India–China relations under the Modi 3.0 government

Antoine Levesques - Research Fellow, International Institute for Strategic Studies, London

India is gambling that it can both steal a page from China’s playbook, earn China’s consideration and maintain stability on favourable terms.India and China have an interest in maintaining strategic communications to avoid any inadvertent flare-ups which could distract them from their peaceful rise. One possible route is to establish new confidence-building measures. Only the two countries, between themselves, can make that determination of the need – or not – for any form of new ‘guardrails’, before relaying this to the rest of the world.

On 4 June, Narendra Modi was re-elected as prime minister of India for a third consecutive term – unprecedented in 62 years. By reappointing his foreign minister and national security advisor, Modi has signalled his desire for continuity in India’s statecraft.

However, among India’s key bilateral ties, those with China will merit significant attention and possibly adaptation. As the relationship between Asia’s largest nuclear-armed militaries and economies by 2025 appears increasingly distant and tense, where is it headed?

Mutually exclusive prosperity and security

India–China ties are troubled by an unsettled border, an unequal trade relationship, China’s strategic ties to Pakistan, and a broadening political-strategic disagreement over each other’s perceived rightful place in Asia and beyond. The relationship has suffered from a lack of strategic trust since a June 2020 border clash, which unmade much of the letter and spirit of the border-management regime that had been patiently negotiated, designed and agreed to over a generation. The war in Ukraine has brought China closer to Russia, India’s historic defence partner.

The result is a complex relationship which tends towards tension over cooperation. This has not always been the case. During the course of the 1990s and until 2013, India and China agreed to set aside their differences on the border and focus on their economic development, each involving the other on secondary issues such as terrorism or Afghanistan.

Despite sharing the goal of avoiding another border war akin to that of 1962, national interests began to diverge. Coinciding with lower economic growth prospects, President Xi Jinping pursued an assertive foreign-policy and security agenda by focusing on promoting global technology champions and its Belt and Road Initiative (BRI), as well as acquiring advanced dual-use technologies and securitising its economy at home. This created insecurity for India.

India has concurrently considered itself a rising global economic force able to leverage its strategic partnerships in Asia and beyond. Since the end of the coronavirus pandemic, India has gained confidence from its status as the world’s fastest growing major economy, while China’s own economic prospects defied optimism. India’s ambitions evolved from seeking to be the ‘plus-one’ of multinationals’ China-focused strategies to being a preferred, ‘trusted’ middle-weight supplier in global supply chains in order to ride the ‘decoupling’ trend that is partly hollowing out China’s prosperity. India’s ‘Make in India’ policy epitomises its ambitions to grow its services and industry, using foreign capital to eventually boost exports.

Breaking the deadlock

Thus, India under Modi, who as leader of Gujarat State once cited China’s Guangdong province as an example for achieving growth, appears increasingly to be trying to outdo China at its own economic and strategic game. This is designed to change China’s perception of India without becoming ‘revisionist’. India seeks leverage by showing its strength: setting conditions for dialogue based on the pre-2020 border conditions; restricting official contacts and visas; renaming localities in disputed territory; investing in border infrastructure and defence; limiting dependency on Chinese imports to fuel its own rise, to the benefit of supply chains with the Quad and other countries; strengthening its nuclear second-strike capability; and letting select irritants develop. India hopes the sum of these calibrated and restrained actions will pressure China to recognise India’s global rise, while staying below China’s threshold for an adverse, counter-productive response.

China, for its part, is focused on its rivalry with the US. China often sees India as having a diminishing international agency of its own, as a result of that contest. The existence in Washington of a bipartisan consensus on both China and India, the relevance of Modi’s warm relations with Donald Trump, and the fact that US Indo-Pacific strategy hinges on India’s support for Washington’s objectives in the region all drive much of the thinking in Beijing about India. China is paying particular attention to US–India cooperation on emerging and disruptive technologies, as well as naval logistics. India’s now larger population and promising economy are attractive to Chinese exporters, but may also worry China. The GDP gap between India and China continues to grow in the latter’s favour, feeding its belief that its terms alone can direct the relationship. 

Exceptions to India and China’s zero-sum rivalry are few and shrinking. Suggestions of ‘India-China-plus-one’ projects appear out of date as both compete for the Global South’s attention. Both countries are investing in national technological capacities to enhance their prosperity and security in space, cyber and underwater maritime domains, leaving little room for cooperation. This carries global implications. Their convergence within BRICS on promoting their currencies is challenged by India’s rejection of the BRI and New Delhi’s consideration of a US-led sanctions policy on Ukraine. Dissuading Russia from using nuclear weapons in Ukraine or combatting climate change also appear as rare areas of agreement.

Meanwhile, third countries feel they have to choose between India and China, undermining both countries’ claims to a benign rise. Other risks abound. The militarising border remains unstable and incident prone. Accidents in the Indian Ocean or South China Sea could occur as long as there is no dialogue or agreement to prevent or manage such incidents. The rise of technology ties with Taiwan, which India is increasingly displaying as a symbol of its independent statecraft, is becoming a major area of misunderstanding. Meanwhile, both countries are building up domestic expectations for their national-development goals set for 2049 for China and 2047 for India.

Strategic communication and understanding

Amid these tensions and wider geopolitical uncertainty, as well as both optimism and distrust of some dialogues with China, the two countries need to find a format for establishing and maintaining dialogue – to set and update expectations – without seeing this as an undue reward for the other. Xi and Modi held two highly personalised informal summits in 2018 and 2019. But Xi declined to attend Modi’s 2023 standout G-20 summit. After a hiatus of over two years, their two top national-security officials met in 2022, 2023 and July 2024, but the meetings are unlikely to have been proportionate to the relationship’s needs, not least because ‘disengagement’ at two border points is still a pending objective. 

China needs to better understand how India’s conduct reflects its motives for engaging, competing, balancing and deterring China. India wants China to show more sensitivity to its interests. One Indian official has explained that there is little point ‘aiming for the moon while we remain in a ditch’.

Modi’s lack of attendance at the Shanghai Cooperation Organisation summit in July 2024 does not close the door to future engagement with Xi. Xi’s failure to send his personal congratulations upon Modi’s re-election may be the latest clue that managing any ‘loss of face’ matters most to the two leaders who have never criticised each other in public. Yet Xi’s reference to India in a June 2024 speech on cooperation could be a conciliatory response to Modi’s own display of optimism during his re-election campaign. India and China have an interest in maintaining strategic communications to avoid any inadvertent flare-ups which could distract them from their peaceful rise. One possible route is to establish new confidence-building measures. Only the two countries, between themselves, can make that determination of the need – or not – for any form of new ‘guardrails’, before relaying this to the rest of the world.

[©️2024, The International Institute for Strategic Studies, originally published, (reproduced with permission)]