Xuan Zang (Hiuen Tsang) had returned from Nalanda to Xian with manuscripts and experiences of India, which he called the “western heaven”. His translations were maintained in a stone tablet library at the Big Goose Pagoda and were deemed precious treasures. Even today, the classic “Journey to the West”, based on his trip to India, continues to inspire in China. Recently, Wukong, a video game based on it, had blockbuster success, reviving the Nalanda connect. These exchanges went beyond Buddhism to a broader civilisational influence. The middle kingdom acknowledged the Indian influence on their society and civilisation. 

This positive perception of India was mainstream till the early 21st century and maintained peace and stability. However, notions of competition and hierarchy, present even in Mao Zedong’s time, emerged stronger in recent times. A belief that China has risen and its ideas should frame the shared future of mankind now dominates Chinese expression. 

Chinese narratives of India as a country struggling with economic growth, her democracy as a limiting force and her dependence on the West have permeated the public domain. These perceptions seek to transform the understanding of India as a civilisational power that contributed to the Chinese ethos. There must be a reason for this inaccurate depiction, perhaps some motive or some latent concerns. 

The Han Fei Factor

In today’s China, Han Fei, a strategist from the Warring States period, seems more persuasive than Confucius or Sun Zi. As in Han Fei’s thesis, China’s spectacular economic rise seeks dominance, initially in Asia and then globally. 

China’s economy has slowed and is unlikely to regain the high levels of the past. Structural imbalances, ideological challenges, and an ageing society are constraints. Yet it sees a window to leverage technology and its dominant position to gain advantage amid the geopolitical flux. Its zero-sum approach focuses on active defence, coercive economic relations, assertive diplomacy, and dominance in comprehensive national power. The China Dream project - with its four global initiatives on security, development, civilisation, and governance - presents a blueprint of China's ambitions. 

This makes India-China relations a complicated affair. 

Our relations, since independence, had elements of both cooperation and conflict. The boundary question remains unresolved, and there are dependencies and competition in economic exchanges. China has violated bilateral agreements, expanded influence in our neighbourhood and tried to block our global aspirations. There is a deficit of trust as words often do not match actions on the ground. 

As civilisational powers that can shape an Asian century, both sides need to adopt the 3Cs approach - prevent conflict, manage competition, advance cooperation.

Stability In Border Areas 

Mao era Chinese military entered Tibet and eroded the buffer. Two nations that had no conflict in two millennia had a war in 1962 and skirmishes in 1967,1975, and 2020 that left scars and a trust deficit. The Deng era engagement in diplomatic dialogue led to agreements on boundary peace and tranquillity (1993), confidence building measures (1996), and guiding principles and political parameters for the resolution of the boundary question (2005), which provided stability in border areas and economic engagement. However, China’s military modernisation and aggressive border management led to tensions and confrontations, not only with India, but along China's entire periphery. 

Since China follows an autonomous approach, India must exercise autonomous options as well on this core issue, while we build bilateral cooperation. 

First, focus on building credible hard power, military capacity and logistics in border areas to repel and deny Chinese intrusions and violations of agreements.

Second, some old agreements may need review. That India’s leverage is improving with narrowing gap in power and India will stand firm on her interests and values, needs amplification.

Third, summit-level bilateral engagements are crucial to build trust and confidence. Multi-level diplomatic and military dialogue must continue for crisis management in border areas and engagement on the boundary question. 

Fourth, the maintenance of peace and tranquillity in border areas is our core interest and is linked to the conduct of normal relations, including economic engagement. Chinese side must understand that trust was eroded by their transgressions. Piecemeal or early harvest options will mean progress only if they address key concerns in Eastern and Western sectors.

Economic Engagement For Mutual Benefit

China’s growth into a manufacturing superpower with over-capacity led to de-industrialisation globally. The economic circumstances in India and China were similar in the early 1990s, but the gap widened. India's options will depend on our ability to build capacity and resilience. 

First, de-risk and diversify trade and investment; this may impose initial cost but life cycle costs are likely to be advantageous. It will move us towards reliable and resilient supply and value chains. 

Moreover, it will diversify and expand domestic economy. 

Second, scale up the share of manufacturing in GDP through Make in India and Productivity Linked Initiatives in a wider range of products. Chinese investments should be welcomed.

Third, revive our micro, small, and medium (MSME) sector, which suffered on account of cheap Chinese imports. The trading lobby will need to diversify sources and entrepreneurs will need support. APIs, textiles, machine tools, and other sectors will stimulate employment, incomes, skills and innovation. Scaling up the production of niche products for exports will provide new opportunity.

Fourth, there is policy-level recognition that China seeks to maintain a dominant economic status. Thus, trade imbalance will rise unless we disincentivise Chinese imports through domestic manufacture and diversification of imports. China has under invested in India and not introduced new technology despite regulatory relaxations. China’s export controls on critical minerals and its appeal against PLI in the World Trade Organisation (WTO) revealed its concern that the growth of manufacturing in India could challenge China.

Global Status And Global Governance

China fears the rise of India and hopes to maintain status quo. It seeks to bottle India in a South Asia framework and contain India’s global profile. Yet, the rise of India is inevitable. Since the pandemic, India's growth rate has been higher than that of China and although the GDP gap is big, it will narrow. India’s demographic dividend and democratic practices are features of concern to China as it assesses India’s growth and influence will extend into the next half of 21st century. 

In the multilateral arena, particularly at UN, where China has veto power, it has not supported the rise of India and her inclusion in UNSC. However, in other multilateral forum and also in minilateral and plurilateral groups, the voice of India has been growing and its credibility has been higher. The rise of India as a voice of the Global South, pursuit of interests and values, role as a force for convergence and ability to work amid diversity rather than through domination, gives India leverage on the global stage. China is not comfortable with this rise and this will remain a matter of contention. 

An Asian Century

India and China have robust dialogue mechanisms to narrow differences and improve understanding for a balanced outcome to prevent conflict, manage competition and expand cooperation. India seeks mutual respect, mutual sensitivity, and mutual interest for stability in border areas and engagement for development. 

China seeks advantage in economic engagement and the boundary issue is of secondary importance. As long as India is focused on building comprehensive national power and reducing the gap with China, they will remain careful, though the risk of adventurism cannot be ruled out. 

The Asian century may be contested. 

Both India and China are emerging global powers, China is somewhat ahead in the race. China seeks dominance while India believes in partnerships. Perhaps, the story of India needs to be retold once again perhaps, Nalanda may be the place to start telling that story again.  

(This commentary is based on a keynote address on India-China relations at Nalanda University. The writer is a former diplomat and currently Professor at Jindal Global University)