ICS Occasional Papers

What Future for India-China Economic Relations?

India today faces a ‘triple whammy’: the Covid crisis, the economic downturn and the China challenge. To confront these issues and emerge successful will require a massive and well-considered effort of national mobilisation. The key driver has to be the economic front; only the enhancement of India’s “comprehensive national power (CNP)”1 will provide the resources to meet all three challenges and also achieve India’s goals for transformation and prosperity. Meanwhile, China remains the second-largest economy in the world, deeply linked with the global economy. This essay discusses how we might harness China’s investments and resources adroitly but carefully to our purpose, somewhat like a sailor out on the high seas in bad weather,who has to tack cleverly from side to side to reach his destination without being blown off course. We consider Sino-Indian economic links in terms of supply and investment chains, products, services, brands and digital offerings in the short, medium and long terms; look at how India’s engagement with the rest of the world should evolve, and at enabling factors such as science, technology and finance. A complex web of connections and inter-dependencies then emerges, as do positive and negative incentives that India and the world can apply to change Chinese behaviour. Finally, we pull all these threads together to chart the appropriate course for India-China economic relations.


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