The Future of Chinese-Indian Relations
The bilateral relationship between the world’s two most populous countries, China and India, has the potential to be one of the relationships that defines the remainder of the 21st century. Unfortunately, the relationship between these two Asian giants has not always been easy, with a great deal of mistrust for one another sowing discord between them. The leading example of the difficulties of this relationship in the 1962 war that they fought with one another, a war in which China inflicted a humiliating defeat on India. In recent years, a number of issues and disputes have arisen that are once again threatening to derail efforts to improve ties between China and India. For example, India is fearful of China’s rising economic and military power, particularly in areas that it considers within the Indian sphere of influence, such as the Indian Ocean and South Asia. Moreover, while both countries are high-growth emerging markets, the fact that China’s re-emergence precedes that of India means that China’s economic power far outstrips that of India at present. How India responds to China’s rising power will go a long way towards determining the future of this very important bi-lateral relationship.
Despite their strained relations, China and India do share common interests in a number of areas. For example, both countries are leading efforts to rebalance the global economy by lessening the dominant position of developed economies in terms of trade, investment and the establishment of global economic standards. Furthermore, both countries largely support multilateralism, despite long histories of distrust of international organizations in both countries. Both China and India share the goal of preventing the spread of radical religious ideology from Central Asia, while both countries are engaged in efforts to reduce support of separatist movements within their borders, in areas such as Xinjiang and Kashmir. Finally, both countries view Asia as the center of the global economy and it is the interest of both China and India for the entire region to enjoy high rates of economic growth and to maintain a degree of stability. Thanks to these shared goals, China and India have been able to find common ground on many issues in recent years. However, many issues still divide these two giants.
A key issue that both brings together and divides China and India at the same time is the trade and investment relationship they share. On one hand, trade and investment ties between China and India have soared in recent years, and both governments have made major efforts to promote these bilateral economic ties. However, the relationship thus far has been anything but equal. For example, the fact that China’s economic modernization began more than a decade before that of India, and the fact that China developed a massive manufacturing sector well before India, has resulted in China now enjoying a massive lead over India in terms of the scale of their economies and their relative wealth levels. In fact, while China averaged economic growth rates of 10% for three full decades between the 1980s and the early part of this decade, India has, thus far, been unable to match this impressive record. As a result, India views its trade and investment relationship with China from a position of inferiority, with China enjoying most of the benefits of this relationship. Likewise, both countries are competing with one another for natural resources, most notably energy, to fuel their expanding economies. This has put them at odds in many areas of the world. As a result, while economic ties between China and India are likely to continue to grow, so too is their economic rivalry, and this could stoke political and security tensions between the two countries in the coming years.
In addition to their economic rivalry, China and India find themselves on opposite sides of a number of political and geographical disputes that have resulted in tensions between the two countries remaining relatively high in recent years. Many of these issues stem from disputes involving the border between the two countries. In fact, there disputed areas along almost the entire border between China and India, from Kashmir in the west to the very end of their shared border in the east. At times, including the present, one or more of these disputed areas of the border has resulted in both sides sending additional armed forces to the border region, raising the potential for a clash between the two countries. Away from the border, a number of other issues are straining relations between these two giants. For example, China is expanding its presence around the Indian Ocean in order to secure shipping lanes for energy and other resources from the Middle East and Africa, but India considers much of this ocean to be within its sphere of influence. Likewise, China’s strengthening economic and defense relationship with India’s long-time rival, Pakistan, is worrying New Delhi, which accuses Pakistan of attempting to destabilize India. On the other hand, Beijing is concerned about India’s closer economic and defense ties with the United States, fearing that the US sees India as a counterweight to rising Chinese power in Asia. Overall, it is clear that there are many issues that could provoke a major deterioration of this vital bi-lateral relationship.
Given the size and the potential power of both countries, it can be argued that the second-most important bi-lateral relationship in the world today is the one between China and India, due mostly to the scale of the two countries. For example, China and India are home to 2.7 billion people today, or 35% of the world’s population, with India’s population alone set to soar to an estimated 1.7 billion people by the middle of this century. In terms of economics, China is already either the first or the second largest economy in the world, and India has begun its climb up the rankings as its economy grows by around 7% per year. While their scale is massive, so too is the potential for a conflict between these two countries, either along their disputed border or in regions where both countries are seeking to exert their power and influence. Moreover, both countries could find themselves on opposite sides of an alliance system designed to offset China’s growing power in the region. Should this relationship worsen dramatically, the future stability and prosperity of all of Asia will be jeopardized and the gains that both countries have made in recent years could be reversed. It is therefore easy to see why this relationship is so important for both countries, as well as for the rest of the world.