The two developing superpowers have been disputing territories or resources since the mid-20th century. Both increasing tensions, and de-escalation of the disputes are possible. Will water shortages and political posturing cause tensions to rise between the two leaders of Asia?

There are many, unequally weighted reasons, why China and India have veered on the side of escalating tensions – in the context of their foreign relations.

China’s and India’s histories have been marked with invasions of foreign powers, and a long path to unification. Both countries have seen strong regional divisions in the past, and colonial attitudes from previous superpowers.

These shared experiences could turn the two countries into closest partners. Nevertheless, the same shared experiences make very close foreign relations almost impossible. When the majority of history has been either internal fighting for territory, or defence against foreign invaders (e.g. invaders from the West for India, Mongols for China), giving leeway to neighbours becomes an impossible task.

After India’s independence and China’s communist revolution, the relations of the two countries became more complex. From one side, the need for internal modernisation and poverty reduction kept the relations between the two countries civil. Disagreements about territorial claims are more of an exception, because of unclear territorial divisions after the modern India and China were founded.

Historically, the two previous empires and largest states in the South-Southeast Asian regions interacted with one another in a manner fitting to the specific historical period.

China has had the largest population in the world since the early common era. India is bound to surpass this achievement in the early 2020s. The growing populations have created increasing domestic demand, and a strong incentive to modernize. This has contributed to both countries moving towards, and competing for the status, of the regional superpower.

The present relations of the two countries are better than they were in the past (particularly during the 1960s). Yet, any bilateral talks are always marked with competition in mind. Territorial competition and claims still haven’t been resolved even after decades of the partnership of two independent nations.

The main issues which are causing the countries to trade jabs (both diplomatic and military) are: environmental, territorial, and those related to the fight for the influence in the region.

Rising tensions because of environmental and territorial issues have long been a problem for China and India. The territorial issues have been a cause for conflict as early as the establishment of the modern China and India.

Environmental issues are a complex factor creating increasing tensions for the two countries. Issues like water scarcity have had a not only negative impact on the relations of China and India. Instead, identical issues experienced by the two Asian countries also act as a push factor for closer cooperation in this sphere.

In contrast, rising tensions because of the fight for the influence in the region, are a newer threat to good relations of the two countries. In the 21st century, both countries, to different degrees, underwent transformations which pushed them to expand their foreign influence.

There are several push and pull factors for rising tensions between China and India.

Water shortages and the steadily growing populations of both countries, present an increasing problem.

Every year, China’s population increases by around 6.5 million, and India’s by 14 million. This wouldn’t be a problem if there wasn’t a dispute surrounding the water-scarce regions of India and China. Most notably, the region of Arunachal Pradesh, and the rising fears related to the possible diversion of the river Brahmaputra.

Solutions to these problems are expensive and hard to deliver. Mostly due to the terrain, and the low infrastructure development of the contested regions of north-eastern India or south-western China.

The historical precedent because of which neither China nor India are ready to give away anything (territory, resources), also slows down any talks for the resolution of this issue. In regions, where military shoot-outs have become commonplace, a step away could be interpreted as defeat. Not only by the opposing side, but also by the citizens of these two countries.

The most powerful pull to lower tensions, and peaceful relations, is trade and economic ties between nations. For the two countries, these ties account for 0.006% of China’s, and 0.006% of India’s GDP. Losing the 7th and 3rd largest trade partners would bring severe negative consequences to both countries.

The consequences of lower amounts of trade can be solved easily if the type of exports can be easily re-oriented to other markets. E.g. trade in electronics or unprocessed food products. For China and India, the largest quantities in exports are commodities and chemicals. An increasing probability of lower trade would see businesses having to solve a difficult problem. Selling products, which can’t be easily re-oriented to export into other markets.

The strategies for trade and economic development, chosen by the two neighbouring countries, also work in favour of closer relations between them. China’s newest economic strategy, presented in 2015, “Made in China 2025”, focuses on developing manufacturing prowess in high tech (e.g. robotics) manufacturing. This means that a re-orientation in the most numerous exports of China can be expected.

India’s top imports include electronic equipment, machinery, and medical or technical equipment. Hence, a push for the production of these tools and machines in China will very likely lead to higher exports of the products into India. With them, closer trade ties between the two countries. After all, the current top imports of India from China already include these products.

India’s newest choice of trade strategy doesn’t favour trade with China at first glance. The statements released by the commerce and industry minister of India, point to an increase in exports towards regions west of India, like the Middle East and Africa.

Nonetheless, India’s orientation of trade into other regions should not be viewed as a movement away from its older, and closer markets. Instead, the hesitant talks about an FTA between China and India, the establishment of Chinese industrial parks in India, and cooperation in fuel trade, show that these two countries can create closer cooperation, even while branching out in foreign relations.

Foreign nations also have influenced the bond between China and India. More so, when the rising tensions meant gains for the allies of either side.

For one, competing regional powers often try to bring neighbouring countries to their side through financial or political incentives. In the case of China and India, the South and Southeast Asian region has long been divided into two opposing factions, supporting a different side in this competition.

Countries supporting the side of China, in the South Asian region, have been Pakistan, Myanmar and Cambodia.

China, more recently, has solidified these relations through the Belt and Road initiative. The scale of investment is large for the region: $62B through the Belt and Road initiative for Pakistan, already nine approved projects through the China-Myanmar Economic Corridor, and $7B already invested in Cambodia by 2017.

Although giving out aid to allies against potential regional rivals looks like a good strategy in the short term, it can backfire in the long term. Instead of doubling down on negotiations, or looking for alternative solutions for the management of disputed territories, the spending on allies treats the symptoms, and not the disease. More so, when investments are directed towards countries unfriendly in regards to the competitor.

India has chosen a different path to gain allies and power in Asia. Its foreign aid budget was $1.19B in 2019-2020. Even though the amount of foreign aid given out by India is growing, its size can’t compete with that of China’s – $2.63B in 2019.

India’s allies in the South and Southeast Asian regions are Vietnam, Nepal and Bangladesh. Contrarily to getting allies through mostly monetary means, India is intent on expanding on already existing cultural and military ties. Communications directed at Nepal have emphasized the shared cultural connections. With Bangladesh and Vietnam, India has worked on joint military cooperation.

As long as there is a possibility of conflict escalation, both countries have an incentive to bring neighbouring countries to their side. And for financial or military support, such as provided by loans from China to its allies, the question remains: what will happen when some other country will offer a better deal?

For the foreign relations of China and India, their current disputes have the potential to bring the two countries closer through cooperation, and even similar goals. Nonetheless, the decades-long issues that haven’t been solved, and the increasing environmental issues will add to conflict escalation.

It's a tough moment