Eurasia’s Future
Can Elephant and Dragon Dance Together?

The dragon and the elephant can move in tandem, provided they commit to mutual respect and equitable partnership, Maj. Gen. RPS Bhadauria writes.

Introduction

India-China relations are characterised by a complex interplay of cooperation and competition. In recent years, ties have been overshadowed by the 2020 Galwan clashes, which resulted in significant casualties on both sides. These clashes impacted bilateral relations, and underscored deep mistrust due to an unresolved border dispute. Despite the tensions, trade between the two nations has grown, illustrating a paradox of conflict coexisting with the potential for cooperation. Both countries realise that the world is possibly not moving towards bi-polarity, but towards multi-polarity and that middle powers and organisations like BRICS, ASEAN and SCO are coming to the fore.

Currently, both nations appear to be undergoing a tentative détente. High-level diplomatic engagements and military talks have sought to stabilise the situation along the Line of Actual Control (LAC); 21 rounds of Corps Commander Level Meetings and 17 rounds of Working Mechanism for Consultation and Coordination (WMCC) meetings resulted in an agreement on October 21, 2024. This revives India’s access to patrolling and grazing rights in the Depsang and Demchok regions, restoring them to their pre-2020 standoff status. The agreement has spelled optimism for bilateral engagement on the boundary question. Also, the recent Senior Representatives meeting in Beijing in December 2024 has shown incremental progress in managing flashpoints along the border. During this meeting, the two sides agreed to “explore/seek a fair, reasonable and mutually acceptable solution to the boundary question.”

India affirmed that the overall political perspective of the bilateral relationship must be taken into account so that issues on the border do not hold back the normal development of bilateral relations.”. India believes that the peaceful conditions prevailing on the ground will benefit ties as a whole.

While challenges remain, these talks underscore both nations’ recognition that managing their relationship is essential for regional and global stability. India and China have demonstrated an ability to manage their disputes and focus on areas of mutual benefit, indicating that cooperation is not only possible but necessary.

The Border dispute: genesis and current status

The India-China border dispute spans over 4,000 kilometres, from the barren Aksai Chin plateau in the west to Arunachal Pradesh in the east, which is claimed by China as “South Tibet.” The origins of the dispute lie in colonial-era treaties and differing perceptions of territorial boundaries. The McMahon Line, drawn during the 1914 Anglo-Tibetan Simla Conference, remains a major point of contention, with China rejecting it as a colonial imposition.

The 1962 Sino-Indian war further deepened mistrust. Chinese forces advanced into Indian territory before withdrawing unilaterally, leaving scars on India’s national psyche. Despite these historical challenges, the two nations have shown restraint in recent decades, opting for dialogue over military escalation. Mechanisms like the WMCC and the Corps Commander Level Meetings illustrate a commitment to finding ways to coexist. Resolving this dispute is complicated by the strategic value both sides attach to these territories. However, the sustained peace along most parts of the LAC reflects a shared understanding that collaboration is a better path forward than confrontation.

The role of military in achieving stalemate and confidence-building measures to maintain peace along the Line of Actual Control (LAC)

The military plays a pivotal role in maintaining the status quo and preventing escalation along the Line of Actual Control (LAC). Both India and China have deployed significant forces along the border, with China’s People’s Liberation Army (PLA) leveraging its better infrastructure, including airbases and strategic roads, to maintain operational readiness. India has responded with its own modernisation efforts, such as developing border infrastructure and enhancing its military capabilities.

Despite regular incursions and standoffs, both sides have managed to avoid large-scale conflict through confidence-building measures (CBMs). Agreements such as the 1993 “Agreement on the Maintenance of Peace and Tranquillity along the LAC” and the 1996 “Agreement on Confidence-Building Measures in the Military Field” have established protocols to manage tensions. Mechanisms like flag meetings, hotlines, and joint military exercises aim to reduce misunderstandings and build trust. Both nations understand that a cooperative approach to border management can lay the groundwork for deeper engagement in other areas.

Cooperation in multilateral forums: G20, BRICS and SCO

India and China’s membership in multilateral organisations like G20, BRICS and the Shanghai Cooperation Organisation (SCO) reflects their overlapping interests and shared vision for a multipolar world. These platforms highlight the potential for collaboration, particularly when their national interests align in practical and actionable ways.

Convergences:

  1. Global Governance and Development Financing: Both nations actively participate in BRICS-led initiatives such as the New Development Bank (NDB), which funds critical infrastructure projects in developing countries. For example, the recent financing of renewable energy and urban development projects highlights a shared commitment to sustainable development in the Global South. Both countries have also pushed for reforms in global financial governance, advocating for a stronger voice for emerging economies in institutions like the IMF and World Bank and are against the weaponisation of the economy.
  2. Counter-Terrorism and Regional Stability: In the SCO, India and China have cooperated on addressing extremism and terrorism. Recent SCO meetings have seen India and China converge on countering the influence of radical groups, emphasising shared security concerns.
  3. Trade Facilitation through Multilateral Channels: Both nations have collaborated on streamlining cross-border trade regulations within BRICS. While their bilateral trade has disparities, joint efforts under BRICS to enhance trade logistics and reduce barriers will have indirect positive effects on India-China economic exchanges.
  4. Technology Collaboration: Both countries recognise the transformative potential of technology in addressing shared challenges. BRICS forum has facilitated joint discussions on artificial intelligence, renewable energy technology, and space exploration, paving the way for targeted collaborations in these high-impact sectors.

Divergences:

  1. Belt and Road Initiative (BRI): China’s push for the BRI has met resistance from India due to territorial sovereignty concerns, particularly regarding the China-Pakistan Economic Corridor (CPEC) traversing Pakistan-occupied Kashmir. Despite this, India has engaged in discussions to ensure that connectivity projects under other multilateral frameworks do not undermine its interests. India has also countered the BRI narrative by championing alternative connectivity initiatives such as the International North-South Transport Corridor (INSTC).
  2. Geopolitical Rivalry in Leadership Roles: India and China often compete for influence within these organisations. For example, while China seeks to dominate the narrative on connectivity and infrastructure under SCO, India emphasises counter-terrorism and regional inclusivity, creating occasional friction. The two countries have also vied for support from other member states, reflecting their broader strategic competition.
  3. Resource Allocation in Multilateral Institutions: Both nations occasionally differ on priorities for funding under the NDB. India focuses on diversifying funds for digital transformation and green technology, while China prioritises large-scale industrial projects that align with its broader economic ambitions. This divergence highlights their differing developmental priorities.

Despite these divergences, the multilateral platforms provide a neutral space for India and China to engage constructively. These forums demonstrate that even amidst competition, pragmatic cooperation on shared goals is achievable. Recent collaborative efforts on public health and pandemic response through BRICS underline their potential to tackle global challenges together.

India’s membership in the QUAD

India’s involvement in the Quadrilateral Security Dialogue (QUAD) with the United States, Japan, and Australia is often perceived as a counterbalance to China’s growing assertiveness in the Indo-Pacific. However, India has consistently emphasised that the QUAD is not an anti-China grouping but a platform to promote a free, open, and inclusive Indo-Pacific.

The QUAD’s focus extends beyond security. Initiatives such as infrastructure development, vaccine distribution, and technology collaboration aim to address regional development gaps. For India, the QUAD complements its Act East Policy and enhances its strategic options without directly antagonising China. This nuanced approach reflects India’s broader policy of strategic autonomy, balancing its ties with the US and its engagement with China. India’s participation in the QUAD underscores its ability to maintain diverse partnerships while exploring avenues for cooperation with China.

Economic engagement: signs of thaw

Despite political and military tensions, economic ties between India and China have remained robust. Bilateral trade reached $125 billion in 2022-23, making China India’s largest trading partner. However, the trade imbalance, with Indian imports from China far exceeding exports, remains a significant concern.

  • India’s Economic Survey of 2024 signalled a willingness to attract Chinese investment, particularly in the manufacturing sector. This shift underscores the Indian government’s pragmatic approach to leveraging China’s economic clout for domestic growth. Sectors like renewable energy, electronics, and infrastructure offer opportunities for collaboration. For instance, Chinese expertise in solar panel manufacturing could complement India’s renewable energy goals, while India’s pharmaceutical industry could address China’s growing demand for healthcare products.
  • Regarding the three key aspects of bilateral economic relations, namely trade, talent, and investments, a recent survey has shown that many Indians have expressed a positive attitude vis-à-vis India’s greater engagement with China. A majority of them agree that greater trade with China is in India’s developmental and security interest (49.6%), and that investments from China are beneficial, especially in sectors opening up new employment opportunities for Indians (56.3%), and that Chinese talent should be welcomed in India, if the requisite Indian talent in a particular industry is lacking (52.4%).

By identifying complementary strengths, such as India’s burgeoning tech services industry and China’s manufacturing expertise, both nations can explore ways to ensure a more balanced trade relationship. The economic relationship illustrates that mutual dependencies can act as a stabilising force. Both nations stand to benefit from strategic economic ties that prioritise shared growth and development. This pragmatism is indicative of their broader capacity to work together.

Conclusion: Overcoming the trust deficit

India and China, as ancient civilisations, have a responsibility to shape the future of Asia along with other major powers such as Russia and contribute to the Global South’s development agenda. The path to cooperation lies in establishing strategic economic ties that go beyond transactional trade relationships and foster mutual growth. Both nations must work towards agreements that ensure balanced trade and address structural imbalances in their economic engagements.

In multilateral platforms like G20, BRICS and SCO, India and China can find common ground to advocate for the priorities of the Global South. By promoting shared development goals, addressing climate change, and fostering sustainable growth, they can redefine their relationship as partners in global governance.

While challenges persist, the potential for cooperation outweighs the risks of continued mistrust. By embracing strategic economic ties and leveraging their roles as leaders of the Global South, India and China can lay the foundation for a more stable and collaborative relationship in the 21st century.

The dragon and the elephant can indeed move in tandem, provided they commit to mutual respect and equitable partnership.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.