Context

Deng Xiaoping had told then-Indian Prime Minister Rajiv Gandhi in 1988 that the 21st century would be “India and China’s century”, the current Chinese leadership has no patience for such pablum. They believe — indeed believe they know — that it is destined to be China’s century alone.

The policy of side-stepping contentious issues and encouraging bilateral economic relations

• There have always been political tensions, both over each country’s territorial claims over land controlled by the other, and China’s alliance with Pakistan, and India’s hospitality to the Dalai Lama.
• But neither country had allowed these tensions to overwhelm them:
• China had declared that the border dispute could be left to “future generations” to resolve.
• India had endorsed the “One China” policy, refusing to support Tibetan secessionism while limiting official reverence for the Dalai Lama to his status as a spiritual leader.
• India actions and statements have usually been designed not to provoke, but to relegate the border problem to the back burner while enabling trade relations with China (now worth close to $100 billion) to flourish.
• India made it clear that it was unwilling to join in any United States-led “containment” of China.
• From negligible levels till 1991, trade with China had grown to become one of India’s largest trading relationships. 
• India engages with China diplomatically in the BRICS  as well as conducting annual summits of RIC (Russia-India-China).
• India is an enthusiastic partner in the Chinese-led Asian Infrastructure Investment Bank and the New Development Bank (NDB).
• However, it has become increasingly apparent that the policy of side-stepping contentious issues and encouraging bilateral economic relations has played into Chinese hands.

Chinese strategy in Galwan

• In the Galwan clash, the Chinese troops seem to have been engaged in a tactical move to advance their positions along areas of the LAC that it covets, in order to threaten Indian positions and interdict patrols.
• They are threatening India’s construction of roads, bridges and similar infrastructure on undisputed Indian territory, a belated effort to mirror similar Chinese efforts near the LAC in Tibet.
• They have established a fixed presence in these areas well beyond China’s own ‘Claim Line’.
• The objective seems to be to extend Chinese troop presence to the intersection of the Galwan river and the Shyok river, which would make the Galwan Valley off bounds to India.
• The Chinese have constructed permanent structures in the area of their intrusion and issued statements claiming that sovereignty over the Galwan valley has “always belonged” to China.
• Consolidation of LOC: China’s strategy seems to be to consolidate the LAC where it wants it, so that an eventual border settlement — that takes these new realities into account — will be in its favour.
• Implications for India:  In the meantime, border incidents keep the Indians off-balance and demonstrate to the world that India is not capable of challenging China, let alone offering security to other nations.

India’s options

• India has reinforced its military assets on the LAC to prevent deeper incursions for now.
• And hopes to press the Chinese to restore the status quo ante through either diplomatic or military means.
• Chinese and Indian officials are currently engaged in diplomatic and military-to-military dialogue to ease tensions, but de-escalation has been stalled for months.
• Economic options: India has responded with largely symbolic acts of economic retaliation.
• India has also reimposed tighter limits on Chinese investment in projects such as railways, motorways, public-sector construction projects, and telecoms.

Limits to India’s economic retaliation

• India is far too dependent on China for vital imports — such as pharmaceuticals, and even the active ingredients to make them, automotive parts and microchips that many fear it will harm India if it acted too strongly against China.
• Imports from China have become indispensable for India’s exports to the rest of the world.
• Various manufacturing inputs, industrial equipment and components, and even some technological know-how come from China; eliminating them could have a seriously negative effect on India’s economic growth.
• And there are limits to the effectiveness of any Indian retaliation: trade with China may seem substantial from an Indian perspective, but it only represents 3% of China’s exports.
• Drastically reducing it would not be enough to deter Beijing or cause it to change its behaviour.

Consider the question “State of India-China relationship hardly indicate the 21st Century being the “India and China’s century”. In light of this, examine the factors responsible for this and suggest the way forward for India.”

Conclusion

This range of considerations seems to leave only two strategic options. Playing second fiddle to an assertive China or aligning itself with a broader international coalition against Chinese ambitions. Since the first is indigestible for any democracy, is China de facto pushing India into doing something it has always resisted — allying with the West?

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