By – Rajkumari Sarjita

For many centuries, India and China’s relationship as two of the world’s largest economies and most populous nations has been characterized by both cooperation and conflict. However, in the last few decades, this relationship has been defined in a larger measure by contestation, trade deficits, and growing levels of mistrust. While there is still room for cooperation between these two countries, the hostile business environment against India in China, coupled with growing Indian nationalism, has made the possibilities of significant economic linkage difficult. To fully comprehend this dynamic, one must understand the historical context, including the rise of Indo-China relations, contemporary strategic outlooks, trade relations, and the feelings of ordinary people on both sides, which together drive policymaking.

Until quite recently, the two countries were aware of great cultural interactions. Ancient routes of commerce and the expansion of Buddhism created bonds that lasted for an age. However, British colonialism did not result in much contact between the Indians and the Chinese. While India was engaged in the struggle for independence, China was recovering from, among other things, the collapse of its imperial system. However, in the years immediately following India’s independence in 1947, Sino-Indian relations were viewed with great optimism. Indians’ first Prime Minister, Jawaharlal Nehru, hopes for a friendly partnership and relations, so much so he is famously quoted as saying that ‘Hindi-Chini Bhai-Bhai’ (India and China are Brothers). Nehru considered China and India to be two great Asian nations that were in an unparalleled position to help the developing world in the post-colonial era. However, this hope was short-lived. The unsolved border problems in no time have a bitter relationship in the foreground. Relations soured toward the end of the 1950s and the ‘62 India-China War, which significantly damaged the relationship between these two countries. The resulting conflict was full of distrust and enmity, with the Indian perspective of China largely influenced by the war movement until the present.

After the war, the enmity continued into the 60s and 70s as some diplomatic features were exchanged cautiously, but mostly, it was devoid of cooperation. However, renewed bilateral diplomatic initiatives were attempted in the 1980s and the 1990s, when both countries regarded possible opportunities for trade and development. The importance of India and China within the global economy has increased, and their growth in economic dependence suggests the possibility of rapprochement. However, this possibility was always limited by the drastically different political and strategic orientations of the two countries. The simultaneous economic rise of China and its increasing diplomatic and military assertions within the Asian region raised tensions further. Simultaneously, while engaging in economic reforms and opening up, India came out to be increasingly pro-West in approach, which in the eyes of China was an attempt to contain the expanding Chinese influence in the region.

The events in the Galwan Valley (2020) bring discontent to both nations by quitting the already declining relations. This incident drastically changed bilateral relations, which appeared to have been on the mend after years of economic intercourse. The scuffles confirmed India’s preoccupation with the army as the most significant threat posed by China. Consequently, India has sought to enhance its strategic relations with the United States and its role in the Quad alliance (India, Japan, Australia, the U.S.) This step was regarded as a move meant to contain China’s objectives towards the Indo-Pacific and has added more tension to the two countries’ relations. The changes have seen India come closer to the West, an undertaking that has wrought anger in Beijing because it sees such a shift as encroaching on its sphere of influence.

Geopolitical competition between India and China cannot be expressed in terms of military skirmishes or even border issues. Economic competition exists as well. China has the largest trade deficit in trade with India. For example, in 2021, India reached a trade volume of thirty-five trillion dollars, with China being the largest buyer while sitting on a 69 billion dollar deficit. China is a primary client for electronics, machinery, and chemicals imports, for which agricultural products are the main only and limiting exports that China has to offer. Trade cannot explain the gap in India’s aversion to China, especially since India perceives China to be a rival mixed in competition to dominate global manufacturing. This widening gap has gradually brought India towards imposing more protectionist measures, including levying tariffs on imports from China, which has contributed to the growing tension.

In light of China’s dominance, one of the important economic measures that India has adopted is the “Atma Nirbhar Bharat” (Self-Reliant India) campaign. This campaign was initiated in 2020 to ensure that India did not rely heavily on China for imports. It is intended to encourage Indians to manufacture more and source less from outside, so as to be more self-sufficient in crucial areas such as electronics, pharmaceuticals, and consumer goods. This decision greatly impacts Chinese enterprises, as most of them are leading players in these areas of the Indian market. With Indian apps such as Tiktok and WeChat being banned from use and Huawei being restrained in the course of India’s 5 g roll-out, India’s efforts to lessen her contact with Chinese imports and technology. These actions have contributed to the growing anti-Chinese sentiment in India, where calls to boycott Chinese products have been on the rise. While these boycotts have been welcomed by the masses, little impact has been achieved in reducing India’s political oppression of Chinese products, especially those sectors that largely depend on Chinese products.

Nonetheless, economic hurdles are not asymmetric. Chinese investors consider India to be a great market, but at the same time understand the vast range of risks involved. The regulatory growth in India regarding how investments flow into the country has made many Chinese companies cautious in terms of penetrating the Indian market. Since 2020, India has blocked many potential Chinese investments by making it mandatory for DFI from China to first have the relevant government’s approval. This policy has formed part of other policies in India aimed at decreasing the level of Chinese penetration in India’s economy, especially in sensitive fields such as telecommunications and IT. Despite this, many Chinese companies still regard India as an emerging market rather than a place for investing, as they do not have confidence in the political stability of the country. Numerous Chinese companies have bypassed regulations establishing a presence in India as suppliers rather than manufacturers such as Xiaomi Oppo and Huawei, for which the Indian market has been viewed as highly attractive; however, they have started to face challenges in the market due to the changing political dynamics in India.

On the contrary, it is difficult for the Chinese market to enter Indian companies. Tariff and non-tariff barriers in China seem to be a hassle for Indian firms that target competition. Such trade obstructers combined with existing fierce contests from local Chinese enterprises severely constrict the chances of Indian firms to establish their businesses in China. Unlike Indian firms in the Chinese market, which have little to no constraints in doing so, Indian companies find it harder to penetrate the political and cultural box China seems to be for them.

The anti-India business perspective among the Chinese also focuses on their culture and society. The Indian media and the general public have negative views on other countries. Reports tend to underline the negative side and let go of the positive side, thereby exaggerating the stereotypes and certain facts regarding India, such as its impoverished areas and unemployment. This is in line with the research of Ji et al. (2016), which also highlights the frequent use of “neighboring competitors” with regard to India in the Chinese media. There are allegations that an author like Ji et al. (2016) makes, “The image of India presented in the Chinese news is largely, if not entirely, negative, with the news encompassing overbearingly military build-up, land grabbing, and social weirdness in India’ (p.239). There is greater competition-oriented coverage of India where it is auto, assuming that India aims to dominate China’s region and is therefore threatening. The increased fear that India poses to China as a political outsider is enhanced by the political dealings that India is involved in, with the support of other countries. In China, India is trying to fight back Chinese authority by establishing alliances with Japan and Australia, as well as supporting the Indo Pacific policy.

This public sentiment goes beyond just the military and political scope but also beyond economic and cultural perceptions. Chinese businesses tend to consider the Indian market to be less stable than other markets, given India’s political inconsistency and its strategy to reduce Chinese imports. In addition, the media’s portrayal of India as a competitor adds to this bias, disincentivizing Chinese investment in India and positioning India as a competitor instead of a partner in the global economic stage.

On the contrary, in India, the perception of dealing with China is becoming rather nationalistic, with movements keen on lessening the Chinese foothold in the country. “Make in India” and “Atma Nirbhar Bharat” are excellent examples of this because they do aim at reducing foreign dependence and encouraging Indian manufactured products. These campaigns have been widely supported, but have also contributed to the growing anti-China bias, especially after the boundary incidents in 2020. This has resulted in growing public calls to boycott Chinese products despite the practical challenges in doing so. The upsurge in nationalism also resulted in stricter rules and regulations regarding Chinese interest in India, making business relations between both countries more complex.

The wider impact of India–China rivalry is voiced in international affairs and the international economy. They are contesting for leadership in Asia and the Global South, an angle that their rivalry seems to be bringing out in various international forums. The engagement of India with the United States camp and the Quad grouping, as well as the emerging partnership with Japan and Australia, contains China’s aspirations in the Indo-Pacific. At the same time, the Chinese Objectives in the One Belt One Road (OBOR) project cut and further strained their relations with India. The case between these two giants is not simply regional leadership, which is at stake, but rather global order in terms of trade, investment, and security.

In summary, this anti-Indian business mindset in China is rooted in deeper layers of geopolitical, economic, or cultural contexts. Historical baggage, strategic competition, economic rivalry, and surging nationalism in both nations – these factors have managed to provide a plumbing for synergy, yet made the chemistry for collaboration difficult. With both countries have made a further issue

Reference:

1) Ji, D., Hu, Z., & Muhammad, Y. (2016). Neighboring Competitor? Indian Image in Chinese Media. Global Media and China, 1(3), 234-250. p. 239.