Why There's Need to Search for a New Equilibrium in India–China Relations 

This is an excerpt from Ashok K. Kantha’s book Decoding China. Read the first excerpt published from the book here. 

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Keeping in view the China challenge, some suggestions on the management of India–China relations in the near to medium term are offered. 

Border management

Looking ahead, India must work on the basis of a clear-eyed assessment of the situation, deny China any gains of its ‘salami-slicing’ tactics along the border, look at the latest disengagement in the Depsang Plains and Demchok as a step towards the normalisation of the LAC rather than the completion of a process, continue discussions on the restoration of the status quo as of early 2020 in terms of patrolling activities and grazing rights, and move with caution on the subsequent steps of de-escalation and de-induction of troops. 

Decoding China, Ashok K. Kantha, Bloomsbury, 2025.

It should be made clear to the Chinese interlocutors, through Track 1 and Track 2 channels, that while India favoured bringing down tensions in the border areas, the status quo had been disturbed and there is an unfinished agenda of normal management of borders that must be addressed before overall relations can return to full normalcy. It is premature to talk of any reset in ties at this stage. Any reset will not be a realistic proposition without meaningful progress on structural challenges in the relationship. This will require a frank strategic dialogue and readiness to resolve the accumulated problems steadily, rather than wishing them away. 

During the meeting between Prime Minister Narendra Modi and President Xi Jinping at Kazan on 23 October, the two leaders ‘agreed that the Special Representatives on the India–China boundary question will meet at an early date to oversee the management of peace and tranquillity in border areas and to explore a fair, reasonable and mutually acceptable solution to the boundary question’.

The agenda of this dialogue, as also conversations between the foreign ministers as well as through other diplomatic channels should, inter alia, include an early dismantling of the so-called buffer zones and the resumption of patrolling by Indian troops (and traditional grazing by Indian graziers) to patrolling points and pastures they were visiting in the Galwan Valley, Gogra, Hot Springs and the Pangong Lake area in Eastern Ladakh, without giving the Chinese concessions in other sectors. 

In parallel, there should be greater visibility on what has been agreed upon in different phases of disengagement, without compromising our negotiating position. It may be recalled that after Chinese intrusions in the Sumdorong Chu and Namkha Chu valleys in 1986–87, there were frank discussions in Parliament. 

In fact, greater transparency on the part of the government helped buttress our position in the negotiations and we could resist intense pressure from China (including the threat of ‘teaching India a lesson’ conveyed by Deng Xiaoping through the then US Defence Secretary Casper Weinberger) to vacate the Hathongla–Lungrola–Sulula ridgeline that Indian troops had occupied in Brigade strength after the Chinese set up a post at Wangdung in June 1986. 

The matter was de-escalated through quiet diplomacy and the stage was set for Prime Minister Rajiv Gandhi’s visit to China in December 1988. The disengagement at Wangdung was eventually reached in 1995 without in any way affecting the deployment of Indian troops along the Hathongla–Lungrola–Sulula ridgeline and its northern slopes and their patrolling activities in the two valleys. There is a need to show similar perseverance and strategic patience, which might in fact encourage China to consider a more durable modus vivendi with India. 

Any de-escalation of troops will have to be done very carefully, keeping in mind our disadvantages vis-à-vis the nature of the terrain and infrastructure, and consequently the longer reinduction time required by us. 

In this context, we should bear in mind Article III(3) of the Agreement on Confidence Building Measures in the Military Field Along the LAC in the India–China Border Areas of November 1996 which reads as follows: 

The two sides shall exchange data on the military forces and armaments to be reduced or limited and decide on ceilings on military forces and armaments to be kept by each side within mutually agreed geographical zones along the line of actual control in the India-China border areas. The ceilings shall be determined in conformity with the requirement of the principle of mutual and equal security, with due consideration being given to parameters such as the nature of terrain, road communication and other infrastructure and time taken to induct/de-induct troops and armaments.

As the army chief has repeatedly emphasised, the subsequent steps will also require rebuilding trust, which was seriously undermined when Chinese troops pivoted after what was misread as a routine military exercise and crossed the LAC at multiple locations, taking advantage of the distraction caused by the COVID-19 pandemic. If adequate and verifiable safeguards are not put in place before any de-escalation of troops, there is a distinct risk of the past behaviour being repeated by the Chinese (as they did on the Doklam Plateau in Bhutan where the Chinese moved in and entrenched their position on the ground soon after the disengagement in 2017). 

We cannot be in any hurry to deinduct additional troops as we are at a disadvantage when it comes to the reinduction of troops. However, a situation of enhanced deployment of troops of the two countries in close proximity over the long run is also not desirable as it can lead to accidents. India must therefore keep exploring ways and means of achieving de-escalation of troops through patient negotiations. 

As discussed earlier, Article X(1) of the Agreement on Military CBMs of November 1996 contained a categorical agreement on the two sides ‘arriving at a common understanding of the alignment of the line of actual control in the India–China border areas’, ‘agree[ing] to speed up the process of clarification and confirmation of the line of actual control’ and also ‘agree[ing] to exchange maps indicating their respective perceptions of the entire alignment of the line of actual control as soon as possible’. 

The process of clarification of the LAC must be resumed. Even if a common understanding of the entire alignment of the LAC is not arrived at, ways and means can be found for handling those pockets where the two sides have different perceptions. Indeed, that will make it possible to implement understandings like notification of military exercises and even move towards force limitation in mutually identified geographical zones as provided for in the agreement of 1996. 

Boundary settlement

As for the task given to the SRs by the two leaders at Kazan to resume their work on a boundary settlement, there is little evidence to suggest any breakthrough in the talks that has eluded the SRs since they concluded the Agreement on Political Parameters and Guiding Principles for Boundary Settlement in April 2005. 

However, a clear message must be conveyed to the Chinese SR that, as a result of Chinese transgressions in Eastern Ladakh and elsewhere, their resurrection of the narrative of ‘Zangnan’ and repeated protests about our routine and normal activities in Arunachal Pradesh, the border issue has returned to the centre of India–China discourse and it is increasingly difficult not to let it come in the way of normal development of relations. 

The two sides should therefore ponder over the letter and spirit of the breakthrough agreement of 2005 and seek a political settlement which will safeguard the vital interests of the two countries rather than return to the futile exercise of repeating their respective narratives which can never be reconciled. 

Strategic dialogue

An important task performed by the SRs (as well as foreign ministers) in the past has been to engage in strategic consultations on regional and global trends as well as future directions of India–China relations. It is particularly important to have such a dialogue at a time of churn in the international environment. 

The geopolitical milieu in which China is pursuing its ambitious agenda has been complicated by its strategic contestation with the US. China’s predicament might become more complicated in the second Trump administration. 

Faced with geopolitical pushback and economic headwinds, will China show greater tactical flexibility vis-à-vis India, even though it is unlikely to dilute its strategic objectives? India too could do with more elbow room to pursue its multi alignment strategy amidst more pronounced pressures from the US and its allies and uncertainty stemming from an unpredictable incumbent in the White House. 

This strategic dialogue can explore whether the simultaneous rise of India and China can be managed in a less confrontational manner. However, we must show staying power and strategic perseverance and should not lower the bar to seek an elusive détente with China. 

Asymmetric deterrence

The key to discouraging China from again deploying its favourite playbook of grey-zone operations against us is continued investment in our deterrence capabilities and preparedness for multi-domain warfare. The deterrence will be primarily defensive in character but not without quid pro quo options. Given the large gap between the capability endowments of India and China, we will have to pursue asymmetric deterrence, rather than seeking parity with China in terms of military hardware. For China, it is the US which is its primary strategic challenge. In fact, China tends to deliberately downplay India as a challenge or threat, though its deployments vis-à-vis us remain robust. 

In our assessment, the risk of a full-fledged armed conflict with China is relatively low in the near term but clearly there is no scope for complacency. The more likely scenario is probing by China along the LAC where there are differing interpretations on the two sides. In a recent Track 1.5 conversation, a Chinese scholar with a PLA background ominously suggested that China has not yet reached its claim line in the Western Sector. 

Likewise, the so-called ‘LAC of 7th November 1959’ is raised from time to time. The Chinese had pushed for our acceptance of this construct in discussions on border-related understandings. In response, we have consistently rejected this notional alignment, which is not based on the facts on the ground and keeps changing as per Chinese predilections. 

In the Eastern Sector, both sides agree that the LAC is along the McMahon Line of 1914, but we favour the interpretation of the alignment based on the watershed principle (as explained by Henry McMahon in his final memorandum), while the Chinese would like a literal transposition of the McMahon Line as shown in small-scale maps (appended to the Shimla Convention of 1914) onto modern maps (which is neither logical nor in keeping with cartographic principles). 

We are aware of the pockets with differing interpretations, some formally acknowledged and some tacitly recognised, but opportunistic probing by China elsewhere cannot be ruled out. Our response has to be reading Chinese intentions correctly with improved intelligence, surveillance and reconnaissance (ISR) capabilities (where there was apparently a shortfall in not anticipating large-scale Chinese transgressions in May 2020), foiling attempts by China to alter the LAC and if that happens remaining prepared to embarrass it with countermeasures elsewhere (‘quid pro quo’ options).

In this regard, continued improvement in border infrastructure is essential. It is important to recall that the Indian Army reviewed its reservations regarding developing roads close to the LAC (due to apprehensions that such roads could become ingress routes for the PLA) way back in the mid-1990s when a list of roads was developed in the China Study Group (called ‘the CSG roads’) but progress was relatively tardy until a few years ago. 

While the Chinese military conventional and strategic capabilities are much larger compared to ours, they have major commitments elsewhere, particularly in the Western Pacific. 

Besides, effective deterrence involves not matching China’s overall military might (which we cannot do in the foreseeable future) but having a comparable capability to bring to bear forces along the LAC (which is doable) and retaining an edge in the deployment of our air power (where the terrain favours us) and naval assets (where we have the ‘home field’ advantage due to our peninsular geography and strategic location in the IOR). This capability can be asymmetric in character. However, there are four policy choices we must make at the earliest. 

One, India’s defence budget is inadequate to cope with a two-front situation that exists vis-à-vis China and Pakistan, which have a track record of strategic collusion. Studies by PRS Legislative Research bring out the inconvenient fact that in recent years, the central government’s expenditure on defence has decreased as a share of its total expenditure – from 17.1 per cent in 2014–15 to 13 per cent in 2025–26 (BE). Can we afford this downward trend? 

Figure 1.3 Defence Expenditure as Share of Central Government’s Total Expenditure. Source: Union budget documents (various years); PRS

Legislative research

Two, a lasting consequence of the Chinese transgressions in Eastern Ladakh will be a further preoccupation of the Indian armed forces with its land borders. Our northern frontiers with China will require enhanced deterrence and continuous vigilance. This will have an impact on inter-service prioritisation, even though the maritime domain offers greater opportunities to our defence planners to take advantage of the IOR chokepoints and China’s other vulnerabilities. 

This happens at a time when, in a reversal of the trends spanning several centuries, China does not have a serious continental threat and can focus more on building up its maritime capabilities as it is doing. The imperative of not ignoring any of the three services (as well as the strategic forces) reinforces the case for a progressive enhancement of our defence budget. 

Three, we must grapple with a conundrum relating to the ‘Agniveer’ scheme which has caused deep misgivings among our armed forces and within the strategic community. This initiative, though well-meaning, needs an urgent review with an open mind and an appropriate course correction. 

Finally, can we keep delaying effective measures towards jointness of our three services and the theatreisation of command? Xi Jinping forced the PLA to bite the bullet, and the restructuring of the Chinese military has made considerable headway in the past decade. 

Strategic capabilities 

In our discourse, we tend to overlook recent changes in China’s strategic capabilities and its nuclear posture, and the implications of these developments for India. Traditionally, even though India–China relations have been fraught, nuclear deterrence has not been a major feature of the relationship. 

Strategic communities of the two countries seldom talk about the possibility of escalation of potential conventional conflict along borders into the nuclear dimension. Nuclear weapons have mostly remained in the shadows, including in the border standoff in Eastern Ladakh. 

However, the basic stability of India–China nuclear deterrence is now under some stress due to several developments, namely: the rapid expansion of China’s nuclear warheads (assessed by the US Department of Defence to be in the ‘low 200s’ in 2020 but over 600 operational nuclear warheads as of early 2024; over 1,000 operational nuclear warheads by 2030, much of which will be deployed at higher readiness levels; and 1,500 warheads by 2035); increasing diversification and sophistication of its nuclear arsenal (including more accurate delivery systems like CSS-5 and CSS-10 missiles, reportedly allocated for missions against India); acquisition of counterforce and ballistic missile defence (BMD) capabilities which are not yet mature enough to be effective against the US but could potentially erode India’s limited second-strike capability; and problematic changes in China’s nuclear doctrines, including relatively rapid retaliation and an ‘early warning counterstrike’ posture.

India has maintained a conservative nuclear posture, reflected in the modest size of its nuclear inventory and its consistent nuclear doctrines. However, as the gap between the nuclear arsenals of India and China increases, and as Pakistan continues to enlarge its nuclear arsenal, we will have to carefully assess the implications of these developments.

India’s nuclear doctrine, including ‘No First Use’, has been clearly articulated and is consistent; previous reviews have not indicated any need for modification. However, what is a ‘credible minimum deterrent’ under the scenario of the nuclear threat from China and Pakistan, which have an extensive history of collusion and both of whom are expanding their nuclear weapon capabilities and delivery systems? 

China refuses to have meaningful dialogue with India on nuclear and strategic issues. It is essential that nuclear matters be discussed at the least between the strategic communities of India and China, if not at an intergovernmental level. 

External balancing

Much of our answer to the challenge posed by China will have to be found in enhancing our own deterrence and capabilities, and reducing the capability gap with China, but a policy of external balancing, working with the US, Japan, Australia and other like-minded countries, will be an essential part of our response. 

We will have to help build up each other’s competencies, work together to innovate and develop advanced technologies, promote more diversified and resilient regional and global value chains not excessively dependent on one country, enhance our combined deterrence to discourage China from opting for disruptive behaviour and seek a more equitable order reflecting contemporary realities. 

The objective is not to contain China but to nudge it to be a more responsible stakeholder in the global commons where it is not pursuing its narrowly defined ‘core interests’ to the detriment of other countries. 

In this process, it will be important to manage our expectations from the US and its allies, and their expectations of us in conflict situations, whether along the India–China borders or in the Indo-Pacific and the IOR. 

Given the transactional approach being adopted by the second Trump administration towards the US allies and partners, we will have to continuously monitor the efficacy of external balancing against China, prioritising essentially our own deterrence capabilities. 

While it is unlikely that India would consider direct military involvement in a crisis in the Taiwan Strait or the South China Sea, there is a menu of options available to India, ranging from diplomatic signalling to logistic support, depending on the scenario that develops and our assessment of the country’s interests in those theatres, the preference being deterrence and prevention of any armed conflict. 

Economic security

There is a seductive logic in the arguments being advanced in many quarters that closer economic engagement with China, delinked from the broader relationship, greater integration with Chinese supply chains and the wooing of inflows of investment from that country, will address many of our economic challenges. 

Most of these arguments fail to factor in the complex dynamics of both India–China relations as well as the China factor in India’s economic security which has been analysed by V.S. Seshadri in a recent study (September 2024).

We have already discussed the issue of an unsustainable trade deficit with China and growing dependencies on imports from China in critical sectors that create vulnerabilities. It cannot be business as usual with China (which is the Chinese preference) when overall relations and the situation along the borders remain fraught. Some other considerations should be kept in mind while deciding the level of economic security we seek vis-à-vis China.

One, both the US-led West and China are increasingly securitising their economies and de-risking and diversifying vis-à-vis each other. According to a Rhodium Group report, India has the highest score (2.86) of all emerging and developing countries as a potential alternative investment destination to China.

If India seeks closer integration with Chinese supply chains, global companies might be discouraged from considering India as their alternative node for global value chains. In the unlikely event of Chinese companies developing India as a major manufacturing hub to circumvent tariffs and other entry restrictions in the US and European markets, there will be a high risk of India being targeted by those countries to plug the loophole in their regimes vis-à-vis China. 

It is already happening in the case of exports of solar panels through ASEAN countries, and Canada and Mexico being pressurised to follow enhanced US tariffs on Chinese products so that there could be a ‘fortress North America from the flood of Chinese imports that’s coming out of the most unbalanced economy in the history of modern times,’ as the US Treasury Secretary Scott Bessent put it.

Two, China is still not a market economy. China’s objective of dominating future industries and its preference for exporting its way out of its economic difficulties, rather than prioritising domestic consumption, will aggravate existing tensions in economic relations with both advanced economies and emerging economies such as India. 

Three, China’s rigorous scrutiny of outward flows of investment and technology by its companies aims to maximise domestic value chains and make the country indispensable to global technology production, as a recent Mercator Institute for China Studies (MERICS) study brings out.

A Bloomberg report suggests that China has strongly advised its carmakers to ensure that advanced electric vehicle technology stays in the country and that they produce key parts domestically and export so-called knock-down kits to their foreign plants. India has been specifically mentioned in this regard.

Going by past experience, it would be naive to expect that China will help build India’s manufacturing capacities. Instead, Chinese companies have preferred to invest in sensitive sectors in India, including through acquisitions, which led to Press Note 3 in April 2020. Giving free access to Chinese companies will attract low-value-addition investments, potential investments in sensitive sectors where data security can be an issue, and suspicious investments, and be a recipe for stunted industrialisation in a large number of sectors in which China seeks to dominate the world or act globally. 

Four, the expectation that imports from China can be reduced by boosting FDI from China is not borne out by the experience of other geographies which have received substantial Chinese investments. For instance, the ASEAN imports from China increased from US$386 billion in 2021 to US$438 billion in 2023, as sourcing of intermediates from China soared. 

Thus, proceeding from strategic, security and economic perspectives, India would do well to take a differentiated policy towards economic relations with China. India cannot decouple itself from the economy of China, the world’s largest manufacturer and exporter. But India must decide which sectors of its economy it can selectively allow Chinese FDI into based on its manufacturing strengths and strategies, and keep in mind the interests of its national security and industrial development.

Anticipating crises

In a relationship that is complex and accident prone, preparing for turbulence on sensitive issues is advisable. Just to give an example, Tibet has traditionally been a difficult issue in the relationship.

The joint statement issued on 24 June 2003 during Prime Minister Atal Bihari Vajpayee’s visit to China had the following formulation on Tibet: ‘The Indian side recognizes that the Tibet Autonomous Region is part of the territory of the People’s Republic of China and reiterates that it does not allow Tibetans to engage in anti-China political activities in India.’

The problem with the formulation is that soon the Chinese resurrected the term ‘Zangnan’ (or ‘South Tibet’), which includes most of Arunachal Pradesh. Besides, the ‘Tibet Autonomous Region’ as shown in the PRC maps claims most of Arunachal Pradesh. Therefore, it was not tenable to use the language of the TAR being ‘part of the territory’ of the PRC. 

Looking ahead, the passing away of the 14th Dalai Lama, who will soon reach the age of 90 years, will generate a problematic situation. The question of who selects the reincarnation of the Dalai Lama is debatable as Vijay Gokhale brings out in his recent Carnegie India monograph.117 The PRC claims that the imperial ordinance of 1793 (known as the Imperially Approved Ordinance for Better Governance of Tibet or the 29-Article Ordinance) stipulates the procedure for the reincarnation of the Living Buddhas (including the Dalai Lama) and subjects the selected candidate to approval by Beijing. In 2007, the State Religious Affairs Bureau issued Order No. 5 titled ‘Measures on the Management of the Reincarnation of Living Buddhas of Tibetan Buddhism’, which made it clear that the central government intended to control the entire process of selection and appointment of the Living Buddhas. 

Tibetans reject the idea that China has the authority to exercise legal jurisdiction over the process of selecting the Dalai Lama (and other Living Buddhas of Tibet).

In fact, the Chinese claim was rejected by the 14th Dalai Lama himself and he observed in a statement issued on 24 September 2011: ‘[The] person who reincarnates has sole legitimate authority over where and how he or she takes rebirth and how that reincarnation is to be recognized.’

The Dalai Lama added: ‘When I am about ninety I will consult the high Lamas of the Tibetan Buddhist traditions, the Tibetan public, and other concerned people who follow Tibetan Buddhism, and re-evaluate whether the institution of the Dalai Lama should continue or not. On that basis we will take a decision.’ 

However, the Chinese authorities will undoubtedly seek to control the reincarnation of the 14th Dalai Lama, which will generate considerable controversy. We need to prepare for that contingency. 

Working with China in SCO, BRICS and G20

During the past four-plus years, even while bilateral relations between India and China were at a low ebb, the two countries continued to work together in minilateral platforms like the Shanghai Cooperation Organisation (SCO), BRICS and G20. During the EAM’s meeting with Foreign Minister Wang Yi on the margins of the G20 Summit on 19 November 2024, both ministers made a positive evaluation of the cooperation in the three groupings. 

According to the MEA readout: ‘EAM noted that India and China have both differences and convergences. We have worked constructively in the BRICS and the SCO framework. Our cooperation in the G20 has also been evident.’ Xinhua quoted Wang Yi as making a similar assessment. 

India’s continued proactive involvement in these forums will be in keeping with its stance of strategic autonomy and will advance its agenda. Its participation will also help ensure that these groupings do not become instruments for geopolitical contestation and instead seek concrete and positive outcomes. 

New paradigm

As discussed earlier, the old paradigm governing the relationship has broken down, but a new paradigm is yet to be forged. While we may initiate dialogue in this regard, it is premature to fashion such an overarching framework for the resumption of constructive engagement with China. There is still unfinished business in sorting out the disruption caused by Chinese behaviour along the borders and making some progress on accumulated grievances on both sides before it can be declared that the relationship is back on the normal track and a reset can be attempted. However, channels of communication and dialogue must be kept open at different levels between the two governments and the strategic communities of India and China. 

Given Xi Jinping’s primacy in the Chinese party-state, our PM’s continued engagement with him is desirable but without any undue expectations that these summit-level meetings will provide a negotiating platform to resolve outstanding issues. With China, productive summit-level meetings require extensive preparatory work and even then, they can be deployed to seek breakthroughs in the relationship only when the circumstances are favourable and there is readiness on both sides. Such a juncture eludes the two countries at present. 

In conclusion, our working hypothesis should be that the Chinese economy will continue on its growth path, albeit at a progressively slower rate. 

The geopolitical pushback it is facing, including its strategic contestation with the US for pre-eminence, is unlikely to abate until a new equilibrium is reached, though there might be tactical adjustments from time to time. 

There is still considerable uncertainty about the trajectory of China’s relations with the US under the Trump administration. Donald Trump poses a special challenge because the Chinese leadership is not comfortable when it cannot predict and game out its rivals and competitors (as has happened with India as well), but China will play the long game and ride out the Trump years, if needed.

It will seek to protect its privileged relationship with Russia, drive a wedge between Europe and the US, stabilise relations with Japan, Australia and other US allies, continue to grow its footprint in the Global South, and utilise openings created by the retrenchment of the US from multilateral platforms like the WHO.

India too must show strategic patience in its dealings with China, make a clear-eyed assessment of the China challenge without demonising its largest neighbour, build its own capabilities, reinforce its deterrence, not shy away from external balancing without any exaggerated hopes, keeping in mind the larger geopolitical picture (where a degree of stability in relations with China gives it more elbow room) and seek cooperation wherever possible and desirable, bilaterally and on multilateral and global issues, without yielding on its own interests, concerns and aspirations, and without harbouring any unrealistic expectations. 

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