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The Dichotomy of the India-China Relationship

Edward Wright

The bilateral relationship between India and China is much like a two-sided coin. On one side, it is characterised by cooperation through trade and enjoinment within multilateral organisations. On the other side, China continues to support India’s arch-rival Pakistan, and India considers China’s growing presence in the South Asian region an unwelcome reality.

On the world stage, President Xi Jinping and Prime Minister Narendra Modi stand shoulder to shoulder and present a similar world vision, one where their nations project a significant sphere of influence over the international geopolitical economy. Yet at the same time they continue to work against each other, as India solidifies its relationship with the West, while China continues to develop its Belt and Road Initiative (BRI).

Economic Unity

As the trade war between China and the US continues, India has shown its willingness to lend a hand to its neighbour in need. Modi appears eager to improve soybean and cotton exports into China as a bid to not only improve bilateral relations, but to also improve domestic relations with disgruntled farmers seeking more favourable prices for their produce.

Moreover, India and China appear keen to solidify a stronger trading relationship between the world’s two most populated countries as part of the ongoing Regional Comprehensive Economic Partnership (RCEP) talks. At a time when President Trump appears to be challenging the fundamental nature of the established international order, China seems interested in appearing steady and predictable on issues such as trade with its other economic partners.

Despite persistent tensions, the ongoing RCEP negotiations between India and China highlight another form of cooperation between the economic powerhouses. Both nations seem interested in creating the free trade pact that would include sixteen countries. India, however, remains cautious of allowing unrestricted trade on Chinese exports, in addition to possible changes to migration regulations. Despite this caution, trade deals have continued – with India recently striking a trade deal over tobacco with China, the world’s largest consumer of the product. This highlights that the RCEP trade pact is still possible and that the two economic giants have the capacity to cooperate bilaterally on an economic basis.

The RCEP is not the first time China and India have worked together within a multilateral setting, despite ongoing bilateral tensions. China and India see continued cooperation when it comes to numerous intergovernmental organisations. The BRICS New Development Bank is headquartered in Shanghai and headed by K. V. Kamath, an Indian national. The development of free trade and push for economic liberalisation from both countries in a multi-polar world order evidences that the two economic giants indeed share common ground on world views. Both economic systems are reliant on stable international environments that will allow the two countries to produce rapid economic development. Whilst tensions may persist, both nations have something to gain from peaceful coexistence and cooperation.

Strategic Division

As China slowly moves into the Indian Ocean through the String of Pearls, India remains vigilant. China continues to invest heavily in India’s arch-rival Pakistan, which continues to destabilise relations between Beijing and New Delhi. Whilst this investment remains part of the BRI economic revitalisation through the China-Pakistan Economic Corridor (CPEC), concerns over the strategic and military implications persist. India has left several options open to respond to possible Chinese threats, in excluding Australia from the trilateral US-India-Japan Malabar exercises, and has taken a softer approach on the Quad relationship.

It is worth mentioning that India’s interests remain steadfastly focused upon the Indian Ocean, whilst much of China’s present attention remains directed at North-East Asia and the South China Sea. However, China’s long-term plans of placing military assets in the Indian Ocean indicate that India should be wary about China’s role and ambitions in the region. This relationship will soon become a question of what is the red line for India, and what actions must Beijing take in the Indian Ocean for New Delhi to step up its strategic response to China? Whilst China continues to invest in India’s longstanding rival, this does not appear to be enough for India to shift its foreign policy priorities.

Strategic cooperation appears to remain at least a possibility, given the inclusion of India into the Shanghai Cooperation Organisation (SCO). Whilst the SCO may not quite equal the level of military cooperation illustrated in NATO, the presence of China, India and Pakistan under the one security framework highlights a willingness from all sides to at least cooperate on a baseline level. The SCO’s counterterrorism focus allows for greater confidence building measures to be put in place and enables dialogue to occur in some form. Therefore, while strategic tensions between India and China persist, avenues for de-escalation remain, and such issues may be addressed given time.


Whilst the relationship between India and China is unlikely to descend into chaos, their relationship is likely to remain strained in rivalry despite their shared interests and common world view. Both parties will continue to push for free trade in the interests of the BRICS nations.

Yet this shared vision faces challenges as Chinese strategic interests begin to move into the South Asian region – India’s neighbourhood. Neo-liberal scholars suggest that the growth of economic relationships between two states allows for greater peaceful coexistence to occur. However, this does not particularly seem to be the case with China and India, who continue to orbit each other economically while strategic tensions persist.

Nonetheless, the dichotomy of the relationship between cooperation and conflict remains evident. Whichever side the coin lands on will determine how the advent of these two economic superpowers will define the geopolitical balance in the Indo-Pacific region for decades to come.

Edward is a former intern of the Consulate General of Nepal to Victoria. He is currently studying his Masters of International Relations at the University of Melbourne.



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