Indian and Japanese perspectives on navigating a political and economic relationship with China
As the world’s second-largest economy and the third-strongest military worldwide, China’s rise presents a new challenge for many countries. Its neighbors, India and Japan, share extensive trade relations with China but are increasingly drawn into border disputes with it. Insights shared by Salzburg Global Fellows Alka Acharya and Tomoo Kikuchi during the Pathways to Peace Initiative “Crossing New Rivers by Feeling the Stones? Aspirations, Expectations, and China's Role in the 21st Century” reveal the recent evolution of Indian and Japanese relations with China.
A fraying India-China relationship
The India-China relationship is in a “somber state of affairs,” described Professor Alka Acharya, professor at the Centre for East Asian Studies in the School of International Studies at Jawaharlal Nehru University in New Delhi, India. As countries with shared, albeit contested borders, relations between the two Asian powers were never particularly warm. India and China have an asymmetric economic relationship, with a burgeoning trade deficit exceeding $100 billion in China’s favor in 2022.
Alka added that India also suspects collusion between China and its adversary Pakistan to its detriment. Relations plunged to a historic low when border clashes flared up again in 2020 in the Galwan Valley, a small mountainous territory that has been contested between India and China for decades. The Galwan Valley skirmish was the most significant border escalation between the two countries in four decades. According to Alka, this signified a “turning point” in the India-China relationship. For the first time in decades, soldiers on both sides lost their lives.
However, relations between the neighboring countries were not always this heated. Alka recalled sharing in the cautious optimism of the early 2010s that India and China would develop a mutual understanding regarding their differences. Although sporadic border clashes still occurred at this time, their interests also converged on certain issues, such as climate change. India and China also previously shared the understanding that a war would be disastrous for both nations, not least for the region. “Today, unfortunately, the boundary dispute has come to exercise a determining impact” on the India-China relationship, remarked Alka.
In the current climate of tension between these neighboring nations, Alka believes that formal, structured, and regular dialogue is needed; this has come to a halt amidst the dispute. Nationalism has also come to the fore, and economic relations have been affected, with India seeking to decouple itself and reduce its financial dependence on China.
Japan’s economic relations with China
Across the Asian continent, Japan finds itself in a similar situation. Although Japan relies on China as its biggest trading partner, it has consistently accused China of unilaterally attempting to change the status quo in the disputed East China Sea region.
The China-Japan economic relationship began with official development assistance (ODA) following the normalization of relations after World War II. As noted by Dr. Tomoo Kikuchi, professor at Waseda University Graduate School of Asia Pacific Studies in Tokyo, Japan was one of the first countries to invest in China when it opened up to the outside world; this laid the foundation for Japanese companies to continue investing in China. With disputes over the Senkaku islands flaring up, the economic relations between the two countries have also been affected.
“It has become more difficult to trade with China, to invest in China, and vice versa,” remarked Tomoo. He highlighted that the Japanese government has “core” sectors such as nuclear power, railways, critical minerals, and others, where trade with China is monitored and restricted. However, China remains the biggest market for Japanese corporations. While some, such as Mitsubishi, have moved out, others, such as Uniqlo, are expanding their base of operations in China. The reality of the situation, as Tomoo put it, is “nuanced and multifaceted”.
A common threat
Both India and Japan have recognized the common challenge stemming from China. Alka emphasized that the Indian government has singled out China as its “biggest security threat”. China’s rise has driven both countries into a closer relationship with each other and with China’s competitor, the United States. India, once known for its non-aligned approach, has decided to “hedge its bets,” as Alka put it, by reaching out to the US, Australia, and Japan. These countries are united by their wariness of a growing Chinese presence in the Indo-Pacific. According to her, it points to the need for Indian policymakers to “expand their options”.
Japan’s options may be more limited, as “Japan basically follows the recommendations set by the United States,” remarked Tomoo. Torn between their biggest military ally and biggest trading partner, Japan might have some difficult decisions to make.
India and Japan are wary of what an ascendant China might mean for them and their interests. They are finding it increasingly difficult to balance their strategic interests with their economic links to China. While India and China have seemingly reached an impasse, Japan is still trying to manage its complicated relationship with China. The jury is still out on whether either country will be successful in navigating a relationship with a rising China.
Alka Acharya is a professor and chairperson at the Centre for East Asian Studies (Chinese Studies) School of International Studies, Jawaharlal Nehru University (JNU). From 2014-2017 she was Director and Senior Fellow of the Institute of Chinese Studies in Delhi. She was editor of the journal China Report from 2005-2013.
Tomoo Kikuchi is a professor at the Graduate School of Asia-Pacific Studies, Waseda University and Adjunct Senior Fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. Previously, he worked at the National University of Singapore, Nanyang Technological University, and Korea University and held visiting positions at the MIT Sloan School of Management and the Keio University Global Research Institute.
Alka Acharya and Tomoo Kikuchi attended the Salzburg Global Pathways to Peace Initiative titled “Crossing New Rivers by Feeling the Stones? Aspirations, Expectations, and China's Role in the 21st Century” from February 18 to 21, 2024. This program was a forward-looking opportunity to debate and understand the future of global engagement with a rising China. It convened an intergenerational, international, and interdisciplinary group from government, the private sector, and civil society to engage in off-the-record conversations to evaluate sources of misunderstanding between China and the globe, to explore state and non-state mechanisms through which to productively engage China, and to identify risk-mitigating pathways.
