Strategic patience and flexible policies: How India can rise to the China challenge

 by Gautam Bambawale, Vijay Kelkar, Raghunath Mashelkar, Ganesh Natarajan, Ajit Ranade, Ajay Shah.

A paper, Strategic patience and flexible policies: How India can rise to the China challenge, has been released by the Pune International Centre. Key ideas of this paper are presented here.

After the war in 1962, the India-China relationship was frozen till 1988. After that, both sides agreed on a framework of holding border disputes in abeyance and pursuing increasing economic engagement. Procedures and protocols were established for handling situations on the border, if they should arise.

In recent years, China has dismantled this arrangement and established a more hostile stance towards India with simmering military conflict. This raises important questions for policy in India. How should India navigate this landscape? When the conflict became kinetic in Doklam and then Ladakh, the immediate impulse was of course about mobilising troops. There was an outcry in the press, nationalistic fervour, and emotional boycotts of Chinese goods.


It is important to see these problems on a larger scale, in terms of space, time and force. It is not just about a few weeks in Ladakh involving a few thousand troops. There is much more at play. If India merely responds with troop movements and winter gear, this may set the stage for future reverses. Indian thinkers need to address deeper questions. What are the forces shaping Chinese behaviour? What is the best path for India in the short term and the long term? How can diplomacy and economic policy work in an intertwined fashion, to best further India's interests?


At present, India is in a weak position when compared with China. Whether we look at raw GDP, state capacity, the capabilities of the best firms, the extent of internationalisation, the mastery of science and technology or the quality of the top intellectuals: at present, China is significantly ahead of India. This superiority can be used by China to put pressure on India in many ways. Some examples of this include a sheer display of military strength to grab land at the border, the use of a variety of levers to foster friction for India with neighbouring countries, and nudging decision making at international organisations in ways that hinder India's interests.

Looking into the future, if the gap between Chinese and Indian economic growth rates continues, these problems will be amplified. As an example, we must visualise a future scenario where Chinese carrier groups prowl the Indian ocean, and the Indian navy is out-matched.

In this scenario, how best should India proceed? There is a useful distinction between the short run and the long run.


In the short run, Indian diplomacy faces a new situation. Never before has India faced a hostile nation with significantly superior strength. China in 1962 was at roughly Indian levels of GDP; Pakistan is a smaller country. This is the first time that India has   hostilities with a substantially stronger nation. Confronting China alone would be unwise. It is essential to build coalitions.

There are three groups of natural allies for India: the great democracies of the world, who worry about the global prominence of an authoritarian China; the countries on China's borders, who are all facing difficulties just as India is; and the countries in India's region who can potentially have positive exposure to Indian success given that proximity matters greatly in cross-border economic and cultural activities.

India needs to embark on a process of building deep ties with about 20 countries. The genuine depth of these relationships requires linkages in trade, finance, investment, education, travel, migration and shared values. India will need to modify domestic policy positions in ways that suit the interests and values of these partners. Diplomacy needs to play a much bigger role in domestic policy making, than has ever been the case in Indian history. The coming decades need to become a golden age of diplomacy.

In the short run, there is debate about protectionist measures that will harm Chinese exports or investment in India. A significant proportion of those moves are self-defeating in that they harm India more than they harm China. There is a case for three groups of restrictions : Limit companies controlled by the Chinese state from a controlling stake in a hotlist of sensitive infrastructure assets; steering clear of Chinese-controlled technological standards; and blocking surveillance of Indian persons.

Strategic thinkers in Indian firms need to rethink business plans in the light of these complexities. In some areas, China-centric sourcing and technological dependance can elevate business risk. For these, a selective retreat from economic engagement with China, and increased emphasis upon the global market, is optimal. In other areas, India can become the dominant alternative to the China-centric supply chains of the past, addressing the desire of global firms to reduce their exposure to China.


In one scenario, India remains smaller than China for an indefinite future, and the strategy of coalition-building will remain central. There is, however, the possibility that India can roughly match Chinese strength in about 20 years. This is not just wishful thinking, and this is not predicated upon Chinese stumbles. It requires reversing the growth malaise of the post-2011 period. This requires foundational change in public policy frameworks around three main ideas: the increasing scale of government micro-management of the economy, the expanding administrative state and the growing erosion of the rule of law. A critical element of this 20-year journey lies in innovation policy. India needs to match and improve upon China's achievements in fostering research institutions and the intellectuals that inhabit them.

Becoming an advanced economy has always been the objective in India, right from the freedom movement and the creation of the Republic. What has changed in recent years is Chinese hostility, which has given a fresh dimension of urgency on solving the growth malaise, on learning how to be a mature market economy located in a liberal democracy. The judicious use of self reliance ("atmanirbhar") grounded in self confidence ("atmavishwas"), where a confident India engages with the world without insecurity, forms alliances with like minded countries, and leverages democracy and a skilled workforce to good effect, is the path through which the China challenge can be addressed.

Gautam Bambawale is former Ambassador of India to China, Pakistan and Bhutan. Vijay Kelkar is Vice-President, Pune International Centre. Raghunath Mashelkar is President, Pune International Centre. Ganesh Natarajan is Chairman of 5F World and of Lighthouse Communities. Ajit Ranade is Chief Economist, Aditya Birla Group. Ajay Shah is Research Professor of Business, Jindal Global University.