India-China Friendship: Short Term Relief or Long Term Risk for India?

India–China Friendship: Short Term Relief or Long Term Risk for India?

KAKALI DAS

In 2025, India finds itself at a crossroads in its international economic and strategic policy. Rising global tensions, particularly with the United States, have created a situation where India is facing the possibility of heavy tariffs that could affect key sectors of its economy.

At the same time, China has extended a hand, offering opportunities for trade and collaboration, which could provide some short-term relief.

While the prospect of easing tensions and boosting trade with China may seem attractive, it is essential to look closely at the potential consequences. Aligning too closely with China could carry significant economic and geopolitical costs for India, far outweighing any immediate benefits.

Over the last two months, the situation with the United States has been increasingly tense. The threat of tariffs has put India in a challenging position. Though India has maintained a firm stance, making it clear that it will protect its financial sovereignty and safeguard its economy, the looming threat of tariffs has made policymakers explore other avenues. In this context, China’s approach seems like an opportunity.

Last week, China openly criticized the US as a bully while extending support to India by resuming trade through the Lipulekh Pass. India’s Prime Minister also suggested that India and China need to work together to ensure stability in the global economic order. However, this apparent opening for cooperation must be examined critically. While it may provide temporary relief, it carries risks that could compromise India’s economic and strategic position in the long term.

Economically, the first issue India faces with China is trade imbalance. Historically, India has run a significant trade deficit with China, currently close to $100 billion. While US tariffs could reduce some Indian exports, relying on China as a partner could worsen this imbalance.

India primarily exports low-value commodities to China, while importing high-value goods such as electronics, critical minerals, and other essential products. This imbalance is not only about trade volume but also about the value addition India receives. Moving closer to China may compromise India’s financial and strategic autonomy, locking the country into an arrangement that favours Chinese interests.

Import dependence is another concern. India relies heavily on China for 59 key product categories, including electronics, pharmaceuticals, and critical minerals. Increasing reliance on China risks repeated supply shocks. Diversification becomes harder, and India may be unable to achieve long-term benefits from this partnership.

Historical experience shows that whenever India and China have moved closer economically, tensions eventually rise due to China’s expansionist tendencies. Any disruption in supply chains would harm India’s economy more severely than the US tariffs ever could.

Additionally, closer economic ties with China may limit India’s opportunities to diversify its trade and attract foreign investment. Western businesses seeking alternatives to China, a strategy known as “China plus one,” might avoid India if it becomes too aligned with China. This would result in a loss of foreign capital and investment, undermining India’s economic growth prospects.

Moreover, cheap Chinese imports could flood the Indian market, threatening small and medium enterprises and undermining the “Make in India” initiative, which aims to boost domestic manufacturing and self-reliance. A heavy reliance on China could weaken this cornerstone of India’s economic strategy, leaving the country vulnerable in multiple sectors.

Beyond economic considerations, geopolitical consequences are equally significant. India has invested heavily in aligning with the Quad group, which includes the United States, Japan, and Australia, to ensure a free and open Indo-Pacific and to strengthen its strategic position in the region. Moving too close to China could undermine this alignment, reducing India’s strategic leverage and signaling inconsistency in foreign policy.

Border tensions with China further complicate the picture. Even after repeated de-escalation talks, thousands of troops remain stationed along the Line of Actual Control, especially in sensitive areas like the Galwan Valley. This ongoing presence reflects the fragility of the situation, and any shift in India’s alignment could exacerbate these tensions.

China’s historical approach and strategic objectives also pose risks. China has consistently supported Pakistan, a country that has been hostile toward India since its independence. Economic and military aid to Pakistan, bolstered by Chinese support, could compromise India’s security if India leans too heavily on China.

Also, China’s “String of Pearls” strategy in the South China Sea, designed to establish influence over critical maritime routes, could be interpreted as an effort to encircle India strategically. Any partnership that places India within this framework could undermine its independent foreign policy and weaken its regional influence.

Another key aspect to consider is the nature of India-China relations. In previous decades, attempts to establish closer ties have often ended with India at a disadvantage. China tends to seek asymmetrical relationships, expecting partners to assume subordinate positions rather than true equality. This dynamic means that any close economic or strategic collaboration carries the risk of India sacrificing autonomy in decision-making, both economically and geopolitically. The costs of such a shift could be far higher than the short-term gains from trade relief or diplomatic gestures.

Given these factors, India faces a strategic dilemma. On one hand, avoiding China might make the country vulnerable to short-term economic shocks, especially with looming US tariffs. On the other hand, embracing China too closely risks long-term economic dependency, industrial vulnerability, and a loss of foreign investment. The balance is delicate, and the stakes are high, particularly when considering India’s strategic interests, border security, and its role in global geopolitics.

India must navigate this situation carefully, ensuring that any engagement with China is measured and strategic rather than reactive. Maintaining economic sovereignty requires reducing import dependence, particularly in critical sectors such as electronics, pharmaceuticals, and rare minerals.

Expanding domestic manufacturing capacity under the “Make in India” initiative remains essential, as it not only reduces vulnerability to external shocks but also strengthens India’s bargaining power in global trade. Diversifying trade partners and attracting foreign investment from countries looking to reduce their reliance on China can help India balance short-term challenges with long-term growth.

From a geopolitical perspective, India must maintain a firm commitment to its alliances, such as the Quad, and ensure that any engagement with China does not undermine its strategic objectives. India cannot compromise on its independent foreign policy, and careful diplomacy is required to manage border tensions while pursuing constructive economic engagement. Ensuring regional stability and maintaining credibility on the global stage must remain guiding principles.

The situation also calls for strategic patience. While China may offer short-term relief from tariffs or trade disruptions, India must consider whether this is a genuine reset or another cycle of strategic manoeuvring that has characterized past interactions. Economic incentives, while attractive, must be weighed against potential long-term risks to sovereignty, security, and regional influence. India’s policymakers need to evaluate whether temporary gains outweigh structural vulnerabilities, particularly when the history of India-China relations demonstrates recurring asymmetry.

Ultimately, India’s approach should be cautious and pragmatic. Trade with China should continue in areas that benefit both nations without creating over-dependence or compromising strategic autonomy. Simultaneously, India must strengthen ties with other partners, encourage investment from diversified sources, and reduce critical import dependence to safeguard its economy. Diplomacy should focus on conflict resolution at the border, mutual respect for sovereignty, and measured engagement that does not compromise India’s long-term strategic objectives.

In conclusion, India is at a critical juncture where economic opportunity and strategic caution must be carefully balanced. While the immediate offer of cooperation from China may seem appealing in the context of looming US tariffs, it is crucial to consider the broader implications.

Aligning too closely with China could aggravate the trade deficit, threaten domestic industries, reduce foreign investment, and compromise India’s independent foreign policy. The geopolitical landscape, including border tensions, Pakistan’s alignment, and regional maritime strategies, adds further complexity.

India must navigate these challenges by strengthening domestic capacity, diversifying trade and investment, maintaining strategic alliances, and exercising caution in economic and diplomatic engagement. By doing so, India can protect its financial sovereignty, maintain foreign policy independence, and secure long-term economic and geopolitical stability, ensuring that short-term relief does not come at the cost of enduring vulnerability.

02-09-2025

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