India-China Relations: Issues and Emerging Trends

-By Dr. Reeta Kumari

Abstract

India-China relations are shaped by a complex mix of historical disputes, economic interdependence, and geopolitical competition. The primary issues include the long-standing border dispute, particularly in regions like Ladakh and Arunachal Pradesh, trade imbalances, water-sharing concerns, and China’s increasing influence in South Asia through initiatives like the Belt and Road Initiative (BRI). Despite border tensions, economic ties remain significant, with China being one of India’s largest trading partners. Emerging trends indicate a shift toward strategic competition, with India bolstering its regional alliances, strengthening defence capabilities, and promoting self-reliance in critical sectors. Additionally, both nations are engaging in multilateral platforms like BRICS and the Shanghai Cooperation Organization (SCO) to manage diplomatic engagements. As the geopolitical landscape evolves, the trajectory of India-China relations will depend on conflict resolution mechanisms, economic recalibrations, and broader regional dynamics.

Keywords: India, China, relations, trends, issues, strategic-relations, border disputes, SCO, BRI.

Introduction

India and China as two of the world’s largest and most influential nations, share a complex and often competitive relationship. Over the past few decades, their interactions have been shaped by territorial disputes, economic interdependence, and strategic calculations. Among the significant trends in India-China relations, military modernization and strategic partnerships stand out as defining factors that influence their bilateral dynamics and regional security architecture. As two of the world’s largest and most populous nations, India and China share a long and contested border, which has been a source of both cooperation and conflict. Their relationship has seen periods of diplomatic warmth, economic collaboration, and strategic rivalry, particularly in the context of regional and global politics. While historical cultural exchanges date back over two millennia, modern bilateral relations have been influenced by events such as the 1962 border war, ongoing territorial disputes, and recent tensions along the Line of Actual Control (LAC). However, both nations continue to engage in trade, multilateral forums, and diplomatic dialogues to manage their differences. The evolving dynamic between India and China will have significant implications for regional stability, economic growth, and global geopolitics in the 21st century.

Key Issues in India-China Relations

While India and China have areas of cooperation in trade and multilateral engagements, their relationship remains fragile due to recurring border tensions, economic disparities, and strategic rivalries. Managing these issues through diplomatic dialogue and confidence-building measures will be crucial for regional peace and stability.

1. Border Disputes and Military Tensions

India and China share a 3,488-kilometre-long disputed border, known as the Line of Actual Control (LAC), which has been a source of recurring tensions and military confrontations. The border issue stems from historical disagreements over territorial boundaries, unresolved since British colonial rule, and remains a key factor in the complex bilateral relationship between the two nations.

Historical background of the disputes: The India-China border dispute can be traced back to competing territorial claims over Aksai Chin and Arunachal Pradesh, based on different interpretations of historical agreements. Aksai Chin (Western Sector), Claimed by India but controlled by China, Aksai Chin is strategically important for China as it connects Tibet and Xinjiang via the G-219 highway. India considers it part of Ladakh, Jammu & Kashmir, while China views it as part of Xinjiang. Arunachal Pradesh (Eastern Sector), China claims the entire Indian state of Arunachal Pradesh, referring to it as “South Tibet”. India, however, asserts full sovereignty over the region. The lack of a clearly demarcated border has led to frequent misunderstandings and military confrontations.

Major military clashes and standoffs: 1962 Sino-Indian War, the most significant conflict occurred in October 1962, when China launched a full-scale invasion, capturing large portions of Arunachal Pradesh and Ladakh. India suffered heavy losses, and China unilaterally declared a ceasefire, withdrawing from Arunachal Pradesh but retaining control over Aksai Chin. The war left deep scars in bilateral relations, and tensions have persisted ever since. After the 1962 war, another confrontation took place in Sikkim’s Nathu La and Cho La passes in 1967, where Indian forces successfully repelled Chinese advances. This was one of the few instances where India decisively pushed back Chinese troops. In Arunachal Pradesh’s Sumdorong Chu Valley, tensions escalated when Chinese forces attempted to establish positions in disputed territory. However, diplomatic efforts led to de-escalation without conflict. Then in 2017 three-month standoff occurred at Doklam (a tri-junction between India, Bhutan, and China) when China attempted to extend a road into Bhutanese territory. Along this, India is supporting Bhutan, intervened to block China’s construction efforts. After intense diplomatic negotiations, China halted construction, but its presence in the region remains a concern. Then the deadliest India-China clash in over four decades occurred on June 15, 2020, in the Galwan Valley (Ladakh). Both sides engaged in violent hand-to-hand combat, resulting in 20 Indian soldiers and an undisclosed number of Chinese troops being killed. This led to heightened military deployments, and since then, multiple rounds of diplomatic and military talks have been held to reduce tensions. Despite some disengagement efforts, tensions persist in Depsang Plains, Hot Springs, and Demchok in Eastern Ladakh. Both countries continue infrastructure build up, with China constructing villages and military bases near the LAC, while India strengthens roads, airstrips, and surveillance systems.

Key Factors of deriving border tensions: Lack of a defined border, unlike other international borders, the LAC is not clearly demarcated, leading to differing perceptions of the boundary by both sides. Military build-up and infrastructure Development, China has significantly expanded roads, airbases, and military installations near the LAC. In response, India has ramped up its own infrastructure projects, such as the Darbuk-Shyok- DBO Road in Ladakh, improving military access to remote border regions.

Strategic and Political Factors: India’s growing ties with the US, Japan, and Australia (QUAD alliance) are viewed with suspicion by China. It’s increasing influence in Pakistan, Nepal, and Sri Lanka has raised concerns in India. China’s ‘Salami Slicing’ Tactics, China has been accused of using “Salami Slicing” a strategy of gradually occupying small portions of disputed territory without triggering full-scale war.

Diplomatic and Military Measures to Manage the Dispute: Confidence-Building Measures (CBMs), 1993, 1996, and 2005 agreements established mechanisms to reduce military tensions, including maintaining peace along the LAC and avoiding use of firearms during face-offs. Through military and diplomatic Dialogues like Multiple rounds of corps commander-level talks have been held since the 2020 Galwan clash to de-escalate tensions. Special representatives from both nations continue discussions on border resolution. After the Galwan clash, India banned over 200 Chinese apps, restricted Chinese investments, and imposed stricter security regulations on Chinese businesses operating in India.

2. Economic and Trade Imbalance

India and China, two of the world’s largest economies, share a complex trade and economic relationship. Despite political tensions, trade between the two countries has grown significantly over the years. However, India’s trade deficit with China has been a persistent concern, influencing economic policies and bilateral negotiations. Trade between India and China has expanded over the past two decades. As of recent years. Bilateral Trade, China is India’s largest trading partner, with total trade exceeding 120 billion dollars in 2022. Exports from India to China, India primarily exports raw materials like iron ore, cotton, organic chemicals, and seafood. Major imports from China to India are electronics, machinery, pharmaceuticals, chemicals, and other manufactured goods. India’s dependence on Chinese goods, especially in sectors like telecommunications, electronics, and pharmaceuticals, remains high. One of the most pressing issues in India-China trade is the huge trade deficit in China’s favour. India’s trade deficit with China, Exceeds 80 billion dollars in recent years. Reasons for the Trade Imbalance are: India exports mainly raw materials, while China exports high-value manufactured goods. China’s competitive manufacturing sector offers lower-cost products. India has a weaker industrial base in key sectors like electronics and machinery. India has been actively working to reduce this deficit by promoting domestic manufacturing through initiatives like “Make in India” and imposing restrictions on certain Chinese imports.

Major economic challenge for India is dependence on Chinese goods. India relies on China for essential imports in sectors like pharmaceuticals, electronics, and solar energy components. Investment flow, Chinese investments in Indian start-ups and infrastructure were growing but faced restrictions after the 2020 border conflict. Geopolitical tensions, the border disputes and political issues often impact trade decisions, leading to calls for reducing economic dependence on China. Diversification of trade partners, India is strengthening trade ties with nations like the US, EU, and Japan. Boosting domestic production, initiatives like the Production Linked Incentive (PLI) scheme aim to reduce dependency on Chinese imports. Tariffs and restrictions, India has imposed stricter regulations on Chinese companies in sectors like telecom and technology. India-China trade is marked by high trade volume but an increasing deficit in China’s favour. While India continues to rely on Chinese imports, efforts are being made to reduce dependency, boost local manufacturing, and diversify trade relations. The future of economic ties will largely depend on geopolitical stability and India’s success in enhancing its industrial capabilities.

China is one of India’s largest trading partners, but the trade relationship is heavily skewed in China’s favour. India imports a vast array of goods, including electronics, machinery, and pharmaceuticals, while its exports to China remain limited. The trade deficit, exceeding 100 billion dollars in recent years, has prompted India to push for greater self-reliance through initiatives like “Atmanirbhar Bharat” (Self-Reliant India). Additionally, restrictions on Chinese investments and apps in India post-Galwan have highlighted the economic dimensions of the rivalry.

3. Geopolitical and Strategic Competition

India and China are major players in the global and regional order, often competing for influence. China’s Belt and Road Initiative (BRI), which India opposes due to sovereignty concerns over the China-Pakistan Economic Corridor (CPEC), has widened the strategic divide. Additionally, India’s participation in the Quadrilateral Security Dialogue (Quad) alongside the US, Japan, and Australia is viewed with suspicion by Beijing. Both nations are also engaged in a power struggle in South Asia and the Indian Ocean region, with China’s increasing presence in Sri Lanka, Nepal, and Bangladesh raising concerns in New Delhi.

India and China, two of Asia’s most powerful nations, have a long history of geopolitical and strategic competition. While both countries share economic ties, their relationship is shaped by territorial disputes, regional influence, and global power aspirations. The competition spans across border tensions, military build-up, regional alliances, and global diplomacy. One of the most significant aspects of India-China rivalry is their longstanding border dispute over territories in Ladakh (Aksai Chin) and Arunachal Pradesh. The Line of Actual Control (LAC), The de-facto border is poorly defined, leading to frequent military stand-offs. The 1962 War, China won the war, capturing Aksai Chin, which it continues to control. Recent Clashes, the 2020 Galwan Valley clash resulted in casualties on both sides, escalating tensions. Military Build-up, both nations have increased troop deployments, built infrastructure, and enhanced surveillance along the LAC. Despite multiple rounds of diplomatic talks, the border dispute remains unresolved, fuelling strategic competition.

Regional influence and rivalry: India and China compete for influence in South Asia, the Indian Ocean, and beyond. China has expanded its influence in India’s neighbouring countries through investments, infrastructure projects, and military cooperation. Pakistan, China’s closest ally in the region, with strong economic and military ties under the China-Pakistan Economic Corridor (CPEC). Nepal, Sri Lanka, and Bangladesh, China has increased investments and economic engagement, challenging India’s traditional influence. China’s “String of Pearls” strategy- developing ports and military bases in countries like Sri Lanka, Myanmar, and Pakistan-concerns India. In response, India is strengthening its navy, building alliances with the US, Japan, and Australia under the QUAD alliance, and developing its own strategic ports. Both nations aim to be dominant powers in the Indo-Pacific region. China’s Belt and Road Initiative (BRI), expanding influence through infrastructure projects across Asia, Africa, and Europe. India refuses to join BRI due to sovereignty concerns over CPEC, which passes through disputed territory in Pakistan-occupied Kashmir. The QUAD Alliance, India, the US, Japan, and Australia collaborate on defence, trade, and security to counter China’s dominance in the Indo-Pacific. Both countries are strengthening their military capabilities. China is working for rapid military modernization, expanding naval presence, and high defence spending. India is also strengthening its army, navy, and air force with advanced weaponry, infrastructure, and strategic partnerships with the US, Russia, and France. Both nations possess nuclear weapons, making direct conflict highly risky. Technology and economic competition have also started between these two. India has restricted Chinese tech firms like Huawei and TikTok due to security concerns. India is pushing “Make in India” to compete with China’s dominance in global supply chains.

The India-China rivalry is defined by territorial disputes, military competition, regional influence battles, and global strategic positioning. While economic ties exist, geopolitical tensions and security concerns keep relations complex. The future of their competition will be shaped by diplomatic negotiations, regional alliances, and military advancements.

4. China’s Influence in South Asia and the Indian Ocean

China has significantly expanded its influence in South Asia and the Indian Ocean Region (IOR) through economic investments, military partnerships, and strategic infrastructure projects. This growing presence has challenged India’s traditional dominance, leading to geopolitical competition between the two Asian giants. China’s strategy involves economic diplomacy, political engagement, and military expansion under initiatives like the Belt and Road Initiative (BRI) and the “String of Pearls” strategy.

China’s expanding naval and economic presence in the Indian Ocean has significant strategic implications. China is developing ports and bases around India to ensure maritime dominance and secure trade routes. Key locations include: Gwadar (Pakistan), Hambantota (Sri Lanka), Kyaukpyu (Myanmar), Djibouti (East Africa)-China’s first overseas military base.

Expanding Naval Presence: China has increased patrols and submarine deployments in the Indian Ocean. Conducts joint naval exercises with countries like Pakistan and Iran. Spy Ships & Surveillance, concerns over Chinese research vessels monitoring India’s naval movements. The Indian Ocean is critical for China’s energy imports, with 80% of its oil shipments passing through the region. China aims to secure sea lanes and chokepoints, such as the Strait of Malacca.

India’s Response to China’s Influence: India has taken multiple steps to counterbalance China’s growing footprint: strengthening regional ties through investing in infrastructure projects in Nepal, Bangladesh, Sri Lanka, and Maldives. The Quad alliance, a strategic partnership with the US, Japan, and Australia to ensure a free and open Indo-Pacific. Boosting naval capabilities through constructing bases in the Andaman and Nicobar Islands, and increasing maritime patrols. India’s through “Act East” policy is strengthening ties with Southeast Asian nations to counter China’s expansion. China’s growing influence in South Asia and the Indian Ocean has reshaped regional geopolitics, challenging India’s traditional dominance. While China strengthens its economic and military presence, India is working to counterbalance Beijing’s strategy through regional partnerships and strategic alliances. The future of this power struggle will determine the geopolitical landscape of South Asia and the Indo-Pacific.

China’s Belt and Road Initiative (BRI), including investments in Pakistan, Sri Lanka, Nepal, and Bangladesh are major challenges for India’s regional influence. The China-Pakistan Economic Corridor (CPEC) passes through Pakistan-occupied Kashmir, which India opposes. Chinese naval presence in the Indian Ocean, including port acquisitions (like Hambantota in Sri Lanka), raises security concerns for India.

5. Water Disputes

Water disputes between India and China primarily revolve around transboundary rivers that originate in Tibet and flow into India. The Brahmaputra River (known as Yarlung Tsangpo in China) and the Sutlej River are the most significant among them. Due to China’s upstream position and its dam-building activities, India has expressed concerns over potential disruptions to water flow and ecological impacts.

Major Areas of Concern: China has constructed several dams on rivers that eventually flow into India, raising fears that it might control or divert water. Some key projects include Zangmu Dam, operational since 2015, built on the Yarlung Tsangpo (Brahmaputra). Megadams and Hydropower Projects, China has announced plans for a massive dam in the Great Bend of the Brahmaputra, which could significantly affect water flow into India’s north eastern states. China has considered ambitious water diversion projects like the South-North Water Transfer Project, which might reduce the Brahmaputra’s flow into India. Such moves could have severe consequences for agriculture, drinking water supply, and biodiversity in India’s north eastern region. India relies on hydrological data from China to predict floods and manage water resources. However, China has occasionally withheld data, especially during political tensions (after the 2017 Doklam standoff). The lack of transparency increases India’s vulnerability to floods and water shortages.

Environmental and Ecological Concerns: China’s upstream activities, including deforestation, damming, and industrial projects, could impact downstream ecosystems. Changes in river flow could lead to floods, droughts, and sedimentation problems in north eastern India. The north eastern states, especially Assam and Arunachal Pradesh, depend heavily on the Brahmaputra for agriculture, fisheries, and livelihoods. Any Chinese intervention in river flows could disrupt these activities and lead to socio-economic instability.

Efforts for Cooperation: India and China have signed agreements for data sharing on the Brahmaputra and Sutlej rivers, but these are limited and do not involve water-sharing commitments. Bilateral talks meetings are held to discuss water issues, though no permanent treaty exists. India is exploring regional partnerships with Bhutan and Bangladesh to counterbalance Chinese water policies. The water dispute between India and China is a critical geopolitical and environmental issue. Given the absence of a legally binding water-sharing treaty, India remains vulnerable to China’s upstream actions. Strengthening diplomatic negotiations, regional cooperation, and sustainable water management strategies are crucial to mitigating risks and ensuring water security for both nations.

The issue of transboundary rivers, particularly the Brahmaputra (Yarlung Tsangpo in China), is another contentious area. India has expressed concerns over China’s hydroelectric projects on the river, fearing reduced water flow and potential ecological consequences. Given China’s upstream position, any large-scale water diversion could significantly impact India’s north-eastern states.

Emerging Trends in India-China Relations

1. Economic Decoupling and Supply Chain Diversification

Among major factors driving economic decoupling is: geopolitical tensions. The border clashes, particularly the Galwan Valley conflict in 2020, have strained diplomatic relations between India and China. This has led India to adopt restrictive measures on Chinese investments and technology imports, promoting self-reliance through the “Atmanirbhar Bharat” (Self-Reliant India) initiative. Trade imbalances and import-substitution is also a reason. India has been experiencing a significant trade deficit with China. In response, the Indian government is pushing for import substitution strategies in key sectors such as electronics, pharmaceuticals, and telecommunications to reduce dependency on Chinese goods. Technology and security concerns is also a reason for economic decoupling. India has banned numerous Chinese apps, citing data security risks, and has implemented stricter scrutiny of Chinese investments, particularly in sensitive sectors like 5G technology and critical infrastructure.

Supply Chain Diversification Strategies: Through strengthening domestic manufacturing under the Production-Linked Incentive (PLI) scheme, India is incentivizing domestic and foreign firms to manufacture in India, particularly in electronics, pharmaceuticals, and semiconductors, to reduce reliance on Chinese supply chains. Through expanding trade partnership India is actively engaging with countries such as the U.S., Japan, Australia, and members of the European Union to create alternative supply chains. The QUAD (Quadrilateral Security Dialogue) has also played a role in promoting resilient supply chains in the Indo-Pacific region. Through investment in infrastructure and logistics to make India a more attractive manufacturing hub, the government is investing in industrial corridors, digital infrastructure, and streamlined logistics to enhance production and export capabilities.

Challenges and opportunities: Major challenges are: China remains a dominant global manufacturing hub, and immediate decoupling is complex, Indian industries face cost and efficiency constraints compared to China’s well-established production ecosystems, dependence on Chinese imports in key sectors such as electronics and pharmaceuticals is still high. Major opportunities are: Strengthening India’s role in the global supply chain through targeted policy interventions, leveraging trade agreements and regional collaborations for market access, enhancing technological self-reliance and fostering domestic innovation, India’s efforts towards economic decoupling and supply chain diversification from China are still in progress. While challenges persist, strategic policy interventions and global collaborations can help India strengthen its economic resilience. The next few years will be critical in determining the success of these efforts in reshaping India’s economic landscape in a multipolar world.

In response to trade imbalances and security concerns, India is actively diversifying its supply chains, encouraging domestic manufacturing, and strengthening economic ties with other nations. The ‘China Plus One’ strategy, adopted by many global businesses, presents an opportunity for India to attract investments in sectors like technology, pharmaceuticals, and manufacturing.

2. Military Modernization and Strategic Partnerships

Both India and China have embarked on extensive military modernization programs to enhance their defence capabilities. These efforts are driven by national security concerns, regional power competition, and the evolving geopolitical landscape. Through military modernization China has undertaken one of the most ambitious military modernization initiatives in the world. The People’s Liberation Army (PLA) has focused on technological advancements, modernization of military doctrine, and expansion of strategic capabilities. Some key areas include: naval expansion. The PLA Navy (PLAN) has expanded its blue-water capabilities with aircraft carriers, nuclear submarines, and advanced warships to assert its influence in the Indo-Pacific. Through missile and space capabilities China has developed sophisticated missile systems, including hypersonic weapons, and strengthened its space and cyber warfare capabilities. China through integrated warfare and AI the PLA is incorporating artificial intelligence, drones, and cyber warfare tools to enhance battlefield efficiency and asymmetric warfare strategies.

India’s Military Modernization: India, in response to regional security threats, has significantly upgraded its defence capabilities. Some key aspects include: indigenous defence manufacturing. Initiatives like “Make in India” aim to reduce reliance on foreign arms imports by developing indigenous fighter jets, submarines, and missile systems. Through strategic force projection India has strengthened its air and naval capabilities to counterbalance China’s influence in the Indian Ocean Region (IOR), acquiring aircraft carriers, stealth fighters, and advanced missile defence systems. Through digital warfare and cybersecurity India is focusing on space-based defence initiatives, cyber security frameworks, and AI-driven military applications to enhance operational readiness.

Strategic Partnerships and Aligning with Global Players: Both India and China are forming strategic partnerships to secure their geopolitical interests and expand their influence. China has strengthened ties with nations through economic, military, and diplomatic engagements with Russia. Which is a deepening military and economic partnership with Russia has enhanced China’s access to advanced defence technology and energy security. Pakistan is another partner of China. The China-Pakistan Economic Corridor (CPEC) and growing defence collaboration strengthen China’s position in South Asia. Through Belt and Road Initiative (BRI) China has built military and strategic footholds in key regions, including Africa, the Middle East, and South Asia. India has reinforced alliances with major global powers to counterbalance China’s growing assertiveness through United States. Strengthened defence cooperation through agreements like Basic Exchange and Cooperation Agreement (BECA), COMCASA, and LEMOA, facilitating intelligence sharing and military interoperability. India collaborates with Quad Alliance, the US, Japan, and Australia in the Quad framework to maintain regional security in the Indo-Pacific. France and Israel are another partner of India. Defence procurements, including the Rafale fighter jets from France and advanced missile systems from Israel, enhance India’s military capabilities.

Implications of India-China Relations: Military modernization and strategic partnerships significantly impact India-China relations, creating a mix of competition and cautious engagement. The modernization of forces on both sides borders has escalated border tensions, as seen in the 2020 Galwan Valley clashes. India through regional and global Influence growing its defence capabilities influence the broader Indo-Pacific strategy, affecting alliances and counterbalances in the region. While competition prevails, military dialogues, confidence-building measures, and diplomatic engagements remain crucial for stability. The dual trends of military modernization and strategic partnerships define the evolving trajectory of India-China relations. While these dynamics contribute to heightened tensions and strategic competition, they also necessitate dialogue and cooperation to prevent conflicts and promote regional stability. The future of India-China relations will depend on how both nations navigate these trends in the broader geopolitical landscape.

Both India and China are investing heavily in military modernization. India has enhanced its border infrastructure, deployed advanced weaponry, and strengthened partnerships with like-minded nations, particularly through defence agreements with the U.S., France, and Russia. Meanwhile, China continues to bolster its military presence along the LAC, further intensifying security concerns.

3. Diplomatic Engagement and Conflict Management

India-China relations have historically been characterized by a mix of cooperation and conflict. While both countries share deep historical and cultural ties, territorial disputes and geopolitical competition have often strained their bilateral ties. In recent years, diplomatic engagement and conflict management have emerged as key trends shaping the trajectory of India-China relations.

Diplomatic Engagement: India and China, as two of the world’s largest economies and influential global players, have maintained high-level diplomatic channels to manage their complex relationship. Despite border tensions, both nations have engaged in regular diplomatic dialogues to foster mutual understanding and prevent escalation. Mechanisms such as the Working Mechanism for Consultation and Coordination on India-China Border Affairs (WMCC) and Special Representatives’ Talks on the Boundary Question have played pivotal roles in maintaining communication. Economic diplomacy remains an essential aspect of engagement. China continues to be one of India’s largest trading partners, with bilateral trade exceeding $100 billion in recent years. Despite calls for reducing economic dependence, trade and investment remain a significant dimension of their relationship. Additionally, both countries participate in multilateral forums such as BRICS, SCO, and G20, underscoring their cooperation on global governance issues.

Conflict Management: Border tensions, especially after the Galwan Valley clash in 2020, have necessitated conflict management strategies. India and China have engaged in multiple rounds of military and diplomatic talks to ease tensions along the Line of Actual Control (LAC). The disengagement process in areas such as Pangong Tso and Gogra-Hotsprings reflects a cautious approach toward de-escalation, though challenges remain. Military-to-military engagements and confidence-building measures (CBMs) have been utilized to prevent misunderstandings. Agreements such as the 1993 and 1996 border protocols aimed at maintaining peace and tranquility along the LAC continue to be invoked in negotiations.

Challenges and the Way Forward: While diplomatic engagement and conflict management mechanisms have helped in preventing full-scale conflict, challenges persist. The lack of a clearly demarcated border, strategic competition in South Asia and the Indo-Pacific, and differing political ideologies create friction in bilateral relations. Both nations must strengthen diplomatic initiatives, enhance communication channels, and uphold agreements to ensure long-term stability. Diplomatic engagement and conflict management will remain crucial in shaping India-China relations. While tensions are likely to persist, the commitment to dialogue and negotiation can help maintain regional stability and foster cooperation in areas of mutual interest. Moving forward, both countries must balance competition with collaboration to navigate their complex and evolving relationship.

Despite tensions, diplomatic channels remain open. Regular dialogues through mechanisms such as the Special Representatives’ Meetings and Working Mechanism for Consultation and Coordination (WMCC) on border affairs indicate efforts to prevent further escalation. Track II diplomacy, cultural exchanges, and people-to-people interactions continue to play a role in fostering engagement.

4. Technological and Cybersecurity

India-China relations have long been shaped by a complex mix of cooperation and competition. In recent years, technology and cybersecurity have emerged as critical areas influencing bilateral ties. While both countries are technological powerhouses, concerns over cybersecurity, data security, and digital sovereignty have led to tensions, particularly in the wake of geopolitical disputes and economic competition.

Role of Technology in India-China Relations: Technology has been a major factor in shaping India-China interactions, with both collaboration and conflict defining their relationship. Key aspects include: Trade and investment in tech sector, China has played a significant role in India’s technology ecosystem, with major investments in Indian startups such as Paytm, Ola, and Byju’s. Chinese telecom giants like Huawei and ZTE have also been involved in India’s telecommunications infrastructure, though their role has been scrutinized in recent years. The Indian government’s push for “Atmanirbhar Bharat” (self-reliant India) aims to reduce dependence on Chinese technology and promote domestic alternatives. 5G and telecommunications, India has been cautious about allowing Chinese firms like Huawei in its 5G infrastructure, amid global concerns over cybersecurity and potential espionage risks. India has instead promoted partnerships with Western firms and local telecom providers to develop a secure 5G network. Digital payments and apps, the ban on Chinese apps like TikTok, PUBG Mobile, and WeChat in 2020 marked a significant shift in India’s approach to Chinese technology. The Indian government cited national security concerns and data privacy risks as reasons for the bans. This move was part of India’s broader strategy to limit Chinese influence in its digital economy.

Cybersecurity and Flashpoint: Cybersecurity has become an area of concern in India-China relations, particularly in the following ways: Cyberattacks and espionage, data sovereignty and privacy and cyber diplomacy and regulations. India has reported multiple cyberattacks allegedly originating from Chinese hacker groups, targeting sectors such as power grids, government agencies, and defence infrastructure. In 2021, there were reports of Chinese-linked cyber intrusions into India’s power sector, raising concerns over critical infrastructure vulnerabilities. India has strengthened its data protection policies to safeguard sensitive information from foreign entities, including Chinese firms. The introduction of the Digital Personal Data Protection Act aims to ensure greater control over data storage and transfer, reducing potential security risks. India has actively participated in global cybersecurity discussions to establish norms for responsible state behaviour in cyberspace. The country is also strengthening ties with like-minded partners such as the US, Japan, and Australia (through the QUAD alliance) to counter cyber threats and promote a free and secure internet.

Technology and cybersecurity will continue to be defining factors in India-China relations. While economic interdependence remains significant, security concerns have led to a cautious approach toward Chinese technology. India is prioritizing self-reliance, cybersecurity measures, and strategic partnerships to navigate the evolving geopolitical landscape. The future of India-China tech relations will likely depend on how both nations balance competition, cooperation, and security concerns in the digital age.

Technological competition, particularly in areas like 5G, artificial intelligence, and cybersecurity, is an emerging dimension of India-China relations. India’s restrictions on Chinese technology firms and data security concerns reflect broader strategic shifts. Ensuring cybersecurity resilience while promoting indigenous technological capabilities will be a key focus for India in the coming years.

5. Shifting Economic Engagement

India-China relations have long been defined by a mix of economic cooperation and strategic competition. While China is one of India’s largest trading partners, recent geopolitical tensions, policy shifts, and the drive for economic self-reliance have led to a rebalancing of economic engagement. The shift is evident in reduced dependency on Chinese imports, increased scrutiny of Chinese investments, and a push for diversification in India’s global trade strategy. Key Aspects of the Shifting Economic Engagement are: in trade relations: growing deficit and calls foe correction, restriction on Chinese investments, supply chain diversification and global partnerships, technology and infrastructure: a strategic shift, and the future of economic engagements.

2022. In Trade Relations: Growing Deficit and Calls for Correction: China remains India’s largest trading partner, with bilateral trade crossing 135 billion dollars in 2022. However, India faces a massive trade deficit, exceeding 100 billion dollars. Indian policymakers are increasingly advocating for reducing dependence on Chinese goods, particularly in critical sectors such as electronics, pharmaceuticals, and infrastructure. Efforts to boost domestic manufacturing through initiatives like “Make in India” and “Atmanirbhar Bharat” aim to curb reliance on Chinese imports.
2023. Restrictions on Chinses Investments: Following border tensions in 2020, India tightened foreign direct investment (FDI) regulations to scrutinize Chinese investments, requiring prior government approval for any investments from countries sharing a land border with India. Major Chinese investors, including Alibaba and Tencent, have scaled down their activities in India’s startup ecosystem due to increased regulatory scrutiny. Several infrastructure and telecom projects involving Chinese firms have been canceled or reassigned to domestic or non-Chinese companies.
2024. Supply Chain Diversification and Global Partnerships: India is actively working to reduce dependence on Chinese supply chains by strengthening trade relations with alternative partners like the U.S., Japan, South Korea, and the European Union. The Production-Linked Incentive (PLI) scheme is incentivizing companies to set up manufacturing in India rather than relying on Chinese imports. The “China Plus One” strategy, where global companies look for alternatives to China, has benefited India, with firms shifting operations to the Indian market.
2025. Technology and Infrastructure: A Strategic Shift: India’s move to ban Chinese apps and limit Chinese participation in 5G infrastructure reflects a broader trend of economic disengagement in critical sectors. Indian companies are expanding into semiconductor manufacturing, electric vehicles, and renewable energy, seeking to reduce reliance on Chinese suppliers. Infrastructure projects under India’s Gati Shakti initiative and international collaborations (e.g., the India-Middle East-Europe Economic Corridor) aim to create alternatives to China’s Belt and Road Initiative (BRI).
2026. The Future of Economic Engagement: Despite geopolitical tensions, pragmatic economic considerations may still drive selective engagement between India and China. Trade volumes are expected to remain high in the near term, but India’s policy direction indicates a long-term shift toward greater self-sufficiency and reduced economic dependence on China. Emerging areas such as digital trade, green energy, and pharmaceuticals could shape the future dynamics of economic cooperation, albeit under tighter regulations.

India-China economic engagement is undergoing a significant transformation, driven by geopolitical factors, national security concerns, and India’s push for economic self-reliance. While trade continues, the broader trend is a strategic reorientation aimed at reducing dependency on Chinese imports, diversifying supply chains, and fostering domestic industries. The trajectory of economic ties will likely depend on how both nations navigate competition and areas of mutual interest in an evolving global landscape.

India has reduced its dependence on Chinese imports, particularly in critical sectors like telecom, electronics, and pharmaceuticals. New trade regulations and investment restrictions have been introduced to protect domestic industries and ensure data security. However, bilateral trade remains high, with China still being one of India’s top trading partners.

6. Tech and Cyber Security Concerns

India-China relations have increasingly been shaped by technology and cybersecurity concerns, reflecting a broader global trend where digital security and geopolitical strategy intersect. While economic interdependence remains strong, growing distrust over cyber threats, data security, and critical technology infrastructure has led India to adopt a more cautious approach toward Chinese technology firms and investments. These concerns have influenced policies on telecommunications, digital platforms, cybersecurity, and supply chain resilience.

1. Cybersecurity Threats and Cyber Espionage: Cyber Attacks on Indian Infrastructure: India has faced multiple cyberattacks allegedly linked to Chinese state-backed hacker groups, targeting critical sectors like power grids, defence, banking, and government institutions. In 2020, after the Galwan Valley border clash, there were reports of cyber intrusions into India’s power sector, leading to blackouts in Mumbai. Indian cybersecurity agencies have identified Chinese-origin cyber threats aimed at espionage and data theft from key government and private sector entities.

Response from India: India has strengthened its cyber defence capabilities, with agencies like CERT-In (Computer Emergency Response Team) enhancing monitoring and response mechanisms. Increased cooperation with global allies, including the U.S., Japan, and Australia, to bolster cybersecurity frameworks through forums like the Quad. Strengthening domestic cyber laws and data protection policies to counter potential cyber threats from China.

1. Digital Sovereignty and the Ban on Chinese Apps: In 2020, India banned over 300 Chinese apps, including Tik-Tok, WeChat, and PUBG Mobile, citing national security and data privacy concerns. These apps were accused of collecting user data and potentially sharing it with Chinese authorities under Beijing’s data laws. The move signalled India’s intent to reduce digital dependency on China while promoting homegrown alternatives in the digital economy.
2. Restrictions on Chinese Tech Firms and Telecom Infrastructure: 5G and Telecom Security: India has restricted Chinese telecom giants like Huawei and ZTE from participating in its 5G rollout, aligning with global concerns over potential security vulnerabilities. Instead, India has favored partnerships with Western and domestic firms to develop a secure and independent telecom network. The Indian government has also encouraged indigenous telecom manufacturing under the “Make in India” initiative to reduce reliance on Chinese suppliers.

Surveillance and Data Security Concerns: Concerns over potential surveillance by Chinese tech firms have led India to tighten its foreign investment rules, requiring government clearance for investments from neighbouring countries. The government is also working on stricter data localization policies to ensure sensitive data remains within Indian borders.

1. India’s Strategic Cybersecurity Partnerships: India has increased cybersecurity collaboration with countries like the U.S., Japan, Australia, and the European Union. As part of the Quad framework, India participates in initiatives focused on securing critical digital infrastructure and countering cyber threats. The country is also investing in developing indigenous cybersecurity solutions to enhance digital resilience.

Technology and cybersecurity concerns have become central to India-China relations, shaping policies on trade, investment, and digital security. While economic ties remain strong, India is taking decisive steps to secure its cyber infrastructure, reduce dependency on Chinese tech, and strengthen partnerships with global allies. As cyber threats evolve, India’s approach will continue to focus on safeguarding national security while navigating the complexities of its relationship with China in the digital domain.

India has banned several Chinese apps and digital platforms citing national security concerns. There is a growing emphasis on cybersecurity amid concerns about data breaches and espionage linked to Chinese technology firms. India is investing in domestic tech innovation to reduce reliance on Chinese electronics and software.

7. Geopolitical Competition in South Asia

India and China, as the two largest powers in Asia, have long competed for influence in South Asia. While India has traditionally been the dominant power in the region, China’s growing economic and strategic presence-especially through the Belt and Road Initiative (BRI) has intensified geopolitical competition. This rivalry is shaping regional alliances, economic partnerships, and security dynamics in countries like Nepal, Sri Lanka, Bangladesh, Pakistan, and the Maldives.

1. Strategic Infrastructure and Economic Influence: China’s Belt and Road Initiative (BRI) vs. India’s Connectivity Projects: China has expanded its influence in South Asia through massive infrastructure projects under the BRI, funding highways, ports, railways, and energy projects in Pakistan, Sri Lanka, Nepal, and Bangladesh. India, wary of the debt implications of Chinese investments, has promoted alternative connectivity projects like the India-Myanmar-Thailand Trilateral Highway and the Chabahar Port in Iran to counterbalance China’s influence. India has also pushed for regional integration through the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and the South Asian Association for Regional Cooperation (SAARC).

Pakistan as a Key Battleground: China’s China-Pakistan Economic Corridor (CPEC), part of BRI, is a major concern for India as it passes through Pakistan-occupied Kashmir, an area India claims as its own territory. India has strongly opposed CPEC, viewing it as a strategic challenge that enhances China’s economic and military foothold in South Asia.

1. Military and Security Competition: China’s Military Presence and Influence in South Asia: China has increased military ties with South Asian countries, selling weapons, submarines, and fighter jets to Pakistan, Bangladesh, and Sri Lanka. The establishment of a Chinese military base in Djibouti and increasing port control in Sri Lanka (Hambantota) raise concerns about China’s military reach in the Indian Ocean.

India’s Response and Strengthening Regional Security Ties: India has strengthened defence ties with South Asian neighbours, including providing military assistance and training programs to Nepal, Bangladesh, and Sri Lanka. Increased maritime cooperation with the U.S., Australia, and Japan under the Quad alliance aims to counter China’s influence in the Indo-Pacific. India is expanding its Indian Ocean naval presence, engaging in joint exercises with regional and global partners to maintain strategic dominance.

• Political Influence and Diplomacy: China’s Political Engagement in South Asia: China has increased political and diplomatic engagements with South Asian governments, often using economic incentives to strengthen ties. In Nepal, China has influenced domestic politics, encouraging policies favourable to its interests, including the One-China Policy (regarding Tibet and Taiwan). In Sri Lanka and the Maldives, China has leveraged economic assistance to gain long-term strategic advantages, such as control over key infrastructure.

India’s Efforts to Maintain Influence: India has used cultural, historical, and people-to-people ties to counter China’s influence, particularly in Nepal and Bangladesh. India’s Neighbourhood First Policy prioritizes economic and security partnerships with South Asian nations, offering alternatives to Chinese investments. Through forums like BIMSTEC and the Indian Ocean Rim Association (IORA), India is working to deepen regional cooperation and reduce China’s strategic influence.

1. Competition in the Indian Ocean Region (IOR): China’s growing naval presence in the Indian Ocean is a significant challenge for India, which sees the region as its strategic backyard. China’s “String of Pearls” strategy, involving investments in ports across South Asia, aims to encircle India and establish a stronger maritime position. India has responded by strengthening its ties with Mauritius, Seychelles, and Indonesia and investing in military bases in the Andaman and Nicobar Islands to secure its maritime interests.

Geopolitical competition between India and China in South Asia is intensifying across economic, military, and diplomatic fronts. While China seeks to expand its influence through infrastructure investments and strategic partnerships, India is actively countering these moves through regional diplomacy, security collaborations, and alternative economic initiatives. This ongoing rivalry will continue to shape South Asia’s geopolitical landscape in the years to come.

India is strengthening ties with QUAD (US, Japan, Australia) as a strategic counter to China’s influence. China continues to expand its footprint in Pakistan, Nepal, Sri Lanka, and the Indian Ocean region, raising security concerns for India. The China-Pakistan Economic Corridor (CPEC) and Chinese port acquisitions challenge India’s strategic interests.

8. Water Disputes and Environmental Concerns

Water disputes and environmental concerns have emerged as key issues in India-China relations. As the two most populous nations in the world, both countries depend heavily on shared river systems, particularly the Brahmaputra (Yarlung Tsangpo in China) and the Sutlej (Langqen Zangbo in China). However, China’s control over the upper riparian flow of these rivers and its large-scale dam construction have raised tensions with India, fuelling concerns over water security, ecological damage, and regional stability.

1. Water Disputes: China has control over Transboundary Rivers. It has been building multiple dams and hydropower projects on the Yarlung Tsangpo (Brahmaputra) in Tibet, raising fears that India’s downstream water supply could be reduced. The Zangmu Dam, China’s first major hydropower project on the Brahmaputra, was operationalized in 2015, followed by plans for three more dams. China has proposed the construction of a mega-dam at the Great Bend of the Yarlung Tsangpo, which, if completed, could significantly alter river flow, affecting India’s agriculture and livelihoods in Assam and Arunachal Pradesh.

India’s Response and Countermeasures: India has initiated its own hydropower projects on the Brahmaputra basin to counterbalance China’s water control. India is also pushing for a bilateral water-sharing agreement with China, similar to its agreements with Bangladesh and Pakistan, though China has resisted binding treaties. India has been enhancing water data-sharing mechanisms with China, though Beijing has occasionally withheld crucial hydrological data, especially during periods of political tension.

1. Impact on Downstream Communities and Agriculture: Millions of people in north-eastern India depend on the Brahmaputra for agriculture, fishing, and drinking water. Any disruption in the river’s flow could lead to water shortages and reduced crop yields. China’s control over water flow increases the risk of sudden flooding in Arunachal Pradesh and Assam, as seen in 2000 and 2017 when China released excess water without prior notification. The risk of droughts and desertification in downstream regions is another major concern if China diverts water for its own irrigation and industrial needs.
2. Glacial Melting and Climate Change: Both India and China are highly vulnerable to climate change, with rising temperatures accelerating glacial melting in the Himalayas. The rapid melting of Tibetan Plateau glaciers, which feed major South Asian rivers, threatens long-term water availability for both nations. Unregulated dam construction in a seismically active region raises concerns about potential dam failures, landslides, and flash floods. Collaborative efforts on climate research and disaster preparedness remain weak due to political tensions.

The Way Forward: Cooperation or Conflict?

Bilateral and Regional Cooperation Efforts: India and China have engaged in limited water-sharing agreements, with China providing hydrological data on the Brahmaputra and Sutlej rivers during monsoon seasons to help India predict floods. India is advocating for a multilateral approach through regional forums, involving Bangladesh, Nepal, and Bhutan, to address transboundary water concerns. Greater participation in global environmental initiatives like the Paris Agreement could foster cooperative efforts in climate adaptation and sustainable water management.

Challenges to Cooperation: China’s reluctance to sign a legally binding water-sharing treaty makes long-term collaboration difficult. The broader India-China border conflict, particularly in Arunachal Pradesh, complicates trust and dialogue on water issues. The lack of transparency in China’s dam construction projects fuels suspicion in India, leading to calls for stronger diplomatic and strategic countermeasures.

Water disputes and environmental concerns are becoming an increasingly significant factor in India-China relations. While both countries face common climate challenges, political tensions and China’s upper-riparian dominance complicate cooperation. A sustainable and peaceful resolution will require greater transparency, diplomatic engagement, and possibly a multilateral framework to ensure fair water-sharing and environmental protection in the region. Without such measures, water disputes could escalate, adding another dimension to the already complex India-China rivalry.

China’s dam-building projects on transboundary rivers like the Brahmaputra (Yarlung Tsangpo) are a growing concern for India. Climate change and water-sharing agreements are becoming more critical in bilateral talks.

9. Multilateral Engagements and Strategic Balancing

India-China relations are shaped by a complex interplay of competition, cooperation, and strategic balancing. As two of the world’s largest economies and most populous nations, their engagements in multilateral platforms and their strategic manoeuvring define not only their bilateral ties but also influence the broader global order.

Multilateral Engagements: India and China actively participate in numerous multilateral organizations, including the United Nations (UN), BRICS (Brazil, Russia, India, China, South Africa), the Shanghai Cooperation Organization (SCO), and the G20. These platforms serve as arenas for both collaboration and contestation between the two Asian powers.

1. BRICS Cooperation: India and China, as key BRICS members, have worked together to promote economic cooperation, financial reform, and south-south collaboration. The establishment of the New Development Bank (NDB) is a testament to their shared interests in reforming global financial institutions. However, underlying geopolitical tensions often limit the scope of deeper cooperation.
2. SCO and Regional Security: Both nations engage in the SCO to address regional security concerns, counterterrorism, and economic development. Their cooperation in the SCO underscores a shared interest in maintaining regional stability, particularly in Afghanistan and Central Asia. Nevertheless, China’s increasing footprint in South Asia through the Belt and Road Initiative (BRI) and India’s reservations about it create friction.
3. United Nations and Global Governance: India seeks permanent membership in the UN Security Council (UNSC), a move China has not openly supported. While both nations align on issues like climate change and trade regulations, China’s reluctance to back India’s global aspirations reflects the strategic competition underlying their diplomatic engagements.
4. G20 and Economic Policy: India and China collaborate within the G20 to push for reforms in global economic governance, trade policies, and sustainable development. Despite trade disputes, both countries emphasize the need for multilateral approaches to address global economic challenges.

Strategic Balancing: India and China engage in strategic balancing to counteract each other’s influence regionally and globally. This balancing act manifests in multiple dimensions:

1. Military and Security Posturing: The border disputes, including the recent standoff in Ladakh, highlight the strategic competition between the two nations. While diplomatic dialogues continue, both countries are investing heavily in military modernization and infrastructure along their shared border.
2. Engagement with the Indo-Pacific Region: India’s increasing involvement in the Quad (Quadrilateral Security Dialogue) with the U.S., Japan, and Australia is a direct counter to China’s assertiveness in the Indo-Pacific. Beijing views this as an attempt to contain its rise, while India perceives it as a necessary measure to secure its strategic interests.
3. Economic Competition and Cooperation: Despite border tensions, economic interdependence remains a defining factor. China is India’s largest trading partner, but India is also diversifying its trade partnerships, strengthening economic ties with Southeast Asia, the EU, and the U.S. to reduce dependence on China.
4. Soft Power and Global Influence: Both nations are expanding their soft power outreach through diplomatic engagements, development aid, and cultural diplomacy. India’s engagement with African nations and its push for digital public goods contrasts with China’s massive infrastructure projects under the BRI.

India-China relations continue to be shaped by a mix of cooperation and competition within multilateral frameworks and through strategic balancing. While economic and diplomatic engagements provide avenues for dialogue, geopolitical tensions necessitate cautious manoeuvring. As both nations seek to expand their global influence, their ability to manage conflicts and leverage multilateral platforms will be crucial in determining the future trajectory of their bilateral relations and their impact on global geopolitics. Despite tensions, India and China cooperate in BRICS, SCO, and G20, balancing rivalry with shared economic interests. India is actively diversifying its foreign policy approach by deepening engagement with Western democracies while maintaining a cautious stance with China.

Conclusion

The emerging trends in India-China relations highlight a complex and evolving dynamic shaped by strategic competition, economic recalibration, and geopolitical realignments. While both nations continue to engage in trade and diplomacy, underlying tensions remain, particularly concerning border disputes, military posturing, and regional influence. One of the most defining aspects of the relationship is the continued militarization along the Line of Actual Control (LAC), with both countries enhancing border infrastructure and deploying advanced military capabilities. Despite multiple rounds of diplomatic and military negotiations, deep-seated mistrust persists, making conflict resolution challenging. This militarization, combined with India’s increasing defence collaborations with the United States and the Quad, suggests a shift towards a more assertive security posture in the Indo-Pacific and South Asia.

On the economic front, while trade volumes remain high, India has actively pursued supply chain diversification and reduced dependency on Chinese imports in critical sectors such as technology, telecommunications, and pharmaceuticals. The decoupling trend, driven by security concerns and global economic shifts, reflects India’s push for self-reliance (Atmanirbhar Bharat) and strategic autonomy in economic policymaking. Technological and cybersecurity concerns are also redefining bilateral ties, with India implementing strict regulations on Chinese investments, banning apps, and restricting Chinese telecom firms like Huawei from 5G infrastructure development. This indicates a broader trend of digital sovereignty and cybersecurity prioritization in India’s national security framework. Geopolitically, China’s growing engagement with Pakistan, Nepal, Sri Lanka, and the Indian Ocean region, coupled with its strategic infrastructure projects under the Belt and Road Initiative (BRI), has led India to strengthen its own regional partnerships. In response, India has enhanced its defence ties with the Quad (US, Japan, Australia), ASEAN, and European nations, positioning itself as a key player in the Indo-Pacific security architecture. This reflects a shift towards a multipolar Asia where India is increasingly aligning with like-minded nations to counterbalance China’s influence.

Despite these challenges, India and China continue to engage in multilateral platforms such as BRICS, the Shanghai Cooperation Organisation (SCO), and G20, signalling that cooperation in global governance and economic forums remains a key feature of their relationship. Additionally, climate change, water-sharing agreements, and global economic stability are areas where both nations may find common ground for future collaboration.

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