Making Sense of Where India-China Relations Are Headed

Welcome back to The India China Newsletter, and I hope this finds readers well. I hope you all had a happy, safe, and healthy Diwali this past weekend and here's hoping for a light-filled year ahead wherever you may be reading this.

While I’d imagine most readers this Tuesday are thinking about events in Washington, in this issue I wanted to lay out the significance of recent developments in India-China relations, what they mean (and what they don't mean) and my best guess at where relations may be headed — regardless of what transpires in the U.S. elections on November 5.

First, a very brief update. Some readers have written in wondering if they have been missing receiving this newsletter. You haven’t! I ended my term as China correspondent for The Hindu earlier this year, and have since taken up a new role at our headquarters in Chennai. I'm no longer writing about China for the newspaper. I am, still, continuing to read and follow what's happening there and on the India-China front. I am also in the early stages of working on a second book on India-China relations. I guess you can say you can take a reporter out of China but…

A few readers have also been in touch asking for my views on the recent meeting between Modi and Xi in Kazan — their first formal meeting in five years — and where relations, that have been in the doldrums since early 2020, go from here, after the recent agreement on the border, which enabled the meeting to take place, and which External Affairs Minister S. Jaishankar described this week as “a positive development". Disengagement in the last two of seven friction points was completed on October 29-30. So I thought it was about time I revive this dormant newsletter, and share, in this issue, a few interesting pieces I've read in the past week and add my two cents.

In sum, my take is:

- The meeting is very significant in re-establishing political contact at the highest level. So the very fact that it happened is important in itself, and isn't something to sniff at.
- BUT it is only the first step - and by no means the last - in what's going to be a long and difficult road ahead in restoring stability on the border — more broadly, in restoring what we may call a normal relationship including on the trade and investment front (trade has been booming but investments from China have been severely curtailed following Press Note 3 issued in April 2020 - more on that below). And, in my view, even at the end of this long and difficult road, relations will not go back to pre-2020.
- Chinese responses to the recent developments— as I outline below — suggest a stark difference remains in how both sides still view how relations deteriorated and where relations may be headed. Both are mirroring the other in placing the onus entirely on the other side for 'compromising'. This isn’t surprising but it doesn’t bode well.
- Keep an eye on the trade and investment front, where I expect easing in some sectors and others where India is likely to remain vigilant. An already interesting unfolding debate in Indian policy circles, about how to navigate what's going to be a very delicate balancing act, will be worth watching.
- Finally, there's a general tendency in media coverage both in India and abroad to either hype up relations as entering a "reset" (a word that should probably be retired as far as India and China are concerned, in my book) or India and China striking a grand bargain (especially in the international press, where it's already happening). Or, on the other end of the spectrum, pooh-poohing recent developments as irrelevant in a relationship doomed for conflict. I would caution against falling into either end of the spectrum, which is quite easy to do.

---

My colleague Dinakar Peri has a report in The Hindu today on India finally resuming patrolling, which sheds some details on how things are actually changing on the ground:

The Indian Army has successfully patrolled one of the five Patrolling Points in Depsang area of Eastern Ladakh, the Leh-based 14 Corps announced late on Monday (November 4, 2024). This marks the resumption of patrolling in the area for the first time since disengagement was undertaken last week and also since the stand-off began in May 2020.

“Following the consensus reached between the Indian and Chinese Side for disengagement and resumption of patrolling in Depsang and Demchok, the Indian Army patrol to one of the patrolling points in Depsang was successfully conducted today. This is yet another positive step towards maintaining peace and tranquility on the LAC [Line of Actual Control],” the 14 Corps said in a post on X.  Patrolling Point 10 was accessed in the patrol as agreed by the two aides, sources said.

Last Wednesday, disengagement was completed from Demchok and Depsang in Eastern Ladakh, which were also the last two friction points of the 2020 stand-off, amid a return to the pre-April 2020 status quo. Following this, the Army resumed patrolling in Demchok a day later. Resumption of patrolling at Depsang means the Indian Army can carry out patrols up to Patrolling Points 10, 11, 11A, 12, and 13 in the area which it last managed to access in January 2020.

To zoom out a bit, I highly recommend this excellent state-of-play that's worth reading from Vijay Gokhale, former Ambassador to China and former Foreign Secretary, who I think hits the nail on the head in his assessment of ties. It's behind a Times of India paywall. Here are some bits that caught my attention:

There are two immediate benefits from the months-long negotiation that led to this. First, political re-engagement has commenced.... The significance of this cannot be understand in any circumstance. For five years there had been no meeting between the top leaders of the two nuclear-armed states. Importantly the resumption of dialogue reduces the possibility of a mishap...... Second, the resolution of the stand-offs at Depsang and Demchok ends the five-year crisis and stabilises the border region.

COMMENT: Resuming political dialogue at the highest levels — especially between NSAs/Special Representatives on the boundary question — is an extremely important takeaway from the Modi Xi meet. That the SRs haven’t met, leave alone that Modi and Xi failed to speak in 5 years, except for two hasty pull-asides, is quite incredible. High-level contact should have probably happened earlier and more frequently. I don’t think the “dialogue is a compromise” narrative that somehow took hold was smart to begin with — especially when dialogue was happening at lower levels between the Foreign Ministries and militaries. It’s good that we are finally out of this needlessly self-imposed corner.

Gokhale continues:

As far as the idea of 'buffer zones' is concerned, this had been adopted earlier in Barahoti in 1956 and in the Sumdorong Chu valley in the 1992. If such a solution reduces or minimises the possibility of bloodshed and is equally acceptable to both sides, then it should remain on the table as a viable option to pursue.

COMMENT: I agree. I actually find the excessive alarm about buffer zones in much of the commentary in India — to the extent that it’s somehow now an evil word — to be a little misplaced. I’m not sure people are aware of the degree and frequency they have been used to defuse situations in the past 20-plus years, even for smaller incidents that haven’t always come to light. In my understanding, both militaries have found them to be very useful in dialling down tensions for a period of time. I also don’t think either side looks at them as permanent arrangements. On a side note, it’s also misleading to suggest, as I’ve read frequently and as claimed by the Opposition in India, that “the buffer zones are entirely on Indian territory”. This is true only if you think there’s one LAC - India’s - in these areas and only if you completely ignore where the Chinese claimed LAC runs here. Which you could well do, but I frankly don’t think that’s a realistic, dare I say even serious, point of view to take.

It’s worth paying attention to Chinese reactions to the recent agreement. At the official level and State media, there have been very brief details merely acknowledging the deal. But there’s been more in the way of commentary from experts. While it is true that we don’t have details on how much each side has had to concede to withdraw, as these commentaries make clear, it is a fact that both have made compromises and pulled back. The Chinese pulling back has been glossed over to some degree in commentaries in India, while this is a point that has ironically been highlighted on some Chinese social media commentaries, especially those written by self-described “military fans” who have given detailed descriptions and maps of said withdrawals. If I had to crudely sum up the gist of these commentaries, they look at it as a tactical withdrawal and believe it makes sense for China to concentrate on its eastern flank — for the time being. This piece shared on CCTV’s official WeChat claimed to provide an authoritative insider’s view of the agreement:

From 2020 to 2021, Indian media often mentioned that although there was a border standoff, India was optimistic that the two sides would disengage soon. Behind this was the Indian side's misunderstanding that China would make concessions. However, as the PLA always stood firm on the front line of the Sino-Indian border, India gradually began to have a different perception.

COMMENT: The dominant view from Chinese commentators has been to focus - as you’d expect - on India willing to make what China sees as the bigger compromise, which is to accede to its demand of the past 4 years of acknowledging that “the border is not the whole of the China-India relationship” and thus restarting dialogue. I say it’s expected as obviously it’s not easy for State media commentators to explain China moving back from what it has publicly stated to be its territory.

The piece goes on to quote Lin Minwang, a well-known India hand:

China has shattered India's illusion that we would make concessions on territorial and boundary issues, which means we have reshaped the rules for interaction between the Chinese and Indian militaries on the border, which is the basis for the progress of China-India negotiations.

As well as Liu Zongyi, another prominent commentator on China-India relations:

Previously, India has always insisted on the so-called "return to status quo before 2020"... This actually dug a hole for Sino-India relations.. In other words.... India is clearing the bottlenecks in its China policy.

Liu also had this to say to the Global Times:

Disengagement is the first step on implementing the resolution, meaning Chinese and Indian troops will no longer confront each other directly at the border. This does not restore the situation to what it was before April 2020 but rather establishes a buffer zone between the two forces to reduce tensions. The next step may involve further consultations on implementing patrols, but the actual implementation may have to wait until spring next year when weather condition is suitable.

Liu also brought in the U.S. angle:

[The] US has long viewed India as a key tool and frontline force to contain China. With fewer border disputes between China and India, the US loses a major lever to fuel discord between the two nations. However, the gradual resolution of the border issue is clearly in the best interest of both China and India…China remains committed to viewing India as a development partner and hopes both nations can advance together and share the opportunity for development. Achieving these goals requires joint efforts, and China cannot do it alone. Both countries need to collaborate to restore bilateral ties. India should move beyond an outdated Cold War thinking and avoid viewing US-China competition as a strategic opportunity.

COMMENT: This view, to my mind, is probably as big an obstacle to India-China relations as the border. Liu isn’t alone in Beijing in looking at the India relationship through the prism of China-U.S. ties, and thus explaining every Indian action as part of this dynamic, rather than as a bilateral relationship. This, to my mind, is already leading some in China to arrive at the wrong conclusions on what’s driving India’s China policy.

---

On the evolving debate in India on its China’s policy, former Ambassador to China Ashok Kantha wrote in the Hindustan Times cautioning against a quick return to business as usual:

Structural problems in the relationship which predated Galwan haven’t gone away. Indeed, they have become more acute. Prior to the pandemic and developments in Eastern Ladakh, India had sought constructive engagement with China and progress was made in some areas. However, in parallel, outstanding issues in the relationship were accumulating. Border stand-offs were becoming more frequent, with China showing little interest in either clarifying the LAC or moving towards a boundary settlement. The worldviews of India and China were becoming increasingly divergent. China was looking at India through the prism of its strategic contestation with the US. There was a growing feeling in India that China was not supportive of the rise of India. Bilateral trade was becoming more and more asymmetrical. In 2023, India’s bilateral trade deficit crossed $105 billion, with unhealthy dependencies on China for key imports.  

None of this has changed. China is still seen as undermining India’s vital security and strategic interests in the shared periphery. It pays lip service to multipolarity but seeks a unipolar Asia dominated by it. China is facing geopolitical pushback and economic headwinds and is more inclined to show tactical flexibility in its dealings with the US, European Union, United Kingdom, Japan, Australia, and now India. We also can do with greater elbow room while seeking strategic autonomy amidst some anxieties in relations with the US.

Yet, India will have to continue to show strategic patience, learn to live with a sensitive border with China, step up investment in border infrastructure, reinforce conventional and strategic deterrence, continue with the posture of external balancing without any exaggerated expectations, and reduce its dependencies on China through a difficult process of economic de-risking, even while exploring openings for cooperation. China will remain India’s principal strategic challenge, and  a hasty return to business as usual will be ill-advised.

Sanjaya Baru offered in the Asian Age a different perspective, making the case for a better balance between security and economic considerations:

The [Indian Economic] Survey offered a suggestion: “Choosing foreign direct investment as a strategy to benefit from the China plus one approach appears more advantageous than relying on trade. This is because China is India’s top import partner, and the trade deficit with China has been growing. As the United States and Europe shift their immediate sourcing away from China, it is more effective to have Chinese companies invest in India and then export the products to these markets rather than importing from China, adding minimal value, and then re-exporting them.”

Subsequent comments in the media have further clarified that on the issue of amending what is called Press Note 3, relating to foreign investment emanating from neighbouring countries, the approach of the keepers of national security seem to differ from that of the minders of economic policy…

First of all, no harm is done if the world and China find out that this issue is being seriously debated within the government. In all democracies such internal policy differences, even those pertaining to national security, are quite openly discussed. The ministry of external affairs and the office of the national security adviser have no monopoly over national security. The Prime Minister is entitled to balance their views against those of the finance ministry and the ministry of industry and commerce. Economic policy has always been a subject of public debate and discussion in India. Successive governments have engaged experts from outside the government on such wide-ranging issues as tax, trade and investment policy.

A wide-ranging debate on what ought to be India’s trade and investment policy with respect to China should be a subject for discussion both within government and outside. More importantly, this issue raises the question as to what really constitutes national security. Is securing territory along the border the sum and substance of national security? Should one not regard as equally important the pursuit of policies that sustain economic growth, enhance investment and exports, generate employment and promote development. Should the settlement of the border issue alone override all economic considerations that aim to strengthen the foundations of economic growth?

China used its economic links with the West to strengthen its own economic power. India too must think out of the box and seek strength from whatever relationships it can establish. The old frameworks for economic policy are breaking down with developed economies becoming protectionist and using every tool in their arsenal to secure their global dominance. We need fresh thinking on economic policy and, to quote an old Chinese saying, there is no harm in letting “a hundred flowers bloom, and a hundred schools of thought contend”.

COMMENT: Some of the easing is already happening. The Hindustan Times reported New Delhi is considering “easing visa for Chinese technicians to Indian power and infrastructure projects running on Chinese plants and technology on merit”. I have heard of a couple of cases where visas have recently been given. The report added that a “review of Press Note 3 that restricted foreign direct investments (FDI) through automatic route from countries bordering India, including China, is expected” though “the process may take time".

I would expect a very calibrated and measured change in policy. One point that I think is often forgotten is Press Note 3 that restricted investments predated the boundary crisis that began in late April 2020. It came out during the early stage of the pandemic amid concern that Indian companies would be vulnerable to Chinese takeovers— and in my view, came out of a much broader change in thinking in New Delhi, unrelated to the border crisis, on what kind of investment relationship India wanted to have with China. So expect more JVs, case-by-case approvals for some deals, but restrictions in “sensitive” sectors to broadly remain.

---

Finally, coming back to events in Washington as one should today, Zorawar Daulet Singh writes in The Print on some of the external drivers that he thinks might be behind India’s thinking:

A key factor leading up to a reassessment in India’s calculus has been whether the US can continue to be leveraged to sustain the abnormal state of India-China relations. This is a question that Indian policymakers have regularly asked themselves since 2020. The answers are disconcerting today.  

A more transactional relationship with the US – more broadly and with respect to China – has been evident with each passing day. If it was conventional wisdom at one point in time to assert that the US held the keys to managing India’s China problem, this assumption is no longer obvious today. Washington has made it apparent that it sees India more as a useful instrument in a future confrontation with China than as a major power with legitimate geopolitical interests and aspirations of its own.

This patronising attitude has unsettled many Indians who worry not just about the US being unable to back up the tough talk on China should a serious clash erupt in the Himalayas, but that India might find itself drawn into a deadly US-China military conflict in the Western Pacific region. If the US cannot alter the balance of power in India’s favour and risks bringing its unpredictable baggage and security flashpoints with China to negatively impact India-China ties, Indian policymakers must geopolitically insulate India-China ties to the maximum extent possible….

This is a hard security argument. India’s national interests demand a management of the China relationship that is in tune with a rapidly changing international environment.

---

It certainly will be interesting to see how relations evolve, not just on the boundary, where lest it be forgotten a difficult process of de-escalation remains, but in the broader relationship as well, especially after what unfolds in Washington.

Watch this space. This newsletter, of course, will! Thank you as always for reading!

---