India and China

The first principle

India and China are two large civilisational states that rose at the same time, in the same continent, with an undefined border between them. Each sees Asia as its natural sphere, so competition is built into the relationship; but each also needs a stable periphery to grow, so neither can afford open conflict. The relationship is therefore managed rivalry: cooperation where interests meet, firm defence where they clash, and agreements whose purpose is to keep the clash from turning into war.

The core

History in brief

• Friendship and the break (1950 to 1962). India was among the first countries to recognise the People's Republic of China, establishing diplomatic relations on 1 April 1950. The Panchsheel agreement of April 1954 on trade with the Tibet region set out five principles of peaceful coexistence, but the asylum given to the Dalai Lama in 1959 and rival claims on the border led to the war of October and November 1962.
• The thaw (1976 to 2003). Ambassadors returned in 1976, and Prime Minister Rajiv Gandhi's visit in December 1988 opened a new phase in which the boundary question was set aside so that the rest of the relationship could grow.
• Agreements to keep the peace. The 1993 Agreement on the Maintenance of Peace and Tranquillity along the Line of Actual Control (LAC) and the 1996 Agreement on Confidence Building Measures in the military field committed both sides not to use force and to limit forces near the line. In 2003 the Special Representatives mechanism was set up for the boundary talks, and the 2005 Agreement on Political Parameters and Guiding Principles agreed that a settlement would take account of settled populations in border areas.

The boundary

• What the LAC is. The LAC is the line separating the areas each side controls; it has never been jointly marked on the ground, so each side patrols up to its own perception of it. India puts its length at 3,488 kilometres.
• Three sectors. The western sector in Ladakh includes Aksai Chin, Indian territory under China's illegal occupation since the 1950s. The middle sector runs along Himachal Pradesh and Uttarakhand and is the least disputed. In the eastern sector China claims Arunachal Pradesh, which is an integral part of India, and rejects the McMahon Line agreed at the Simla Convention of 1914; it has also issued lists of Chinese names for places in the state, which India rejects.
• Standoffs. At Depsang (April 2013) and Chumar (2014) Chinese troops set up camps on the Indian side of the line. At Doklam (June to August 2017) Indian troops stopped Chinese road building on territory claimed by Bhutan near the Siliguri Corridor. At Galwan in June 2020, twenty Indian soldiers died in the first deadly clash in decades, after China massed troops at several points in eastern Ladakh in breach of the 1993 and 1996 agreements.
• Disengagement. Through Corps Commander talks and the Working Mechanism for Consultation and Coordination (WMCC), troops pulled back from Galwan (July 2020), the Pangong Tso lake area (February 2021), Gogra (August 2021) and Hot Springs (September 2022). On 21 October 2024 the two sides reached a patrolling arrangement for Depsang and Demchok, the last friction points, and the Special Representatives met again in December 2024 after a gap of five years.

Dimensions

Economic relations as a tool of power

• A deep imbalance. China is one of India's two largest trading partners, but India's imports from China are many times its exports, and the trade deficit with China is the largest India has with any country, close to 100 billion dollars in 2024 to 25 according to the Ministry of Commerce. India exports mainly raw materials and imports finished goods.
• Dependence in key sectors. Indian industry relies on China for most of its active pharmaceutical ingredients (APIs), for electronic components, and for solar cells and modules, as well as for rare earth magnets. A supplier that dominates such inputs can slow another country's industry by restricting exports, as China did with rare earth exports in 2025.
• From surplus to strength. China's trade surplus with the world, India included, earns the revenue that funds its military modernisation, the largest navy in the world by number of ships, and loans to India's neighbours. This is the sense in which China uses economic relations as a tool for military power in Asia.
• India's response. Press Note 3 of April 2020 requires government approval for any foreign direct investment (FDI) from a country that shares a land border with India. In June 2020 India banned 59 Chinese mobile apps under Section 69A of the Information Technology Act, 2000, and later more, and production linked incentive schemes aim to build domestic capacity in electronics, pharmaceuticals and solar equipment.

The Belt and Road Initiative in South Asia

• What it is. The Belt and Road Initiative (BRI), launched by Xi Jinping in 2013, finances ports, roads, railways and power plants across Asia, Africa and Europe, mostly through loans from Chinese banks.
• India's objection. The China Pakistan Economic Corridor (CPEC), the flagship BRI project, runs through Pakistan occupied Jammu and Kashmir, which is Indian territory. In May 2017 India stayed away from the first Belt and Road Forum, stating that no country can accept a project that ignores its concerns on sovereignty and territorial integrity, and that connectivity must follow international norms, financial responsibility and transparency.
• A theatre of great power competition. BRI has given China a stake in almost every South Asian state: Gwadar in Pakistan, Hambantota in Sri Lanka (leased to a Chinese company for 99 years in December 2017 after Sri Lanka struggled to repay loans), Kyaukphyu in Myanmar, a BRI memorandum with Nepal (2017) followed by a framework for cooperation (December 2024), and power and port projects in Bangladesh and the Maldives. A Chinese tracking ship docked at Hambantota in August 2022 despite India's concerns.
• Implications for India. The risks are a chain of Chinese access points around India (the "string of pearls"), leverage over indebted neighbours, and a two front challenge in which Pakistan is backed by Chinese money and arms. The region's small states also gain bargaining power, playing India and China against each other.

Water

• The Brahmaputra. The river rises in Tibet as the Yarlung Tsangpo, so China is the upper riparian. India and China have no water sharing treaty, only an Expert Level Mechanism (2006) and memoranda on sharing flood season data. In December 2024 China approved a very large hydropower project on the lower Yarlung Tsangpo near Medog, close to Arunachal Pradesh, and began construction in July 2025; India has raised concerns about flows, floods and safety downstream.

In practice

How India manages the relationship

• Military. Infrastructure along the LAC, such as roads, tunnels and airfields, has been speeded up since 2017, and troops stay deployed in depth in eastern Ladakh.
• Diplomatic. India holds that peace on the border is the basis for normal ties. After the October 2024 arrangement, Prime Minister Modi and President Xi held their first formal bilateral meeting in five years at Kazan. In 2025, the year of the seventy fifth anniversary of diplomatic ties, the Kailash Mansarovar Yatra resumed, direct flights were restored, and Prime Minister Modi attended the Shanghai Cooperation Organisation (SCO) summit at Tianjin.
• Balancing. India works with the Quadrilateral Security Dialogue (Quad), the India Middle East Europe Economic Corridor (IMEC, announced in September 2023), the Chabahar port, and lines of credit and grants to neighbours, such as the support of about four billion dollars it gave Sri Lanka in its 2022 crisis.

Issues and way forward

• Trust deficit. China's actions in 2020 broke agreements that had kept the peace for decades, so India asks for verifiable de escalation, not only disengagement. Clarifying the LAC, which China has resisted since an exchange of maps stalled in 2002, would remove the main cause of clashes.
• Trade dependence. A complete break is neither possible nor desirable, so the sensible course is to reduce dependence in strategic inputs, screen investment for security while allowing it in non sensitive sectors, and build supply chains with partners.
• Neighbourhood competition. India cannot outspend China, so it should offer what the region values: faster delivery, grants rather than costly loans, energy and power grid links, and trusted digital infrastructure.
• Water. A legally binding agreement on data sharing and consultation on upstream projects would serve both sides, while India builds storage and flood control capacity in the northeast.
• Global issues. China has opposed India's entry to the Nuclear Suppliers Group (NSG) and has at times blocked the listing of Pakistan based terrorists at the United Nations (UN). Working together where interests meet, in BRICS (Brazil, Russia, India, China, South Africa and newer members), climate negotiations and the Asian Infrastructure Investment Bank (AIIB), keeps channels open without conceding core interests.

Common confusions

• LAC and the international boundary. The LAC is a line of control on the ground, not an agreed border. India's international boundary includes the whole of Ladakh, with Aksai Chin, and the whole of Arunachal Pradesh.
• LAC and the Line of Control (LoC). The LoC is the military line with Pakistan in Jammu and Kashmir, drawn on maps under the Simla Agreement (1972); the LAC with China has never been mapped jointly.
• Disengagement and de escalation. Disengagement pulls back troops at a friction point; de escalation reduces the total forces deployed in the area, which has not yet happened in full.
• BRI and CPEC. BRI is China's global programme; CPEC is one corridor within it, and the only one that passes through Indian territory.

For the exam

• Keyword bank: Panchsheel, Line of Actual Control, Aksai Chin, McMahon Line, Special Representatives, Galwan, Doklam, disengagement, de escalation, trade deficit, APIs, Press Note 3, Belt and Road Initiative, CPEC, string of pearls.
• Practise the previous year questions on this topic →
• Use in an answer:
  • Introduction with data: "India's trade deficit with China, close to 100 billion dollars in 2024 to 25, is the largest it has with any country, and it shows how economic ties have become a source of leverage."
  • Introduction with an agreement: "The 1993 and 1996 agreements on the LAC kept the border peaceful for nearly three decades, until the Galwan clash of June 2020 showed how fragile those commitments had become."
  • Conclusion: "India's China policy has to combine firmness on the border with economic resilience at home and credible delivery in the neighbourhood, so that rivalry stays competition and never becomes conflict."
  • Conclusion: "Peace and tranquillity on the border remain, in India's words, the basis for normal relations, and every step towards normalisation is measured against that test."