China – India Relations: From Common Economic Goals to Geostrategic Concerns


China, with its population that exceeds 1.4 billion and India, with a population that exceeds 1.3 billion and is getting close to the 1.4 billion milestone, represent the world’s #1 and #2 nations by population and at the same time, countries that have grown tremendously from a GDP perspective and are poised to maintain their trajectories. In China’s case, its $15.5+ trillion GDP places it on position #2 in terms of nominal GDP, less than $6 trillion behind the United States and almost three times greater than that of Japan, the country that occupies the third position. India, on the other hand, with a GDP in the $3+ trillion area, occupies position #5, a GDP value roughly $100 billion greater than that of France (position #6) but approximately $1.25 trillion away from the #4 nation, Germany.

From many perspectives, similarities between the two countries abound, as do economic ties which take us all the way back to the Silk Road days. We can consider China and India textbook examples of economies that had a lot of catching up to do and did just that over the past few years. At the same time, however, their low GDP Per Capita values make it clear that there is still ample growth potential, with China’s GDP Per Capita being almost 6 times lower than that of the United States and India’s a whopping 30 times lower.

Moving on to the primarily economic components of the geopolitical dimension, once again, goal similarities become obvious, with both nations being World Trade Organization members that enjoy benefits associated with being considered developing rather than developed nations and neither country being willing to change this status quo, despite pressures from players such as the United States which revolve around no longer allowing entities that account for over 0.5% of global trade to take advantage of developing nation-related benefits.

Still, even if we remain in the economic paradigm, there are certain areas that generate conflicts, such as India’s growing concerns around the very high trade deficit that it is experiencing with China. For 2018, the trade deficit with mainland China was close to $54 billion and while this value is $10 billion lower than the 2017 one, India’s deficit increased to $5 billion with Hong Kong. After drawing the line, despite a noteworthy net improvement, India is still uneasy about the situation… to put it mildly. To rectify this imbalance, it continues requesting increased access to China’s domestic market for Indian agricultural products, among other concessions.

However, once we analyze the military/geostrategic part of the China – India geopolitical relationship, let’s just say things tend to get quite a bit trickier than with “economics-only” dimensions and the most popular two areas of concern speak for themselves:

  1. Narendra Modi, the Prime Minister of India, managed to secure another term and is widely regarded as a figure that stands behind India’s strategic partnership with the United States. One silver lining from the perspective of China could be represented by the fact that the United States are cranking down on some of the trade benefits that are being offered to India and that, occasionally, trilateral meetings between China, India and Russia are emerging as a reaction to the increasingly protectionist tendencies of the US
  2. Border disputes between the two nations, with the Doklam situation which lasted 72 days being representative. Other examples are represented by the border issues between Bhutan and China, the (in)famous South China Sea disputes and all in all, it’s more than unlikely that long-term resolution is within reach when it comes to the main diplomatic topics that are causing friction between China and India

All in all, just like China’s relationships with other countries, it’s all a matter of finding the right balance between the desire of all parties to find solutions that generate increased trade and tackling long-term geostrategic vulnerabilities. At the end of the day, while the trade volume between India and China will probably not exceed $100 billion in 2019 as some analysts had hoped last year, it’s still close enough to this value to make it clear that there is a lot of prosperity on the table and as such, once might say there are 100 billion reasons to work toward sustainable diplomatic resolutions.

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