The last two years have been India’s most challenging since independence. While battling a terrible Covid pandemic and enduring an unprecedented economic slowdown, it has been forced to stand up to China in the worst military confrontation in decades between the two countries . The distrust Indians have for China is so great that any immediate or lasting rapprochement between the two looks impossible. Or does it?

Paradoxically, it is the opening of China’s economy and its spectacular rise — as well as its accompanying froth exposed over the last few years — that has demonstrated the immense promise better relations between India and China hold for both. Even with the ongoing tensions, China emerged as India’s largest trading partner in 2020.

India-China trade is expected to top $100 billion in 2021. The figure could well double or even treble if the impasse on our borders with China is, with a bit of ‘give and take,’ permanently resolved. India represents a huge opportunity for China. It is no surprise then that Chinese firms are aggressively moving into India.

An early mover was Huawei. Its R&D centre in Bengaluru has emerged as its largest in the world. A major Chinese white goods manufacturer, Haier, has plants in Pune and Noida making a range of household appliances such as refrigerators, washing machines and televisions.

A slew of Chinese smartphone makers are establishing manufacturing plants in India, among them Oppo which, according to a report in Businessworld of December 30, 2021, ‘makes six million phones a month’ — one every three seconds — in its 110 acre super-factory in Noida employing 10,000 Indians.

A March 27, 2020, Forbes-India report brings out how major Chinese automobile companies are beating a path to India. Shanghai-headquartered SAIC Motor — a Chinese State-owned firm — has already been selling MG cars in India since last year. Changan Automobiles, a car maker owned by the China government, is also likely to begin operations in India by 2022, apart from other companies like Chery Automobile based in Wuhu and the Geely Auto Group from Hong Kong.

With its technological edge in electric vehicles and lithium batteries — it makes 40 per cent of all EVs sold in the world — China could well end up making and selling more electric cars in India than any other manufacturer in the near future. Many of India’s biggest start-ups like Byjus, Flipkart and Paytm have major Chinese investors. However, it is not all one way.

Presence in China

It will come as news to many Indians that several of India’s leading companies have a presence in China. A report in The Hindu of February 6, 2020, states that ‘Shanghai tops the total investment from India, and is home to IT majors, including TCS, Infosys and NIIT. Zhejiang and Jiangsu are home to manufacturing units, including Dr. Reddy’s Laboratories, Mahindra & Mahindra, Laxmi Machine Works, Tata Jaguar Land Rover and Sundram Fasteners.’

New opportunities, beneficial to both countries, will arise for both India and China as the latter rejigs a real estate-led economic model that has powered its spectacular growth over the last three decades and is now failing. This failure is best illustrated by the world’s most indebted real estate company Evergrande tottering towards a collapse under $300 billion of debt. All this makes China’s transition to newer technologies where it leads the world to power its future growth inevitable.

The transition, James Kynge, Global China editor of Financial Times , says in a October 15, 2021, Financial Times podcast, could come from China exploiting its dominance of green technologies (solar power and wind farms) and electric vehicles. At 253 GW, China has 32 per cent of installed global capacity in solar power and just in 2020 alone it added another 48 GW, more than any other country. Likewise, at 286 GW, its wind-farm capacity is 38 per cent of the world’s total and it added 52 in GW — more than the rest of the world put together.

Notwithstanding an earnest effort to achieve self-reliance, India will need to tap into China’s expertise in clean energy technologies to clear its environment. For its part, as Huawei discovered years ago, India has world-class strengths in statistics, data management and cloud-based operations which China can tap into. This, as an August 10, 2019, Economist report observed, has astonished the global banking industry and compelled big names like Goldman Sachs to shift key operations to India.

To mitigate the risks of melting Himalayan glaciers from where many of Asia’s major rivers — Yangtze, Indus, Brahmaputra, Ganges, Mekong — originate, India and China need to collaborate in the very areas their armies are in confrontation. In the midst of distrust between India and China there are reasons to hope that the two countries will find the necessary will to work towards a lasting peace without either country suffering a loss of face.

In this regard, the statement made by the Chinese Foreign Minister, Wang Yi, in his farewell address to the Indian Ambassador Vikram Mishri, is loaded with meaning. “We should.” he said,”take a long-term perspective and remain undisturbed by temporal things, and we should help each other succeed and not exhaust each other.”

Border differences

For its part, there is much greater awareness, and even a grudging acceptance that India too was to blame for allowing its border differences with China to get so out of hand. Much evidence for this can be found in a book, Nehru, Tibet and China , by AS Bhasin, a former head of the Historical Division of India’s External Affairs Ministry.

It is in the interest of both countries for their leaders to rise above the constraints of a fraught relationship and work towards a lasting peace between them. There are so many reasons for India and China to partner with each other and make the 21st century truly an Asian one. Given the will this is possible.

In this regard a former Indian ambassador to China and later the country’s Foreign Secretary, Nirupama Rao, is spot on in her observation that “Hindsight (learning from history) and foresight (assessing the cost of protracted contest and hostility for the future of both India and China as well as the world) have to be deployed by both Prime Minister Narendra Modi and Chinese President Xi Jinping.”

The writer teaches public policy and contemporary history at IISc. Views are personal