India-China relations
June 22, 2025
The 3,500-kilometre border is not fully defined.
2020 saw deadly clashes between the two nuclear states.
India's key industries are dependent on Chinese imports.
In summary, the China-India relationship has been shaped by China's control over Tibet and an ongoing dispute along their shared border.
In 1950, China annexed Tibet, ending its autonomy and its historical role as a buffer between China and India.
In 1954, China and India signed an agreement on peaceful coexistence that recognised China's sovereignty over Tibet.
In 1959, China's army suppressed a revolt in Tibet, forcing the Tibetan Buddhist leader Dalai Lama to flee to India.
Today, India's granting him asylum is still a source of tension.
In 1960, India rejected a Chinese proposal to resolve the territorial disputes, and tensions increased.
In 1962, India was defeated in the Indo-China War.
It was fought with no use of aircraft or battleships, and prompted both sides to modernise their armies.
In 1964, China became a nuclear weapon state.
In 1974, India conducted its first nuclear test. It has continued its atomic program and declared itself a nuclear weapon state in 1998.
During the Cold War, India sided with the Soviet Union, while China sided with the US and Pakistan, India's main regional rival.
Relations improved by the end of the 1970s as China focused on economic development and India sought regional stability.
China and India agreed in 1993 and 1996 to avoid military confrontation and reduce troops along the disputed border.
However, this did not prevent further incidents.
India-China conflicts in recent years
The 2005 to 2012 period was characterised by political dialogue, border infrastructure development and minor incidents.
The role of infrastructure: China and India have long built roads, railways, military bases and villages along the LAC to assert territorial claims and ensure faster troop deployment.
India-China ties worsened with the rise of nationalist leaders Xi Jinping in China (2012) and Narendra Modi in India (2014).
Nationalism — strong support for the interest of one’s own nation, especially to the detriment of other nations.
In 2017, China started constructing a road in an area of Bhutan seen by India as neutral territory.
Indian troops intervened, leading to injuries on both sides.
Two months later, China and India withdrew their forces, and China stopped the road construction.
Xi Jinping and Narendra Modi held two informal meetings in 2018 and 2019 to reduce tensions but with limited effectiveness.
In 2020, a military clash between India and China in Kashmir resulted in the first fatalities since 1975.
India lost at least 20 soldiers, China — between 4 and 45.
The trigger: India burned some of China's tents and observation towers on its claimed side of the LAC.
Following the clash, China and India each deployed around 50,000 extra troops to the border.
In 2021, China passed the Land Borders law, which provided legal backing to military and civilian infrastructure buildup along the border.
In 2024, China and India agreed to troop disengagement and resumed patrols, but no definitive border line was agreed. Why?
The stalemate on the LAC cost China and India manpower and resources.
India's economy relies on China's components and raw materials.
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Investment and trade
In 2024, India imported $120 billion worth of goods from China, while exporting only $18 billion to it.
In 2023, China's key exports to India were electronic components ($70 billion) and chemicals ($20 billion).
These exports are critical for India’s booming tech manufacturing and pharmaceuticals sectors.
India has implemented policies to lessen its trade dependence on China, including:
Giving money or tax benefits to factories that increase domestic production.
Imposing an extra tax on some goods that China sells at a low price, sometimes even below production cost (“dumping”).
Setting minimum quality standards for some goods and prohibiting the sale of those that do not meet them.
Chinese investments in India totalled $2.5 billion from 2000 to 2024, just 0.37% of India's total investment inflows.
From the mid-to late-2010s, Chinese corporations like Tencent and Alibaba were investors in India's tech “unicorns” (companies above $1 billion in stock value).
After the 2020 clash, India shifted its foreign investment policy, now requiring government approval for investments from neighbouring countries.
From 2020 to 2023, India rejected 58 Chinese investment proposals and put 14 on hold.
After the clash, India also banned 267 Chinese applications, including TikTok, WeChat, and Shein, citing national security concerns.
As of 2025, at least 36 apps have returned to the Indian market, under compliance with new local ownership and data rules.
Technology and AI
China's tech sector is largely state-controlled, while India has greater private competition.
The consequence: China rolls out the latest technologies faster and at a larger scale (such as facial recognition and electric vehicles) but with more state intervention and censorship.
In 2021, India launched a $10 billion program to boost its semiconductor industry and compete with China.
India's semiconductor market value grew from $22 billion in 2021 to $52 billion in 2024, still below China's $183 billion that year.
In 2024, China invested $58 billion in AI, compared to India's $1.25 billion.
The same year, private investments in AI were $9.3 billion for China and $1.2 billion for India.
India's main weakness in this sector is poor infrastructure while its strength lies in the tech-skilled labour force.
India signed technology partnerships with the US, EU, Japan and Australia, while China prioritised ties with Belt and Road Initiative participants.
Global governance
China and India see themselves as leaders and competitors in Asia and the Global South.
China and India advocate for a multipolar international system, but India does not wish to replace the US-led order with a China-led one.
India is cautious about the rise of China's currency (renminbi) and prefers to promote the Indian rupee in the global financial system.
India left the RCEP, a free trade agreement involving 15 Asia-Pacific countries, due to concerns over an influx of Chinese goods into its market.
India has refused to join the Belt and Road Initiative, objecting to infrastructure projects in disputed Pakistan territory.
India has joined some China-led international organisations like the Shanghai Cooperation Organisation (SCO) but has not prioritised engagement to balance its relations with the US.
China opposes India's bid for a permanent UN Security Council seat to keep its status as the only member from Asia.
In 2022-2023, India's UN General Assembly votes aligned with those of China 81% of the time. India's votes aligned with the US 38% of the time.
China's votes aligned with the US 28% of the time.
Future scenarios
There are four key input factors affecting long-term relations between China and India.
Territorial disputes over the LAC.
India's economic dependence on China.
Foreign policy, especially relations with Pakistan and the US.
Public opinion and domestic policies under Xi Jinping and Narendra Modi (or their successors).
Scenario 1 - Competitive coexistence
Summary: China and India maintain their dual-track relationship which involves cultivating economic ties and managing their border dispute without reaching a stable solution.
India's trade deficit remains significant, and minor border clashes occur.
China strengthens its ties with Pakistan, while India remains close to the US.
Scenario 2 - Strategic cooperation
China and India agree on a defined border and withdraw more of their troops.
The countries increase bilateral investments, especially in key sectors like electronics and pharmaceuticals.
China-US and India-Pakistan ties improve, fostering mutual trust in the Asia-Pacific region.
Scenario 3 - Armed conflict
Low-intensity clashes escalate into a larger-scale conflict.
Economic ties are drastically downscaled or cut completely, damaging India’s manufacturing and pharmaceutical sectors.
China could also use its leased port in Sri Lanka to blockade Indian sea trade.
Both China and India have a "no first use" nuclear doctrine, meaning neither will initiate a nuclear strike first.
Pakistan supports China, potentially with strikes on India, while the US mediates the conflict without direct involvement.
Pakistan has used Chinese-made equipment against India during a brief escalation in May 2025. In particular, it shot down India’s French-made Rafale fighter jets with its J-10s.
Author Elia Preto Martini
Editor Anton Kutuzov
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