Kalpit A Mankikar
In 2024, investment proposals from certain Chinese companies in electronics manufacturing received approval. In some cases, investment proposals involving Indian companies partnered with Chinese firms holding minority stakes, Taiwanese firms listed in Hong Kong, or Taipei-based companies backed by Hong Kong investors received clearances.
The government panel scrutinising the joint ventures had set conditionalities on value addition. Another rider reported that Chinese nationals would be debarred from holding key positions in joint-venture companies, or the foreign company cleared to operate in India. Thus, the approach of joint ventures has become a key economic security feature. Beijing commentators fear Chinese companies will be ‘strong-armed’ to enter joint ventures with lower equity stakes with Indian firms, enabling the latter to acquire technology with little effort.
Chinese writers also point to Beijing and New Delhi’s divergent development paths. They see fundamental strength in China concentrating on mastering core technologies, cultivating local leading enterprises like Huawei, BYD, and ByteDance, and cutting through the US technological blockade by developing domestic intellectual property. India’s supposed obsession with the ‘prosperity of Silicon Valley outsourcing’ is a flaw, say Chinese strategists, and could lead to the nation coming under the US technological hegemony.
Beijing’s strategists are wary of the growing India-US ties in light of its tariff war with Washington. China sees India’s approach as keen to benefit from the ‘current chaos’ and ‘collapse of global order’ by sealing trade deals with the US and developed economies. There is a feeling that the trade deals will come at the expense of China’s interests, and to promote manufacturing initiatives like ‘Make-in-India’ to provide a fillip to India’s growth story. It sees New Delhi as keen to profit from the flux in the global order to achieve its objective of becoming a great power.
Beijing perceives that the nature of the US-India cooperation is aimed at China and seeks to disadvantage Russia. China’s strategists argue that Washington’s defence strategy is to enhance New Delhi’s military capabilities by selling the US armaments and stymying cooperation with Moscow. They also see Trump’s intent to sell crude oil and gas to prise India apart from Moscow, warning India must remain vigilant and not become ‘Asia’s Ukraine’.
In conclusion, China’s economic woes, compounded by Trump’s tariff war, and the growing India-US relationship have heightened Beijing’s insecurity. Chinese strategists believe that India’s rise will come at China’s expense. The question that now remains is how this sentiment can impact the nascent India-China normalisation, given that there is a perception among China’s strategic community that New Delhi could be incentivised to join other countries to balance China. Thus, China could prefer to keep the border issue alive as a leverage one way or another.
Kalpit A. Mankikar is a Fellow with the Strategic Studies programme at the Observer Research Foundation.