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China, India and the three Cs

China and India are the two most populous countries in the world. Both countries have dynamic—although, recently, slightly stuttering—economies. Their actions are likely to decisively influence global politics in the near- and medium-term. For decades, relations between China and India have been oscillating between conflict, competition and cooperation—the three Cs. In economic terms, China and India could emerge either as fierce competitors or as amiable cooperation partners.

World attention is presently focused on the display of force between China on the one hand, and Japan and the United States on the other hand, played out via a conflict over a couple of small islands in the East China Sea. But China’s maritime activities might also bring it into conflict with India. However, if China and India can transform their fragile and unstable relationship into something more cooperative, this could have an enormous positive impact on the two countries—and on global politics.

The first C: conflict

The good times of the ‘hindi-chini bhai bhai’ (India–China brotherhood) of the early years of independence under Nehru and Mao Tse-tung are long gone. The 1954 treaty between the two countries (know as ‘panchsheel’ in India) establishing peaceful co-existence was supposed to regulate territorial integrity and institute a non-interference policy.

But the period of their common anti-imperialist ideology of the 1950s ended with a border war in 1962 in which Chinese troops occupied disputed territory and caught India unprepared. This bloody conflict was and remains a traumatic experience for the Indian elite. Although careful diplomatic initiatives have led to a cautious rapprochement, relations are far from being trustful and cordial.

Indian foreign and security policymakers are currently irritated by at least three conflicts. First, the territorial dispute in the north-east of India remains contentious, despite negotiations in numerous bilateral working groups, and neither China nor India is willing to give up its claims. China claims that large parts of the territory of the Indian state of Arunachal Pradesh are part of Tibet, calling it South Tibet (Wulf 2013, PDF).

A second, closely related conflict concerns insurmountable differences over China’s role in Tibet and Tibetan refugees in India. While more than a million Tibetan refugees live in India today, China refuses to recognize the Tibetan Government in exile in India or the presence of the Dalai Lama, who fled to India in 1959 after the Chinese occupation of Tibet.

Third, the Indian Government is concerned by China’s activities in India’s immediate neighbourhood—particularly China’s defence cooperation with Pakistan and its ambitions in Bangladesh, Myanmar, Nepal and Sri Lanka.

The second C: competition

Meanwhile, the Chinese Government is anxious about increased cooperation between India and the USA, which comes after a long period of alienation. The 2005 nuclear deal between the two countries codified India’s de facto nuclear weapon status and thereby paved the way for closer cooperation. In the eyes of China, this partnership is part of the US strategy of 'rebalancing' towards Asia—a move clearly directed against China.

In turn, China’s current diplomatic, economic and maritime ambitions in several Indian Ocean littoral states are a concern for strategists in India. For example, China has invested in harbours in Gwadar (Pakistan), Hambantota (Sri Lanka) and Chittagong (Bangladesh) as well as in harbour and communication installations in Myanmar.

The Chinese Government categorically denies that any of these projects has military relevance. India, for its part, invests in its maritime presence in the Andaman and Nicobar Islands and pursues a strategy of friendly relations with countries in the Strait of Malacca, a vital bottleneck in terms of Chinese oil trade routes.

India’s former Chief of Staff of the Armed Forces, General Deepak Kapoor, warns against a Chinese ‘string of pearls’ around the Indian Ocean. Indian strategists speak in alarmist, geopolitical terms about a Chinese footprint in India’s sphere of influence and a possible encirclement. They call for a speedy and forceful investment in a blue water navy.

If hardliners on both sides have their way, all this could result in a fierce maritime arms race. India’s investments in its armed forces have been substantial, but have slowed recently due to sluggish economic growth. Comparing the military expenditure of the two countries illustrates China’s phenomenal growth: at around $170 billion, China’s defence budget is more than three times as big as India’s.

The third C: cooperation

India–China relations are characterized by contradictory factors. Apart from the worrying conflicts and the potential for an Asian arms race, both countries emphasize their willingness to cooperate. China is one of India’s biggest trading partners, and bilateral trade has flourished in recent years.

Both countries cooperate within the G20 and with other regional powers including Brazil, Russia and South Africa—together with whom they meet as the so-called BRICS countries—in order to break Western dominance of the global governance architecture, particularly international financial institutions such as the International Monetary Fund and the World Bank. China and India are also partners in other multilateral forums, including the global climate negotiations (Wulf 2014). The BRICS countries have also agreed to establish a development bank, in an ambitious plan that could indeed change global economics.

If these countries can overcome their differences, this could have positive effects on China–India relations and make their disagreements over disputed territories and other conflicts, as well as their competition in the Indian Ocean, irrelevant. Together, China and India could change the global power balance, with positive effects on economic development and security in Asia.

Nevertheless, the influence of conflict, competition and cooperation on China–India relations continues to produce a somewhat unbalanced power dynamic; and China is economically more dynamic than India. However, India’s soft power, together with its culture, its functioning democracy, its values of free press and liberty, its pluralistic society and religious diversity could, in the long run, be the more sustainable concept.


This blog post is published as part of a collaborative partnership between SIPRI and Economists for Peace and Security (EPS).