China and India are turning into the key engines for global growth. Although in the West, we still mostly focus on the transatlantic relationship between Europe and the U.S., the relationship between China and India will become key to understanding the future of the global economy. We will soon enter the next phase of their relationship, in which renewed competition could shake up the global order.
During the 20th century, the world looked at the relationship between Europe and the U.S. as the most important bellwether for the global economy. However, increasingly, China and India are the key engines of global economic growth. In the 21st century, understanding the dynamics of their relationship will become much more important. What lies ahead? Some commentators point to their border disputes and expect China and India to remain fierce rivals, while others believe that they will be able to build a mutually beneficial relationship based on connectivity. In reality, the relationship between China and India is more likely to move through several phases, based on their development paths. To understand these shifts, we must first turn to their geography and history.Unlike China, India has never been part of Eurasia. Both countries are located on the Eurasian landmass, but India is cut off from Eurasia by the Himalayas. Although these mountains have facilitated some cultural exchange (e.g. Buddhism found its way to China via the Himalayas), this is why India has never fully integrated with China. It is also why there has not been much conflict between China and India despite both being great powers. It should be noted that when tensions rose because of border disputes, even leading to a brief war in 1962, China and India were in the same phase of economic development. Contrarily, when China’s economy surged in the 1990s, border tensions eased and the relationship between China and India improved markedly as India aimed to benefit from a rising China. But in the coming years, the tide will turn again. Now that the Indian economy is picking up steam, tensions between India and China are destined to rise. Indeed, it should be no surprise that border conflict returned with a military stand-off in 2017 at the Doklam Plateau. This was not merely an incident. In fact, three geographical routes are bringing China and India closer together than ever before, which will fuel tensions between them as India’s economy is set to become the world’s second largest by 2030.First, the border area between India and Pakistan. The Khyber Pass through these mountains is the greatest weakness of India’s security, as it facilitated conquests by Alexander the Great and tribes from Central Asia. Currently, this area is highly contested as military clashes between India and Pakistan take place now and then (such as in the present lead-up to the Indian elections). As such, India is worried by China’s CPEC, a $62 billion infrastructure investment project that runs straight through Kashmir, an area claimed by India.Second, the border area between India and Myanmar. The impenetrable jungle here has long separated China from India. But forests are being cut down and new infrastructure connects Myanmar to both China and India, bringing all of them closer together. For decades, China has been tightening its grip on Myanmar. Large parts of Myanmar are connected to the Chinese electricity grid, telecommunications and internet. China has also invested massively in Myanmar’s ports and energy industries in recent years. Fearing this tightening grip of China, the regime of Myanmar opened up in 2011, cancelled plans for the Chinese project of the Myitsone Dam, and instead signed a contract with India for the port of Sittwe.Third, the Indian Ocean. China has traditionally been a continental power as it has been forced to focus on threats coming from the Eurasian landmass. But as China grows stronger, it is building a stronger maritime presence, which will put China at odds with India, traditionally the dominant maritime power in the Indian Ocean. Already, both countries are in a race for dominance in the region. Both are strengthening their military navies and signing deals with island states.Although these three geographical routes will lead to intensified competition between China and India, their relationship will remain relatively stable during the next decade. That is because India needs China to heavily invest in creating jobs for a burgeoning population, something India cannot do on its own (which will also create massive opportunities for Chinese tech firms in India). However, when India comes closer to overtaking the U.S. economy, it will enter a maritime alliance with the U.S., Japan and Australia. This is when tensions with China will rise considerably. In the meantime, India will take steps to build its own Stack in areas now dominated by American and Chinese firms.