Economic decoupling to self-strengthening, how India can rise to China challenge

A group of us recently released a discussion paper on India’s Path to Power; Strategy in a World Adrift, hosted on the Centre for Policy Research and the Takshashila Institution websites. Running through the paper is a concern with China. India-China relations have seen growing distance and friction since around 2012, and we see the China challenge as likely to be the most significant issue in India’s external security policies in the coming decade.

The deterioration in India-China relations has proceeded simultaneously with momentous changes in the world. The two great powers, the US and China, are locked in a structural rivalry that seems likely to persist beyond this decade, though they should, as a matter of self-interest, find ways to cooperate as well since theirs is not a Cold War but a relationship of mutual economic dependence simultaneous with strategic competition. However, both seem convinced that they cannot trust the other.

We are now in a world that is neither bipolar, as in the Cold War, or unipolar, as after the collapse of the Soviet Union, or truly multipolar. This is a world between orders, the absence of which was clear in the fragmented and local reactions to the Covid-19 pandemic. This is an interregnum that offers India both challenges and opportunities.
It is in this broader context that we see a prospect of continued points of friction in India-China relations. India’s China policy must now be reset to the reality of a live border and antagonistic political relations, and a complicated international context.

The Indian response to this challenge must first of all concentrate on self-strengthening. The military reforms initiated in 2020 would constitute a good beginning. The risk of China-Pakistan collusive action and Pakistan’s increasing significance in China’s global strategy require our military strategy to cater to the worst-case scenario of a two-front war under the nuclear shadow, by building and bringing into play our strengths in the maritime domain as well as on land and in the air.

To be effective, self-strengthening must be holistic, going beyond hard power to safeguarding the foundational sources of India’s international influence. We cannot separate our domestic trajectory from the external course we need to pursue. We also suggest a lessening of India’s economic dependence on China in critical sectors.
While the prospect of Chinese hegemony in Asia appears slim, there is little doubt that its security profile in India’s own neighbourhood will expand. We can and should take effective counter-measures, making ourselves the primary source of prosperity and security in the subcontinent and the Indian Ocean region, integrating economically with our neighbours, and reinvigorating regional institutions.

A China-dominated Asian security and economic order remains inimical to India’s interests given China’s present trajectory and attitude. In these circumstances, the points of India-China friction could at best be managed rather than solved, absent changes in Chinese behaviour.

In Asia, India can work with partners and friends who, as external balancers, share some Indian concerns about Chinese behaviour and could help to change or mitigate it. The US, Japan and other partners can help to restore the maritime balance in the Indo-Pacific. Neither self-strengthening in India nor balancing politics in Asia will be smooth or easy but they can and must be done. This requires that our external economic policies match our political and strategic engagement. A more active regional and international role for India is incompatible with a position on the margins of the global and Asian economy, or with staying away from regional trade arrangements like RCEP and global value chains.

The primary challenge from China is continental, requiring responses beyond an Indo-Pacific strategy or a Quad. India should work with regional Asian powers like Iran, Russia and Turkey, and adjust other policies accordingly.

At the same time, we must not allow an obsession with China to distract us from the main goal of our national strategy: the transformation of India. As China persists with its increasingly assertive and nationalist course in the decade ahead, we will face it as a powerful neighbour with whom we share a periphery, and as an economic actor of considerable heft affecting our external environment politically, economically and infrastructurally. There is probably no feasible alternative for India other than a combination of engagement and competition with China in what promises to be a decisive decade.

In the longer term, if there is one country which, in terms of its size, population, economic potential, scientific and technical capabilities, can match or even surpass China, it is India. The real answer to the China challenge would be the successful transformation of India into a strong, prosperous, inclusive country at peace with itself and its neighbours.