Despite coming face-to-face for the first time after the standoff on the Sino-Indian border since April 2020, there was no handshake or tête-à-tête between prime minister Narendra Modi and China’s president Xi Jinping on the sidelines of the Shanghai Cooperation Organization summit at Samarkand in Uzbekistan. Modi had scheduled meetings with Russia’s president Vladimir Putin, Iran’s president Ebrahim Raisi and Uzbek president Shavkat Mirziyoyev and an unscheduled one with Turkiye’s president Recep Tayyip Erdogan. India did not seek a meeting with Xi. Neither did China. Considering the stakes involved, it is perhaps a missed opportunity at the highest level to remind the Chinese leader that the absence of peace and tranquility on the Sino-Indian border—notwithstanding the disengagement from some border patrolling points ahead of the SCO summit—determines the state of the bilateral relationship. After all, this is what India’s external affairs minister has been telling his Chinese counterpart. This is also familiar territory for Modi. Eight years ago, he reiterated this on the Sabarmati waterfront as the Chinese president’s visit coincided with incursions in Chumar in eastern Ladakh. Four years ago as well, they had an informal summit in Wuhan against the backdrop of the Doklam standoff. Three years ago, they met again in Mamallapuram as bilateral ties were strained over Kashmir.
As the border situation remains fragile, it is not business as usual for bilateral ties. Since April 2020, India has intensified the screening of foreign direct investment proposals from neighbouring countries that share a land border, obviously targeting China. There have been tax raids on smartphone manufacturers from the mainland. However, India has not been able to impose severe economic costs on the dragon for its border transgressions. The dependence on Chinese goods on the trade front or telecom technology has not diminished as it remains one of our largest trade partners with two-way trade rising to $115 billion in FY22. This fiscal, it is up by 11% during April-July over a year ago. China remains the largest source of our imports with a share of 15.4% while only 5% of our exports are headed to the mainland. The trade balance is heavily tilted against India with a ballooning trade deficit of $72.9 billion. India’s dependence on the dragon appears more akin to a Third World country that exports raw materials while importing manufactured goods from the mainland.
Unfortunately, there are no easy solutions for the fraught border situation. Over the long haul, it can be resolved by narrowing the economic power differential between India and China. Much is being made of India replacing the UK to become the world’s fifth largest economy, but China is six times larger as the second largest economy. This is reflected in relative military strength, with India in a disadvantageous position to resolve the issue through force. India must steadily build up its economy through rapid growth to narrow this differential while balancing China in the short run through its strategic alliances with the Quad countries. With the Chinese leader set to become president for the third term, he is keen to showcase the dragon’s rise as a hegemonic power in Asia, if not the world. By building up troops and making incursions at will, China recognises India only as a weaker neighbour, not as a fellow emerging economy with whom it can define the Asian century.