stability and closer commercial ties, Caliber.Az reports citing the foreign media.

The first signs of this shift appeared in November last year, when India eased restrictions on Chinese professionals in certain industries. This was followed by a softening of rhetoric from Prime Minister Narendra Modi, who in April described relations with China as "important and significant," expressing hope for restored border stability. Defense Minister Rajnath Singh also noted “progressive and satisfactory” talks regarding border tensions, while the arrival of a new Chinese ambassador, Xu Feihong, in May marked a diplomatic charm offensive with several high-level meetings.

China, for its part, has been relatively restrained in its public statements about India. Chinese leader Xi Jinping did not congratulate Modi on his re-election, and China refrained from commenting on India's actions regarding Taiwan and the Dalai Lama, avoiding further diplomatic friction.

A crucial factor in the evolving relationship is a new mechanism for managing border tensions. This involves establishing “buffer zones” where both nations have withdrawn troops and ceased patrols, following 21 rounds of talks. However, the strategic significance of these zones means that negotiations over some of the remaining flashpoints continue.

Economic dynamics are also driving the shift. Despite official efforts to reduce dependency on Chinese technology and investment—such as banning 320 Chinese apps and imposing new rules on Chinese investments—India's reliance on Chinese imports has surged. In the 2023-24 financial year, China reclaimed its position as India's top trading partner, with bilateral trade reaching $118 billion. Chinese products account for a significant portion of India's major industrial imports, including electronics, machinery, and textiles.

Indian firms and government officials are increasingly recognizing the necessity of Chinese technology and investment. This has led to renewed cooperation, including joint ventures in the electric vehicle sector. For instance, Chinese company SAIC Motor has partnered with India's JSW Group to produce electric vehicles in Gujarat, aiming to capture a third of India’s electric-vehicle market by 2030. Similarly, Apple’s suppliers, many of which are Chinese, have begun manufacturing components in India.

In infrastructure, Chinese technology continues to play a key role, with Chinese cranes being used at Indian ports despite security concerns. Notably, the Adani Group has installed Chinese cranes at its new port in Kerala.

While India enhances its ties with the US and Russia to counterbalance China’s growing influence, it faces the challenge of balancing national security concerns with economic necessities. Modi's recent outreach to Russia, amidst ongoing competition for global influence, underscores the complexities of India’s position.

Ultimately, India’s relationship with China is a study in contradictions: a mix of strategic caution and economic necessity. Modi's government, while cautious of Chinese influence, recognizes the critical role China plays in India’s economic landscape. As India continues to navigate this intricate relationship, it remains evident that China’s influence will be a significant factor in the country’s future economic and strategic decisions.