India aspires to be and is steadily on the way to be a developed nation by 2047, and to which end, Viksit Bharat and Surakshit Bharat (Prosperous India, Secure India) are wheels of the same chariot, being driven in the same direction. In both of these significant national aspirations, China must be constantly analysed, as it looms large, being the largest trading partner of India and a threat along the Northern Border!

China has been facing internal and external headwinds. Draconian Covid lockdowns and collapse of the all-important real estate sector induced a continued moderation of growth of GDP. China's youth unemployment rate has risen to 18.8% in August 2024. There are major concerns on the demographics, with population shrinking and more importantly, aging. As per one statistic, there are 350 million people nearing retirement age, which is more that the population of the USA! With the prevalent system, this large population will be eligible for state pensions for a long time, with low retirement ages and increased life-expectancy. With the fear of public pension fund running out of money by 2035, retirement ages are being increased in Jan 2025. This will increase the serious youth employment situation, something always a cause of concern in a totalitarian environment. A Catch-22 situation any which way! The anxiety that China has about its economic situation is apparent by the raft of financial measures announced recently by its Regulators to support the economy and increase liquidity.

China is also facing tariff wars with current US Administration having kept most of the previous Administration’s tariffs in place. In addition, in May 2024 the US announced tariff hikes on an additional $18 billion of Chinese goods covering 14 different Chinese product categories and including on Chinese electric vehicles from 25% to 100%. Similarly, EU has imposed extra duties of up to 37.6% on imports of EVs made in China, despite Beijing’s warnings the move would unleash a trade war.

Yet, conversely and paradoxically, China is the largest economy in PPP terms, the second-largest in nominal GDP terms. China retains its primacy in cutting edge technologies, as a technology leader in 57 of the 64 technologies, as per the latest ASPI report. It is the factory of the world, with 31.6% of the total global manufacturing output, nearly $5 trillion of China's economic activities in 2023. It generates above $90 billion trade surplus every month ($99 billion in June 2024), presently not being invested in US Government Treasury. China is responsible for 55% of global steel, 51% of cement, and 59% of aluminium production. It is a key provider of infrastructure globally, and controls the relevant supply chains. China has channelled government funding into strategic sectors, especially the ‘green’ sector, including EVs, renewables and 5G. Within five years, China has become the largest exporter of vehicles. A case in point is the latest BYD hybrid technology car that can drive up to 2,100 km on a single charge and full tank of gas! Imagine at an average, this car requires full tank only five times in a year!

The Government of India’s Economic Survey 2023-24 tabled in July 2024 in Parliament, was important also in its advocation of Foreign Direct Investment (FDI) from China, though this was later refuted. FDI would help India improve its participation in global supply chains through exports, implying that the ‘factory of the world,’ and the world’s second largest economy cannot be ignored. As an aside China stands at 22nd position in total FDI inflow in India, with only about $8 billion investment from April 2020 to March 2024. Indeed, the Economic Survey 2024 kickstarted a debate on Chinese capital inflows in India, and the decision will be pragmatic and in consideration to Indian national interests and ambitions.

Regarding the problematic issue of India China border, on the diplomatic front, discussions have gathered steam, and thaw has been spoken off. Despite Chinese incursions of May 2020, India-China relations hadn’t completely frozen. The EAM interacted with Chinese Foreign Minister Wang Yi in Vientiane, Lao PDR on 25 July 2024, and called for full respect for the LAC and earlier agreements, finding an early resolution of the remaining issues along the Line of Actual Control (LAC) to stabilize and rebuild bilateral relations. The two ministers had also met earlier in Astana, Kazakhstan, on 04 July, 2024, again on finding an early resolution of the remaining issues along the Line of Actual Control (LAC) in Eastern Ladakh to stabilize and rebuild bilateral relations.

On 29 August, 2024, the 31st meeting of WMCC was described as “frank, constructive and forward-looking,” on the situation along the LAC to narrow down the differences and find early resolution of the outstanding issues. In an interview recently the EAM also referred to the issue of the LAC having been resolved 75%, in as much as disengagement in Eastern Ladakh was concerned!

Indian NSA Doval, on the sidelines of the BRICS NSAs Meet in St Petersburg, Russia in Sep 2024, reiterated what has been India's consistent position for some time now - that there can be no normalcy in India-China ties unless there is respect for the Line of Actual Control (LAC) in the border areas. However, both sides agreed to work with urgency and redouble their efforts to realize complete disengagement in the remaining areas. NSA conveyed that peace and tranquillity in borders areas and respect for LAC are essential for normalcy in bilateral relations. And that both sides must fully abide by relevant bilateral agreements, protocols, and understandings reached in the past by the two Governments. There may be likelihood of interaction between the Chinese President and India’s PM on the sidelines of multilateral summits, later in 2024.

Significantly, the Chinese Defence Ministry on 26 Sep 2024 stated that China and India have been able to “reduce differences” and build “some consensus” on disengaging troops from friction points to end the standoff along the Line of Actual Control in eastern Ladakh. It said they agreed to maintain dialogue to reach a resolution acceptable to both sides at an “early date”. The thrust of this “acceptable resolution” needs further consideration.

Consequent to eventful May-June 2020, the India-China border and the wider spaces beyond have witnessed a totally changed character. First, obviously, though PLA did not achieve its likely planned end-state of 1959 Line, it achieved a strategic game plan for the entire Eastern Ladakh border, to deny patrolling on Aksai Chin plateau. PLA’s later day attempts to occupy passes or infringe the watershed, on the Northern borders of Tibet with Uttrakhand, Sikkim and Arunachal Pradesh, were stoically denied by the Indian Army. Consequent to 2020 incursions in Eastern Ladakh, the HP-Uttrakhand-Sikkim-Arunachal Pradesh border with Tibet has much escalated deployments of Indian Army in a protective grid. These did indicate clearly that PLA’s ambitions on the border are yet incomplete.

Second, are the implications of buffer-lands (moratorium on patrolling) created in many places of 2020 incursions in Eastern Ladakh. Apparently, PLA’s incursions and the buffer-lands have limited role, to avoid patrol-clashes, chanced fisticuffs and stand-offs, thereby denying likelihood of escalation. Even if Depsang and Demchok Nalla stand-offs lead to additional buffer-zones in future, Eastern Ladakh will remain in an uneasy peace, in an environment of mistrust. The buffer-lands do not define or in any measure, settlement of the LAC; it just postpones formal of demarcation/ delineation indefinitely.

Even if further understandings on Eastern Ladakh are arrived at, these must be based on the deduction that the ‘LAC is NOT settled, and there exists no consensus on anyone LINE.” Future aggressive fait accomplii, if presented by the PLA, will be unacceptable to the nation, and will cause intense pressure on the Indian Army. By implication, in an era of distrust and threat-in-being of PLA by proximate deployment in South Xinjiang/Tibet, Indian Armed Forces have to ensure that no further incursion takes place. The deployment on the Indian side has to maintained in the forward-most locations on the border, at that altitude and terrain conditions. Similarly, any proposal for de-escalation, though important, must have a strong verification mechanism, especially since build-up by Indian forces has constraints.

In sum, it is likely that between China and India there may be intensifying economic interaction/ trade. Indeed, for China, the saturation of its own consumer base and overcapacity of its manufacturing, the attractiveness of Indian market by size and growing purchasing capacity, as also the aspirational nature of society, are very sound and advantageous reasons for increasing trade/ FDI. This may seem as a win-win situation for China and India both. However, politico-diplomatic-economic initiatives, must be mindful of Chinese ambitions, which envision India as a geopolitical challenger in Asia. Border disengagement must not be taken as settlement of border, it is not cessation of Chinese military interests and expansionism.

Viksit Bharat and Surakshit Bharat are two sides of the same coin!

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>