India-China relations: trade with one hand, feud with the other 

On the night of 15 June 2020, in freezing temperatures, Chinese troops, armed with homemade weapons, including iron rods studded with spikes and wooden clubs wrapped with barbed wire, ambushed a battalion of Indian soldiers in the high altitude Galwan valley in eastern Ladakh, India’s northern-most territory. The attack left 20 Indian soldiers dead and an unspecified number of Chinese victims.  

Both India and China blamed each other for the medieval-type hand-to-hand skirmish, the worst ever showdown between Indian and Chinese soldiers since 1975. Thankfully, it was just a six-hour hand-to-hand clash, in lieu of the decades-long agreement banning the use of firearms along the contested border area referred to as the Line of Actual Control (LAC). The result and its repercussions could have been much worse had there ensued any other kind of violence. But the fact is, the incident caused a severe dent in Sino-Indian relations, and prompted much scepticism on the Indian side about China’s intentions of resolving the border dispute between the two neighbours through dialogue. 

India and China share a 3,488-km-long border with each other, and much of it is under dispute. Each side currently has deployed around 50,000 to 60,000 troops along the LAC in eastern Ladakh.  

Today, China continues to occupy vast swathes of Indian territory in eastern Ladakh. The People’s Liberation Army (PLA) has recently taken possession of Patrolling Point (PP) 15 in Hot Springs and PP17A near Gogra post in Ladakh, which are claimed by India. And has amassed additional troops across the border, armed with artillery, air defences, combat drones and heavy vehicles.  

China’s territorial excessiveness and aggression is also exhibited by its opening up additional fronts along the border with India’s states of Uttarakhand, Arunachal Pradesh and Sikkim. China claims 83,743 square km of the Indian state of Arunachal Pradesh that borders the LAC across from the Tibet Autonomous Region. Since China annexed Tibet in 1950, it has laid stakes on Arunachal Pradesh, calling it ‘southern Tibet’ and hence, its territory. 

In October 2021, some 200 PLA soldiers came close to attacking Indian positions in the Tawang region of Arunachal Pradesh. However, they turned back without any scuffle or damage to Indian property. 

Most border demarcations with India are contentious, as far as China is concerned, despite at least three border agreements in the past. In 2017, China trespassed into the Doklam plateau, which is divided between India, China and Bhutan.  

In 1962, in the only war between the two countries, that lasted for around four weeks, China captured the 37,244-square-km Aksai Chin, that India still claims as part of Ladakh. Following the skirmish in Doklam, the PLA has constructed military infrastructure and permanently stationed troops there. 

The border disputes notwithstanding, India and China have a healthy trade relationship. India’s total trade with China was a whopping $125.7 billion in 2021, though largely in favour of China. India’s trade deficit with China rose to $69.4 billion in 2021, up from $45.9 billion in 2020 and $56.8 billion in 2019. 

Following the Chinese incursion and violence across the Line of Actual Control (LAC) in the contested areas of Ladakh in 2020, India had imposed a spate of restrictions on Chinese goods and investments, but that did not inhibit overall bilateral trade, which grew 44 percent in 2021. Indian imports shot up by over a record 46 percent while exports increased 35 percent in 2021. 

In 2018, Chinese exports to India totalled $75.5 billion, while India’s exports were $16.6 billion, making China, India’s largest global trading partner. Chinese exports to India include smartphones, components for smartphones and automobiles, telecom equipment, plastic and metallic goods, rubber and active pharmaceutical ingredients (APIs). India, in turn, exports minerals and oils, iron ore, chemicals and textiles to China.  

But is this thriving trade relation sustainable in the wake of mounting Chinese belligerence along the LAC? The armed forces of India and China have been engaged in a tense border standoff in eastern Ladakh since 5 May 2020, when there was a violent clash between the two sides in the Pangong lake areas.  

China has also been building infrastructure at a hectic pace along its border with India, to enable the quick mobilisation of troops in case of battle. China is now constructing a second bridge in an area held by it around the strategically key Pangong Tso lake in eastern Ladakh, prompting the US Army’s Pacific Commanding General Charles A. Flynn to state: “The destabilising and corrosive behaviour of Chinese Community Party (CCP) in the Indo-Pacific region is simply not helpful and some of the defence infrastructure that is being set up by China near its border with India is alarming.”  

India, in turn, objected to China’s construction of a second bridge across the disputed Pangong Lake, an area it said has been under the “illegal occupation” of China since the 1960s. 

“We have never accepted such illegal occupation of our territory, nor have we accepted the unjustified Chinese claim or such construction activities,” said Arindam Bagchi, spokesperson of India’s External Affairs Ministry. 

The Chinese have been building dozens of large weather-proof structures in eastern Ladakh for their troops to stay in during winter. New helipads, wider airstrips, new barracks, new surface-to-air missile sites and radar locations have also been reported by Indian media. 

In turn, the Indian government said it has stepped up construction of border infrastructure, especially since 2014, including roads and bridges, to protect its security interests. 

The Indian upgradation is agitating the Chinese PLA that, over the past three months, has been flying its fighter jets, including J-11s, close to the LAC. Cases of violation of the 10 km Confidence Building Major (CBM) line have been reported.  This is being seen as an effort to check Indian defence mechanisms in the region. 

On 23 October 2021, China’s National People’s Congress, exceptionably to its neighbours, approved a new border law asserting that the sovereignty and territorial integrity of China are “sacred and inviolable”. The new border law, which became operational from 1 January 2022, stipulated that “the sovereignty and territorial integrity of the People’s Republic of China are sacred and inviolable”. 

The border law came not without India’s reaction to it. India protested China’s new law blaming China for its “unilateral” decision to bring about a new land border law and said it was a matter of concern as the legislation could have implications on the existing bilateral pacts on border management and on the overall boundary question. 

Apparently, China’s brazenness comes from its aggressive line of reckoning that it has the right to be truculent while others do not. In fact, China has completely encircled India by wooing all of India’s South Asian neighbours with its economic, diplomatic and military might.   
 

But it is not only India’s immediate vicinity that China wants to lay its stake on. In June 2022, Chinese and Cambodian officials signed a secret deal for China to set up a naval base at the Ream base in Cambodia, which was earlier an area where the US operated military facilities. 

China is increasingly eyeing new military bases in Indian Ocean-rim countries, while adding to its pre-existing facility in Djibouti. It is reportedly seeking military footholds in Thailand, Myanmar, Indonesia, Pakistan, Sri Lanka, Kenya, Seychelles and Tanzania, apart from Cambodia. And is reportedly building a port facility with possible military uses in the United Arab Emirates. In contrast, India, attempting to contend with China’s expansionism in the Indian Ocean, has naval bases in Madagascar, Mauritius, Seychelles and Singapore. 

Apart from endeavouring to gain a mighty foothold in Indian Ocean coastal states, China is all set to make its military presence in the waters themselves.  

China has been building a sizeable number of strategic warships that are aimed at establishing itself as the dominant power in the Indian Ocean. Around 80 percent of the global seaborne trade transits through the Indian Ocean. 

China aims at straddling these seas, by taking command of the critical space stretching from the Malacca Strait to the Bab-el-Mandeb strait. This dominance in the Indian Ocean could enable China to hold the US and its allies at ransom, by threatening maritime shipping and even stymieing the US military from accessing the Indian Ocean in the event of a war in Asia. This becomes pertinent because China has been increasingly assertive about its claims on Taiwan and the South China Sea, and its influence on the Indo-Pacific, and it may become exigent for the US to move its forces from Europe, to the Middle East, to the Pacific. 

For the US, that has not so far focussed specifically on the Indian Ocean region, expecting its Quad ally India to do the job, it would be important to note that India has too many problems of its own. The existence of a territorially avaricious China on its eastern front, having already a noisome adversary on the western flank, in Pakistan, poses a strategic nightmare for India. To add to India’s chagrin is the failure to propitiate its immediate neighbours to counterpoise China, that has been efficacious in bestriding the region. 

Clearly, India needs help. And the US must do all it can to provide that help, diplomatically and militarily, if it expects India to thwart China on the sub-continent and the Indian Ocean region.