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

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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.

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.

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.

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.

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