India – China Relationship

India and China, located in the southern and eastern parts of Asia, respectively, are major developing nations with significant influence in South Asian and global politics. Initially, they had a cordial relationship and brotherly bond, but border conflicts and tensions have led to the fragmentation of ties. 

Both nations are part of several multilateral groupings like BRICS, G20, etc., and need to utilize these forums for mutual trust and cooperation building on the Panchsheel Principles agreed between them in 1954. India and China, home to 2.8 billion people, have deep economic ties, with China as India’s top trading partner.

India China relations are complex and dynamic shaped by historical ties, economic collaboration, and persistent border disputes. Formal diplomatic relations were established on April 1, 1950, when India became the first non-socialist bloc country to recognise China. However, the 1962 border conflict caused a major setback. Efforts by the Indian government in 1988 revived bilateral ties, fostering trade, cultural exchanges, and people-to-people connections.

Despite ongoing security and strategic concerns, both nations continue to work toward a structured framework for cooperation. The focus remains on balancing national interests while fostering a constructive partnership that enhances regional stability and mutual growth.

Key Events

India – China relations have evolved with time. Let’s study them with the help of a timeline.

1950 – Establishment of diplomatic relations between China and India:

India was the first non-communist country in the world to recognise China.

1954 – Signing of the “Panchsheel Agreement.”

Five Principles of peaceful co-existence include:

1. Mutual respect for each other’s territorial integrity and sovereignty,
2. Mutual non-aggression,
3. Mutual non-interference,
4. Equality and mutual benefit, and
5. Peaceful co-existence.

1959 – India provides asylum to Dalai Lama:

The bilateral relations between India and China got strained after this incident. The Panchsheel Agreement of 1954 also could not lower down the bitterness on India’s approach towards China. This led to the beginning of China – India conflict as China for the first time criticized India by saying India was behaving like “an enemy state.” Afterwards, China started putting a claim on the Indian territories in Ladakh and NEFA (North East Frontier Agency), today’s Arunachal Pradesh.

1962 – Brief Border War between India and China:

It was fought over the disputed territory in the Aksai Chin region and Arunachal Pradesh. China acquired a huge territory of India on both Eastern and Western fronts. Besides it continues to claim over entire Arunachal Pradesh area. For China, Arunachal Pradesh is “Southern Tibet.”

On December 12, 1962, the six-non-aligned group came out with the Colombo Conference Proposals (CCP). The CCP said that in the Western Sector (namely Ladakh), the Chinese military should go back by 20 km while India could keep its posts up to the LAC as of November 7, 1959. The demilitarized zone of 20 km created by Chinese military withdrawals will be administered by civilian posts of both China and India. With regard to the ‘Eastern Sector’, the Indian Forces can move up to the McMahon Line, except in two areas. While India accepted the proposals, China rejected them. On January 6, 1963, China said: “Since the conflict occurred in both the Eastern and Western Sectors, the same principle of withdrawal should apply to all sectors. In no case should one side be called upon to withdraw, and the other side allowed to advance. If there should disengagement, this should be done all along the entire Sino-Indian Boundary and not just in one of the sectors.” The Colombo proposals had allowed India to advance up to the McMahon Line, a line which China had not accepted as legitimate. It wanted the line to be renegotiated. However, despite disagreement on the CCP, neither India nor China resumed hostilities. 

1976 – Restoration of full diplomatic ties after a period of 15 years:

While the war in 1962 led to a significant break in diplomatic relations, both countries began a process of normalization in the mid-1970s. This process involved several steps, including the exchange of ambassadors in 1976. Further efforts to improve relations continued with visits and dialogues in the subsequent years. 

1984 – Signing of the Most Favoured Nation Trade Agreement:

In 1984, India and China concluded a Trade Agreement which accorded both countries Most Favoured Nation (MFN) status. The MFN status ensures that both India and China extend the same trade advantages to each other as they do to any other country with which they have a trade agreement. The agreement essentially means that if India offers a lower tariff or other trade concession to a third country, it must also offer the same to China, and vice versa. 

1986 – China’s condemnation of India’s moves to make Arunachal Pradesh a full-fledged state (Wangdung Incident):

The incident, which began in June 1986, is named after a small village in the Sumdorong Chu area of the Tawang district of Arunachal Pradesh, and is considered the third Sino-Indian military conflict. Wangdung lies close to the Thagla Ridge—the Indian Army’s occupation of the ridge was the precipitating factor of the first Sino-Indian conflict in 1962—and hosted a subsidiary post of the Intelligence Bureau. The People’s Liberation Army of China occupied Wangdung in the summer of 1986. 

1993 – Prime Minister PV Narsimha Rao visit to China:

The visit set the beginning of the “New Era of Bilateral Partnership.”

The first ever border accord was signed in 1993. As per the border accord both agreed not to have an indirect military confrontation and to recognise the LAC (Line of Actual Control).

In 1996, the LAC was given a legal status by both the countries.

1998 – India conducts nuclear tests, which receives China’s criticism.

With the nuclear tests of India in 1998, again the relations between the two nations suffered a setback.

2003 – PM Vajpayee visit to China:

China for the first time accepted that Sikkim is a part of India. Both agreed to open Nathu La Pass in Sikkim which is the primary entry point between the two countries for trade and commerce. Special representatives were proposed to be appointed for border disputes between the two countries.

“The Bangkok Agreement” was also signed in 2003 for improving economic cooperation between India and China by allowing “Tariff Concession” to each other’s country’s products.

2005 – Chinese Premier Wen Jiabao’s support for India’s UN Security Council Bid.

2006 – Reopening of Nathu La Pass for Trade.

Nathu La Pass in Sikkim is the primary entry point between the two countries for trade and commerce.

2017 – 2022 – Chinese incursion in Doklam, Galwan Valley, and Tawang.

• Doklam issue: The 2017 China-India border standoff, also known as the Doklam standoff, was a 73-day military conflict between India and China over the construction of a road by Chinese troops in the disputed Doklam region. The standoff began on June 16, 2017, with Chinese troops extending a road, prompting India to launch Operation Juniper on June 18, supporting Bhutan. The standoff lasted over two months, and on August 28, 2017, both nations withdrew their troops.
• Galwan Clashes: Chinese troops invaded Indian territory in the Galwan River valley in 2020, causing objections to Indian road construction. It became the first fatal confrontation between the two sides since 1975.
• Yangtse Clash (2022): The Yangtse clash occurred in Arunachal Pradesh, involving Indian and Chinese troops. Around 300 Chinese troops advanced on Indian outposts near Chumi Gyatse Falls, resulting in an hour-long hand-to-hand combat and serious injuries on both sides.

Bilateral Relations / Cooperation

Political Relationship

India-China political relations are complex, marked by both cooperation and conflict. While the two nations have a long history of interaction, including periods of close ties and shared principles like the Five Principles of Peaceful Coexistence, border disputes, particularly the 1962 conflict and the more recent Line of Actual Control (LAC) tensions, have significantly strained their relationship. Despite these challenges, both countries have also pursued economic cooperation and engaged in high-level diplomatic exchanges.

As we discussed above, India-China relations were first established in 1950 with India becoming the first non-socialist bloc country to establish diplomatic relations with China. The relations between both the countries evolved over time with high-level visits from both the countries and increase cooperation using several multilateral forums.

Some major developments include:

1. Panchsheel Agreement – The Panchsheel Agreement of 1954 includes five principles of peaceful co-existence. These five principles are:

1. Mutual respect for territorial integrity and sovereignty.
2. Mutual non-aggression.
3. Mutual non-interference.
4. Equality and mutual benefit.
5. Peaceful co-existence.

2. Dialogue Mechanisms - Over thirty dialogue mechanisms exist between India and China, covering political, economic, cultural, people-to-people, consular matters, and regional and global issues. Few major talks include:

1. During Prime Minister Atal Bihari Vajpayee’s visit in 2003, India and China signed the Declaration on Principles for Relations and Comprehensive Cooperation, and mutually decided to appoint Special Representatives (SRs) to explore the framework of a boundary settlement.
2. During President Xi Jinping’s visit to India in September 2014, the two sides redefined their bilateral engagement as a ‘Closer Developmental Partnership’. In May 2015, Prime Minister Narendra Modi visited China and held meetings with President Xi Jinping and Premier Li Keqiang. Prime Minister Modi and President Xi held their first informal Summit in Wuhan on 27-28 April 2018 and their second informal Summit in Chennai on 11-12 October 2019.

Multilateral Relationship

India and China actively engage in multilateral fora such as BRICS, SCO, G-20, and Asian Infrastructure Investment Bank (AIIB). The two leaders have met on the side lines of various multilateral summits. Prime Minister Modi visited China to participate in the G20 Summit in Hangzhou (Sept 2016), the BRICS Summit in Xiamen (Sept 2017) and the SCO Summit in Qingdao (June 2018). President Xi visited India in October 2016 to participate in the BRICS Summit in Goa. China’s Premier Li Qiang attended the G20 Summit chaired by India in New Delhi on 09-10 September 2023. 

• BRICS: BRICS, which originally stand for Brazil, Russia, India, China and South Africa, is a group formed by eleven countries: Brazil, Russia, India, China, South Africa, Saudi Arabia, Egypt, United Arab Emirates, Ethiopia, Indonesia, and Iran. It serves as a political and diplomatic coordination forum for countries from the Global South and for coordination in the most diverse areas. India and China are among its founding members.
• SCO: Shanghai Cooperation Organization (SCO), is an intergovernmental organization established in 2001 by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan with the aim of promoting cooperation and peace among its member states, as well as fostering “a new democratic, fair and rational international political and economic order.” India joined the grouping in 2017 and, since then, remained an important contributor.
• G20: Group of Twenty (G20) is an intergovernmental forum for international economic cooperation. India and China have cooperated in the progress of the G20.  
• AIIB:  Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that provides financing for infrastructure in Asia and beyond. India and China are included among its founding members.

Economic Relationship

India and China have a complex economic relationship characterized by significant trade volume, particularly in imports from China, but also by investment imbalances and ongoing geopolitical tensions. While trade has flourished, reaching $118.4 billion in FY24, with China regaining its position as India's largest trading partner, investment flows, especially from China to India, remain relatively low. This disparity, coupled with border disputes, creates a dynamic of managed rivalry where cooperation and competition coexist. 

Dialogue Mechanisms

India-China Economic and Commercial Relations are shaped through various dialogue mechanism such as:

• Joint Group on Economic Relations, Science and Technology (JEG), led by the Commerce Ministers of both sides. Joint Economic Group (JEG) was established in 1988 during the visit of Prime Minister Rajiv Gandhi to China, to discuss trade cooperation issues. So far 11 JEGs were held with the last one in Delhi in March 2018. During the 9th JEG held in 2012, the two sides also set up three working groups on Economic and Trade Planning Cooperation (ETPC), Trade Statistical Analysis (TSA) and Service Trade Promotion (or Trade in Services – TIS)
• Strategic Economic Dialogue (SED) was established during the visit of China’s Premier Wen Jiabao to India in December 2010, to discuss macro-economic cooperation. So far 6 SED meetings have taken place with the last one held in New Delhi in September 2019. There are 5 Working Groups under SED: Infrastructure, Environment, Energy, High Technology, Policy Coordination and Pharmaceuticals. The SED is co-chaired by Vice-Chairman NITI Aayog and Chairman, Chinese National Development and Reforms Commission (NDRC), PRC.
• The NITI Aayog – Development Research Centre of China (DRC) Dialogue was established pursuant to the MoU signed during the visit of Prime Minister Narendra Modi to China in May 2015, to discuss global economic cooperation issues. Vice-Chairman NITI Aayog leads the Indian delegation while President (Minister-level) of DRC of China leads the Chinese delegation. The fifth NITI-DRC dialogue was held in Wuhan on 28-29 November 2019.
• India-China Financial Dialogue is held in accordance with the MoU signed during China’s Premier Wen Jiabao’s visit to India in April 2005. The ninth India-China Financial Dialogue was held in New Delhi on 25 September 2019 which was co-chaired by Finance Secretary.

Cultural Relations

China and India have been leading the way of civilizational exchanges in Asia since ancient times. There are early mentions of China in ancient Indian literature dating back to the 2nd century BCE, when cultural interactions between China and India began.

The cultural relations between India and China include people-to-people ties, the influence of yoga & Bollywood, education exchanges, etc.

• Religious sites: India constructed a Buddhist temple in Luoyang, Henan Province, in honor of the Indian monks Kashyapa Matanga and Dharmaratna in 2010.
• Diaspora: As of 2024, the Indian diaspora in China is relatively small, with a population estimated at around 56,000 individuals, primarily consisting of medical students and business professionals.
• Bollywood Movies and Yoga: The popularity of Indian Bollywood movies like Dangal and Yoga in China has improved India’s cultural relations with China.
• Education: In 2006, India and China signed the Education Exchange Programme (EEP), an umbrella agreement that governs educational cooperation between the two countries.

Military Relationship

India China Military Relations have gone through cycles of conflict and cooperation. Military relations include peace agreements, confidence-building measures, and military exercises among others.

Military exercise between India and China: The primary joint military exercise between India and China is called "Hand in Hand". It's an annual event focused on counter-terrorism operations under a UN mandate, enhancing interoperability between the two armies. The exercises involve tactical operations and drills in various combat skills. 

Challenges in India-China Relationship

The relationship between India and China faces significant challenges, primarily stemming from a long-standing border dispute, a trade imbalance, and growing strategic competition in the Indo-Pacific region. These factors contribute to a complex dynamic where cooperation and competition coexist. 

Key Challenges include –

1. Border Disputes: The unresolved Line of Actual Control (LAC) remains a major source of tension, with multiple military standoffs and clashes, including the Galwan Valley clash in 2020. India prioritizes resolving border issues before normalising broader relations, while China seeks to decouple border talks from other aspects of the relationship.
2. Five Finger Policy: It regards Tibet as China’s right-hand palm, with five fingers on its periphery: Ladakh, Nepal, Sikkim, Bhutan, and the North-East Frontier Agency (now known as Arunachal Pradesh), which China considers its responsibility to “liberate”.
3. Huge Trade Imbalance: India has the largest trade deficit with China. Concerns exist about India's dependence on China for certain critical goods and technologies.
4. China’s growing influence: China's economic and military power, coupled with its assertive foreign policy, causes unease in India.
5. China's relationship with Pakistan: China's close ties with Pakistan, including its support on issues related to Kashmir, are viewed as a security threat by India.

Conclusion

The India-China relationship is complex, marked by both cooperation and competition. While high-level exchanges suggest a potential easing of tensions, particularly after the 2020 border clashes, a deeper strategic rivalry persists. The unsettled border, trade imbalance, and China's growing influence in South Asia are key concerns for India. Despite these challenges, both nations recognize the importance of managing their relationship, especially given their global significance as economic powers and their shared interests in regional stability and development.

The India-China relationship has significant global implications, particularly for the future of Asia and the global order. Cooperation between these two major powers can contribute to global stability and development, while their competition can exacerbate tensions and instability.