How India Manages the China Relationship

India-China relations are defined by the world's most complex simultaneous competition-cooperation dynamic: China is India's largest trading partner (two-way trade approximately $125–135 billion in FY2024) while being its primary security threat (Galwan Valley clash 2020, continued Line of Actual Control deployments, China-Pakistan CPEC running through Indian-claimed territory). The relationship is governed by what India calls "the three Cs framework" — competition, cooperation, and conflict must all be managed simultaneously — and what Chinese analysts call the "ABC framework" (Acknowledge differences, Build cooperation, Counter threats). Neither framework has produced breakthrough; both sides manage a structural rivalry that neither can afford to escalate but neither can resolve.

Representational Visualization: How India Manages the China Relationship

The Galwan Valley clash (June 15–16, 2020) — in which an estimated minimum of 35–45 Chinese soldiers were killed in hand-to-hand combat at altitudes above 14,000 feet — was the most severe India-China border clash since 1967 and the first fatalities on the LAC since 1975. The clash's immediate diplomatic consequence was the India-China border disengagement process: multiple rounds of military commander talks produced partial disengagement at specific friction points; by late 2024, agreement on patrolling arrangements at certain LAC sections had been reached; PM Modi and President Xi met at the Kazan BRICS Summit (October 2024) in the first substantive bilateral meeting since Galwan; SCO summit (Tianjin, September 2025) Modi-Xi bilateral reset discussions continued.

What You Need to Know

• Galwan Valley clash (June 2020): Estimated minimum of 35–45 PLA soldiers killed (China initially acknowledged 4, later revised); the deadliest LAC clash in decades; India responded with: trade restrictions on Chinese apps (250+ apps banned including TikTok), FDI restrictions on Chinese investment, increased defence procurement acceleration, Quad deepening.
• India-China trade paradox: two-way trade approximately $125–135 billion FY2024; trade deficit of approximately $85 billion in China's favour (China exports vastly more to India than India exports to China); India depends on Chinese imports for: pharmaceutical APIs (active pharmaceutical ingredients), electronics components, solar panels, telecom equipment; China is essential to Indian manufacturing supply chains despite strategic tension.
• LAC partial disengagement (2024): multiple rounds of military corps commander talks; by October 2024, agreements on "buffer zones" at Depsang Plains and Demchok (two of the most sensitive friction points); patrolling rights partially restored; Modi-Xi Kazan bilateral (October 2024) marked by a cautious tone — "stabilise" the relationship rather than "normalise"; full disengagement not achieved.
• SCO Tianjin 2025: Modi attended SCO summit August 31-September 1, 2025 in Tianjin; bilateral with Xi at the summit; discussions on further LAC normalisation; both sides described the bilateral as "constructive"; the SCO context (a China-led organisation) for India-China bilateral is itself a demonstration of multi-alignment.
• China-India economic competition: India and China compete for: FDI (both positioning as manufacturing alternatives to each other in Western supply chain diversification); Global South leadership (both claim to speak for the developing world at G20, UNSC); digital governance standards (India's DPI model vs China's Digital Silk Road); semiconductor investment (India's Tata fab and China's mature node manufacturing).

How It Works in Practice

1. The "competitive co-existence" formula: India and China have settled into a formula of neither normalising (Modi's statement that India-China relations "cannot be normal" unless LAC is respected) nor escalating (both sides want to manage trade relationship and avoid full rupture). This competitive co-existence manages the relationship through: military disengagement talks; diplomatic engagement through multilateral frameworks (BRICS, SCO, G20); limited people-to-people and business contacts; while maintaining the structural security competition (defence buildout, LAC fortification, strategic denial of CPEC legitimacy).

2. India's strategic response to the China threat: Post-Galwan, India has: accelerated infrastructure development along the LAC (border roads, tunnels, strategic railroads); increased forward deployment of Indian Army divisions along the LAC; deepened Quad engagement as strategic hedge; restricted Chinese FDI (Parliamentary amendment to FDI policy requiring government approval for FDI from countries sharing land border with India); banned hundreds of Chinese apps (including TikTok) for security reasons; begun diversifying from Chinese pharmaceutical API dependency.

3. The China trade dependency challenge: India's pharmaceutical, electronics, and manufacturing sectors are deeply dependent on Chinese inputs that cannot be quickly replaced: 70%+ of India's pharmaceutical API imports come from China; 45%+ of India's electronics components from China; domestic alternatives exist for some categories but are more expensive, less reliable, and years away for others. India's "China+1" strategy — positioning India as the alternative to China for manufacturing diversification — is partly threatened by India's own supply chain dependency on China.

4. CPEC and the territorial dimension: China-Pakistan Economic Corridor (running from Xinjiang through Gilgit-Baltistan to Gwadar) passes through territory India claims as part of J&K (Gilgit-Baltistan); India has formally objected to CPEC on territorial grounds; China has dismissed India's objections; the CPEC gives China a permanent strategic footprint in India's claimed territory that India cannot remove through diplomacy. The CPEC dimension adds a direct territorial grievance to the LAC frontier dispute.

5. India's Arunachal Pradesh and China's "South Tibet" claim: China claims the entire state of Arunachal Pradesh as "South Tibet" and regularly renames places in the state (India protests diplomatically each renaming); China-India boundary in the Eastern sector (Arunachal Pradesh) is entirely undelimited — no Line of Actual Control, just India's effective administration and China's territorial claim; unlike the Western sector (Ladakh), the Eastern sector has not seen active military confrontation in recent decades but remains a potential friction point.

What People Often Misunderstand

• India-China relations are not primarily about Tibet: While Tibet's status (India hosts the Dalai Lama in Dharamshala) creates friction, the more consequential dispute drivers are the LAC boundary dispute, CPEC, China's deepening Pakistan relationship, and China's South Asian influence expansion — not primarily Tibet.
• The Kazan/Tianjin meetings were cautious resets, not breakthroughs: Modi-Xi bilateral meetings in 2024–2025 restored diplomatic contact but did not produce policy changes on LAC, CPEC, or bilateral trade imbalance; characterising them as "breakthroughs" overstates the content; they were crisis stabilisation meetings rather than relationship transformation meetings.
• India's trade dependency on China is a structural constraint on its China policy: India cannot impose severe economic sanctions on China — the pharmaceutical API dependency alone would collapse India's generic medicines industry; this economic constraint limits how assertively India can respond to Chinese pressure; the dependency reduction is years-long work.
• Both India and China benefit from keeping the relationship below all-out conflict: Chinese economic relationship with India provides China with a large export market and diversification; India's BRICS and SCO participation alongside China serves India's multilateral interests; neither side wants full rupture; the competitive co-existence formula serves both parties' interests below full escalation.
• Galwan was a Chinese overreach that produced significant strategic setbacks for China: China's military incursion at Galwan produced: India's deeper Quad participation; India's Chinese app bans and FDI restrictions; India's accelerated LAC infrastructure; Indian public opinion shift strongly against China; and Indian defence procurement reorientation away from Chinese-compatible systems. China's tactical territorial assertiveness produced strategic setbacks — a net loss for China's long-term India strategy.

What Changes Over Time

The LAC's Eastern sector (Arunachal Pradesh) border infrastructure development — China accelerating villages ("Viksit Arunachal" equivalent on Chinese side) and India's counter-construction — will determine whether the current competitive co-existence on the Eastern sector remains stable. India's semiconductor manufacturing investment (Tata/PSMC fab, Micron ATMP) is a direct response to the China supply chain risk; its maturation will gradually reduce India's electronic components dependency on China.

Sources and Further Reading

• ORF — Operation Sindoor Special Report: https://www.orfonline.org/research/in-the-aftermath-of-operation-sindoor-escalation-deterrence-and-india-pakistan-strategic-stability
• Foreign Policy — India strategic autonomy: https://foreignpolicy.com/2025/11/26/india-end-strategic-autonomy/
• Insightsonindia — India's evolving foreign policy: https://www.insightsonindia.com/2025/06/10/indias-evolving-foreign-policy/
• IRGA — India's strategic autonomy: https://irga.in/world_desc.php?id=1217
• Chatham House — BRICS Quad balancing: https://www.chathamhouse.org/2025/07/back-back-brics-and-quad-meetings-highlight-indias-increasingly-difficult-balancing-act

(This series is part of a long-term editorial project to explain the structures, institutions, policies, and strategic frameworks that shape governance and statecraft in India for a global audience. Designed as a 25-article briefing cluster on Indian Foreign Policy Strategy & Doctrine, this vertical examines how India understands, formulates, and executes its engagement with the world — from the institutional architecture of foreign policy and the evolution from non-alignment to multi-alignment, to strategic autonomy, neighbourhood diplomacy, great-power relations, security doctrines, economic statecraft, multilateral engagement, and India's emerging role in a rapidly changing international order. Written in an accessible format for diplomats, investors, researchers, academics, journalists, policymakers, students, civil society organisations, and international observers, the series seeks to explain not only what India does abroad, but why it does so. Particular attention is given to the historical evolution of India's strategic thinking, the practical realities of decision-making, the tensions between ideals and interests, and the opportunities and constraints facing a rising power in the twenty-first century. This is Vertical 9 of a larger 20-vertical knowledge architecture being developed by IndianRepublic.in under the editorial direction of Saket Suman. All articles are protected under applicable copyright laws. All Rights Reserved.)