Published Twice a Month
February 28, 2019 – March 12, 2019

Centre on Asia and Globalisation
Lee Kuan Yew School of Public Policy

Guest Column

China-India relations are undergoing a critical period of development

By Li Qingyan

CIB 133_1200x786Image from Max Pixel

The Wuhan Summit has led to a positive turn-around in China-India relations. A series of bilateral interactions such as the BRICS Summit at Johannesburg and the launch of a new mechanism for people-to-people exchanges followed the positive development of ties. However, when Indian Prime Minister Narendra Modi visited the so-called region of “Arunachal Pradesh” in February 2019, the action complicated the boundary question. The Chinese government has never recognised the region as being part of India and has firmly opposed Modi’s visit to the disputed area. Due to the complexity of bilateral relations, it is understandable that such turbulence cannot be absolutely avoided, but both sides should cherish the hard-won improvement in relations in order to secure future prospects for mutual development and regional stability.

As the two largest countries in Asia, both China and India have entered a historic period of national rejuvenation. Bilateral relations occupy an important position in their respective foreign policies. Despite being each other’s “unmovable neighbours”, the development of China-India relations has seen its share of ups and downs. The Modi period was no exception. Accompanied by increasing economic interactions, both China and India have seen their interests collide in overlapping neighbouring areas, especially in South Asia and the Indian Ocean. Longstanding disagreements over the border dispute, Pakistan and Tibet, as well as new sources of contention like China’s Belt and Road Initiative (BRI) and India’s accession to the Nuclear Suppliers Group (NSG) have widened their mutual trust deficit. Moreover, New Delhi has been strengthening its strategic partnerships with Japan and the US, and reinforcing its regional dominance in South Asia.

It is inevitable for two neighbours to come into competition over overlapping areas of interest; however, the traditional ‘zero-sum’ mentality that India continues to hold on to poses obstacles for future cooperation with China in South Asia and the Indian Ocean region. Thanks to the BRI, infrastructure connectivity and economic ties among the regional countries have dramatically improved. For much of their modern history, most countries in South Asia have remained in a state of poverty and backwardness, and hardly benefited from development dividends brought about by economic globalization and urbanization due to their poor transport infrastructure and weak economic integration. The BRI aims to ameliorate the situation through Chinese investments and technology, and has received positive responses from countries in the region like Afghanistan, Bangladesh, Maldives, Nepal, Pakistan, and Sri Lanka. For instance, Beijing and Kathmandu are jointly pushing cross-border transport connections and trade freedom zones under the framework of BRI cooperation, which would vastly improve the isolated conditions of this landlocked country and improve the overall connectivity of the trans-Himalayan region.

Actually, ‘common development’ (共同发展) should be the core factor of China-India relations. The world today is undergoing profound changes, full of uncertainties and destabilizing factors. As the two largest developing countries, with populations exceeding 1 billion each, the relationship between China and India will have a huge impact on world peace and development. At Wuhan, the leaders on both sides took stock of the situation and reached a consensus: only through common development could they achieve their respective goals of national rejuvenation. This consensus laid the foundation for mutual trust between China and India and encouraged the two countries to meet each other halfway.

Besides, as important representatives of developing countries and emerging markets, China and India share many common interests at the international, regional and bilateral levels. Both hope to reform the existing international, political, and economic order, and enhance the representation and voice of developing countries. Against the backdrop of the rise of anti-globalization and trade protectionism, it is particularly important for China and India to jointly address the challenges of global governance, promote economic globalization, and defend the principles of free trade and the multilateral trading system. From a regional perspective, since both are members of important regional organizations including BRICS, the Shanghai Cooperation Organisation (SCO), and the Asian Infrastructure Investment Bank (AIIB), they could align their development initiatives and help to promote economic integration and connectivity to benefit all countries in the region.

At the bilateral level, there is great potential for all-round cooperation. Both China and India possess huge domestic markets, with a combined population of over 2.6 billion, representing more than 35% of the global population and about 20% of global GDP. The economies of the two countries are highly complementary, as China can provide technical and financial support for India to improve infrastructure construction, while India has a sound foundation in the digital and pharmaceutical industries. The Modi government has been vigorously promoting its manufacturing industry and needs to attract huge foreign investment. According to figures from China's Ministry of Commerce, bilateral trade between China and India hit a record high of USD 95.5 billion in 2018, up 13.2% from the previous year. In recent years, China’s private investment in India has been growing steadily and is expected to create more jobs for India through bilateral industrial cooperation, especially in small labor-intensive industries. China’s smartphone companies have gained an edge in the Indian market which will facilitate the Modi government’s goal of building a “Digital India”.

The historical development of China-India relations has amply demonstrated that mutual cooperation would benefit both countries, while confrontation would hurt both. Under the new circumstances, China and India should insist on the path of peaceful development based on mutual trust. Only by grasping the relationship from a strategic perspective can the practical cooperation between the two sides be carried out smoothly and bilateral relations become a positive factor in promoting world stability and development. China hopes that India can view its rise in a positive and rational way since Beijing has always believed that a healthy and stable bilateral relationship would be in the fundamental interests of the two peoples.

In fact, maintaining steady improvement in China-India relations requires the effort of both sides. However, under the influence of the internal and external environments, India seems unsure of how to respond to China. On the one hand, India would like to make use of China’s capital and market to promote its economic development. On the other hand, India intends to utilize the “Indo-Pacific strategy” to balance China’s influence. Therefore, the possibility of further turbulence within China-India relations cannot be ruled out. At the same time, India’s aspiration to be a great power and its tradition of non-alignment make New Delhi reluctant to become a geopolitical tool of other powers. India’s interest in the Indo-Pacific strategy is different from that of the US, Japan, and Australia. Moreover, it is not in India’s interest to provoke confrontation with China, at least for now. After all, a stable and peaceful environment is the precondition for any country to achieve positive and steady growth. Any fluctuation in China-India relations will undoubtedly negatively impact India’s economic development and delay the process of India’s rise.

Li Qingyan is Senior Research Fellow at the China Institute of International Studies with special focus on geopolitics in South Asia and the region’s relationship with China.

The views expressed in the article are solely those of the author and do not necessarily reflect the position or policy of the Lee Kuan Yew School of Public Policy or the National University of Singapore.

News Reports

Bilateral relations

India engaged with China for lunar mission, talks failed to take off
Hindustan Times, March 11

A rare opportunity for India and China to cooperate in a high-profile space mission fell through after the two countries disagreed on the nature of the Indian payload to be carried on the Chang’e-4 lunar mission, it has emerged.

China, India should be each other's partner, opportunity: FM
Xinhua, March 8

China and India should be each other's partner in pursuing their respective dreams and each other's important opportunity for growing respective economies, Chinese State Councilor and Foreign Minister Wang Yi said Friday (March 8).

China Defends Its Defence Budget Bump, Three Times That Of India's
NDTV, March 4

China, the world's second largest military spender after the US, defended its massive allocation on security on Monday (March 4) and hinted at raising it further this year, saying the country did not pose any "threat" to others. China last year increased its defence budget by 8.1 per cent, taking its declared defence spending to a whopping USD 175 billion which was over three times that of India's.

China says it never recognised India, Pakistan as nuclear states
The Economic Times, March 1

China Friday (March 1) said it has never recognised India and Pakistan as nuclear powers and ruled out extending such a status to North Korea following the unsuccessful second summit between US President Donald Trump and North Korean leader Kim Jong-un in Vietnam.

News Reports

China and India in the Region

India signs US$3 billion nuclear-powered submarine deal with Russia
South China Morning Post, March 8, 2019

India has signed a US$3 billion deal to lease a third Russian nuclear-powered submarine for 10 years, giving New Delhi a boost in the Indian Ocean against arch-rivals Pakistan and China, media reports said.

China worried ban on Azhar will make Jaish target CPEC
The Economic Times, March 8

China, which has to take a call within the next week to change its stand on proscribing Masood Azhar, is now said to be worried that such an action will make the China-Pakistan Economic Corridor (CPEC) that passes through Pakistan-Occupied Kashmir (POK) a target of the Jaish-e-Mohammad (JeM).

China takes credit for helping de-escalate simmering India-Pakistan tensions
South Ching Morning Post, March 8

Beijing said it played a “constructive role” in defusing tensions between India and Pakistan over the terrorist attack on Indian security forces in Pulwama, ahead of a United Nations vote to condemn the head of the Pakistan-based terrorist group that claimed responsibility.

China backs Russian plan of using SCO to defuse India-Pakistan tensions
CGTN, March 5

China on Monday (March 4) backed a Russian proposal to make use of the Shanghai Cooperation Organization's (SCO) counter-terrorism mechanism to defuse the ongoing military standoff between India and Pakistan, while also reiterating that Beijing “will continue to play a constructive role in its own way” to help resolve the situation.

Nepal to use Chinese gauge for its railway, not the one India uses
Reuters, March 5

Nepal has chosen a railway-track gauge used by China for its network and not the main one India uses citing lower costs, a minister said on Tuesday, a setback for India as it tries to limit Chinese involvement in the Himalayan country.

China sets up 5G stations in Tibet
The Times of India, March 2

China has established the first set of three 5G stations in the Tibet region bordering India. The purpose, it is said, was to enhance communication to serve the local population.

News Reports

Trade and Economy

India launches 3rd IT corridor in China
The Times of India, March 8

India has launched its third IT corridor in China that will facilitate partnerships between Indian and Chinese companies.

China buys Indian cotton as prices at home jump: industry officials
Reuters, March 7

Indian traders have signed contracts to ship 800,000 bales of cotton to China as demand surged from the world’s biggest consumer of the fibre due to a rally in prices in China, industry officials told Reuters.

Donald Trump presses India on trade as US seeks its help on China
The Times of India, March 7

The Trump administration notified Congress on Monday (March 4) that it wants to scrap trade concessions for India. The move affects just a fraction of India’s trade flows, but it comes weeks before the general elections.

China asks for duty-free import of 85% of its products into India
Business Today, March 4

China has asked India to allow duty-free import of 85% of its products into the country. During the countries' bilateral discussions, Indian officials were told that China was willing to give duty-free access to 92% of Indian exports, provided the bar was raised for Chinese products. India has offered to open up 74% of its market to Chinese goods in phases but China is not satisfied with the proposal, mentioned reports.

U.S. wins WTO ruling on Chinese grains; decision may also affect India
Reuters, February 28

The United States won a World Trade Organization ruling on China’s price support for grains, successfully challenging a calculation methodology that is also used by India.

News Reports

Energy and Environment

Amid rising trade tensions with US, India wants to extend Iran oil sanctions waiver
Livemint, March 8

New Delhi is asking Washington to be allowed to still buy Iranian oil at current levels of around 1.25 million tonnes per month. India has reduced its purchases of Iranian oil, but has been in talks on extending a sanctions waiver.

India’s digital energy consumption to increase at twice the world average growth rate
OpenGov Asia, March 7

India’s digital energy consumption is set to increase by 16% every year through 2023. This will be twice the world average growth rate, according to a study.

India hosts 7 out of top 10 most polluted cities globally: data
Xinhua, March 5

India has received the dreadful distinction of having seven of its cities in the list of top 10 most polluted cities in the world, according to data compiled in the IQAir AirVisual 2018 World Air Quality Report on Tuesday (March 5).

India, China major contributors to green cover in past 20 years: NASA
Money Control, March 4

National Aeronautics and Space Administration (NASA) in its study has said India and China are significantly contributing to making the planet greener. This comes as good news for both the countries who are known to be significant contributors of pollutants and greenhouse gases.

Space power plant and a mission to Mars: China's new plans to conquer the final frontier
CNN, March 3

China says it is working to develop a solar energy plant in space that could one day beam enough power back to Earth to light up an entire city. If scientists can overcome the formidable technical challenges, the project would represent a monumental leap in combating the Earth's addiction to dirty power sources which worsen air pollution and global warming.


What the India-Pakistan Crisis Taught China
The National Interest (TNI), March 7

By Sumit Ganguly, Distinguished Professor of Political Science and Rabindranath Tagore Chair at Indian University; and Rajan Menon, Anne and Bernard Spitzer Professor of International Relations at City College of New York/City University of New York, and Senior Research Scholar at the Saltzman Institute of War and Peace Studies, Columbia University.

Assessments of the crisis have focused almost exclusively on its implications for the India-Pakistan relationship. In fact, it has wider ramifications, certainly for India. The People’s Republic of China (PRC), Pakistan’s “all weather” friend and India’s long-term adversary, was doubtless watching closely—and assessing India’s military capabilities—even as it, to Pakistan’s disappointment, called for restraint by both sides.

Commentary: India's China problem in Pakistan
Channel NewsAsia, March 6

By Shashi Tharoor, Former UN Under-Secretary-General and former Indian Minister of State for External Affairs and Minister of State for Human Resource Development; currently Chairman of the Parliamentary Standing Committee on External Affairs and an MP for the Indian National Congress

Instead of simply blaming other countries, especially Pakistan and China, shouldn't the Indian government make more self-introspection on its anti-terrorism policy and dwell more on how to better administer the India-controlled part of Kashmir?

Trump’s new tariff plan puts New Delhi-Washington strategic relations to test
Global Times, March 6

By Xie Chao, Assistant Research Fellow, Institute for International and Area Studies, Tsinghua University; and Visiting Faculty Scholar, Jindal School of International Affairs, O.P. Jindal Global University, India

Although the world had been expecting new global trade policy moves by the US, Trump's decision to take measures against India has surprised many. Such move tends to be taken as fishing in troubled waters when the US is expected to play a mediating role at a time India and Pakistan are still grappling with the tensions triggered by the Pulwama attack.

India losing trade battle with China — 80% of two-way business last year were imports
The Print, March 5

By Ananth Krishnan, Visiting Fellow at Brookings India

While the United States and China inch toward a deal to end their bruising trade war, India is still struggling with its lop-sided trading relationship with Beijing.

The India-Pakistan crisis deserves our 'urgent attention'
CNBC, March 2

By Fred Kempe, President and CEO of the Atlantic Council

Headlines in the United States focused more on President Donald Trump's former lawyer turning on him before Congress and on the president's fruitless Vietnam meeting with North Korean dictator Kim Jong Un. But the South Asian nail-biter between nuclear-armed India and Pakistan is of even greater significance.

China, India and Myitsone: the power game to come
Frontier Myanmar, March 1

By Yaw Bawm Mangshang, Yangon-based independent political observer; and Ashley South, Research Fellow at Chiang Mai University, Center for Ethnic Studies and Development.

If China and India seek sustainable development in Myanmar, they should engage more locally and listen to the voices of affected communities. For China, this starts with the Myitsone Dam

Books and Journals

Asian Security262x370The Security Dilemma and India-China Relations
Asian Security 15, no. 1 (2019): 60-72.

Srinath Raghavan is a Senior Fellow at the Centre for Policy Research (ORF), New Delhi.

This article examines whether the concept of a security dilemma is useful in understanding the trajectory of India–China relations over the past seven decades. It considers several phases through which this relationship has passed and it argues that the security dilemma has never been at work. The relationship is characterized not by a security dilemma but by fundamental conflicts of interests. These have been exacerbated or ameliorated by changes in domestic politics and the wider strategic context. Going forward, too, these factors are likely to influence relationship.


Compiled and sent to you by Centre on Asia and Globalisation and the Lee Kuan Yew School of Public Policy, National University of Singapore.

Have any feedback or comment? Email us decb64_Y2FnQG51cy5lZHUuc2c=_decb64