By: Liu Zongyi    Source: The Centre on Asia and Globalisation (CAG)    Published: 2020-07-29

China and India are trying to resolve the boundary standoff and ease bilateral tensions through diplomatic and military channels. I recently participated in track-two dialogues aimed at deepening mutual understanding, some of which involved the Indian Ambassador to China. However, based on my observation, the ongoing boundary standoff is a reflection of the underlying problems within the bilateral relationship. There is a big gap between China and India on certain issues which make it difficult for the two sides to reach a consensus.

First of all, since Narendra Modi came to power, India has increasingly seen itself as a potential global power, with the goal of realizing “a multipolar world and a multipolar Asia”. The leveraging of third parties to ‘check and balance’ China as part of its overall foreign policy has been very prominent. India has continuously strengthened its military and strategic cooperation with the United States, Japan, and Australia, and hopes to advance economic and financial cooperation with these countries to hedge against China’s Belt and Road Initiative. After the outbreak of Covid-19, the Indian government has attempted to take advantage of the China-US trade war and China’s distraction with the pandemic to attract multinational companies away from China and to ‘de-sinicize’ the global industrial value chain.

Secondly, a number of differences over the border have made relations more difficult. For instance, China is cautious about India’s demand to verify the Line of Actual Control (LAC). In the Chinese view, it is premature to determine the LAC, and any attempts to do will only lead to further tensions and the deterioration of bilateral relations. The Donglang standoff in 2017 had previously brought China-India relations to a low point. China did not take any strong measures against India as it was concerned about the negative impact on the then upcoming BRICS Xiamen summit and other major events. Earlier this year, with China pre-occupied with managing the Covid-19 pandemic at home and dealing with the external pressure from the United States, the Indian government took the opportunity to ramp up their border infrastructure, constructing bridges, roads, and fortifications in places like the Galwan Valley.

The recent Galwan conflict has brought India’s policy towards China to a crossroads. The large number of casualties at Galwan has confronted the Modi government with a policy dilemma. Although China and India are carrying out negotiations through diplomatic and military channels to disengage the two armies and reduce tensions, Chinese decision-makers are concerned that Delhi may be tempted to take advantage of the current international situation, in which China is facing great pressure from the United States, to coordinate with Washington and its allies.

From China’s point of view, India’s reaction to Galwan have made the situation more complicated. On July 3, Prime Minister Modi visited the Ladakh front and delivered a speech making a thinly veiled accusation against China for its so-called “expansionism”. Two weeks later, Indian Defense Minister Rajnath Singh visited the Ladakh front and displayed new weaponry imported from the United States, Russia, France, and Israel. Indian officials have said that Australia will be invited to participate in the Malabar naval exercise this year, which will mean the formation of the Quad military alliance. A few weeks ago, US President Trump said he hoped to enlarge the G-7, inviting South Korea, Australia, India, and Russia, to form what some experts believe to be a bloc to deal with China. The Indian government has expressed its wish to join the enlarged G-7 and actively cooperate with its members. In addition, India has joined a “D10” club of democratic partners sponsored by the United Kingdom. The Indian government has also said it would send a senior diplomat as its new representative in Taipei and stated at the UN Human Rights Council in Geneva that it has been keeping “a close watch on recent developments” in Hong Kong.

Beyond these moves, the Indian government has announced the cancellation of two thermal power projects being built with the involvement of Chinese enterprises, stopped foreign direct investment projects from China, and tightened the clearance process for Chinese imports. On June 30, the Indian government banned the use of 59 Chinese mobile apps in India in the name of national security. On July 23, Indian government further upped the ante by restricting bidders from countries with which it shares a land border from participating in government tenders without approval from competent authorities. These measures indicate that India is voluntarily abandoning the principle of ‘separation of politics and economy’ in its China policy, and has embarked on the road towards ‘de-sinicization’ of its economy. These measures may be a response to some interest groups in India, but it also shows that the Indian government believes that global value and industrial chains will be restructured after the pandemic. The Modi government is hoping that India’s market will become attractive and believes that the United States and other Western countries will invest in India on a large scale. On July 9, Modi invited global companies to come and establish their presence in India, claiming that “India remains one of the most open economies in the world. We are laying a red carpet for all global companies”. This ties in with India’s ‘de-sinicization’ measures.

At present, it seems that even if there is another informal summit between the leaders of China and India, it will be hard for bilateral relations to return to normal. From China’s point of view, it seems that the Modi government is cooperating with the United States to contain China. The Indian government, political parties, media, and strategic circles almost unanimously blame China for the deterioration of bilateral relations, and few people reflect on India’s own problems. This suggests that the immediate prospects of China-India relations are worrying.

The author is a visiting fellow of the Chongyang Institute for Financial Studies, Renmin University of China.