Indo-China Relations: Power Play or Power Dilemma?

China-India Brief #102

Centre on Asia and Globalisation                                                             Published Twice a Month
Lee Kuan Yew School of Public Policy                                                    September 27 – October 10, 2017                                     

India and China, two of the world’s oldest civilisations and simultaneous rising powers, are engaged in a geopolitical power-play. Competition between the two, however, is not inevitable and as past experience has shown, constructive engagement can bring great benefits to both sides. Both countries cooperated successfully, along with other members of the BRICS, to establish the New Development Bank. The India-China climate alliance was another example of bilateral cooperation for a mutually beneficial cause. Besides high-level engagements, people-to-people exchanges are also increasing with greater numbers of people from both sides visiting, working, and studying in the other’s country. Today, globalisation has brought the two neighbours closer together than at any other point in history. Yet, it has also made their relationship far more entangled and complex.

Both India and China are undergoing a process of power accumulation with the ultimate aim of re-establishing themselves as great powers within the international system. As contiguous neighbours, they will need each other’s help to fulfil their ambitions. However, their relationship continues to be marked by distrust. Many in India and China perceive their relationship as a zero-sum game, whereby strategic policies which serve the national interests of one are seen to be detrimental to the other.

We can analyse the power accumulation process in China and India by focusing on three aspects of power – political, economic, and military.

Political power largely comes from membership in powerful international organisations and groupings, such as the United Nations Security Council (UNSC), Nuclear Suppliers Group (NSG), Group of 7 (G7), and voting rights in economic institutions including the International Monetary Fund (IMF) and strategic alliances. Permanent membership in the UNSC has also vested China with veto power. The Asian superpower has been economical in using this right, exercising it only 11 times since joining the UNSC in 1971. Yet, closer inspection of China’s behaviour reveals a more recent and disturbing trend – out of these 11 vetos, 10 were cast in the last twenty years between 1997 and 2017. This increasing willingness to exploit its political power to maximise its interests would undoubtedly make New Delhi more apprehensive of Beijing.

In 2016, India’s GDP was $2.264 trillion, a fraction of China’s, which stood at $11.199 trillion. Additionally, in 2016, China was rated as the world’s largest economy in terms of purchasing power parity (PPP) by both the IMF and World Bank. There is also a clear disparity in terms of defence spending as China allocated $151.43 billion in 2017 towards defence, compared to India’s allocation which was roughly one third of that at $53.5 billion. A comparison of their overall military strength shows that India would require substantial financial investment, technological upgrading, and administrative overhauling to catch up with China.
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