India-China relations have long been fractious. The bilateral ties have remained disturbed by an unsettled border, unequal trade relationship, China’s strategic ties to Pakistan, India’s strategic partnership with the US and a broadening political-strategic divergence over each other’s perceived position in Asia and beyond. The relationship has suffered from an acute lack of strategic trust since the June 2020 border clash in Galwan, which reversed much of the progress achieved on the border-management regime that had been patiently negotiated, designed and agreed to over decades between the two countries. The unresolved dispute along the border also impacts the security dynamics and strategic environment of South Asia.

Their relations are also afflicted by a complex and evolving strategic, political and economic interests that over time have converged and diverged. China’s preeminence and influence in the Indian Ocean makes it another arena for the US- China strategic rivalry. Historically, India has been the dominant power in the region and is not comfortable with the phenomenal rise of China, challenging India’s influence on states around the Indian Ocean Rim. This complex interplay of relations between China, the US, India, Pakistan and Russia have serious consequences not just for the region, but for the world in general.

China’s preeminence and influence in the Indian Ocean makes it another arena for the US- China strategic rivalry.

Beijing has enhanced its economic and political influence over the entire Indian Ocean region in the past two decades. It has created a network of commercial facilities, the string of pearls, and strengthened its economic relations with countries of the region, particularly strategically located Sri Lanka, the Maldives, Nepal, Bangladesh, Pakistan and other Indian Ocean Rim and Pacific nations.

India tried to build strong diplomatic ties with other countries in the region through its “island diplomacy” and initiatives such as the Security and Growth for all in the region maritime cooperation. However, China’s massive investment in through the Belt and Road Initiative (BRI), Global Development Initiative (GDI) and Global Security Initiative (GSI) make it quite difficult for India to sustain its economic and political influence in the region.

The world is undergoing profound changes, increasing sources of turbulence and risks around. Significant political, strategic and economic transformation is in the works with clear indications of the world transforming from a unipolar to a multipolar world order. India is aspiring to be one of the pillars of the new world order. Its alignment with the US in the latter’s attempts to restrain the rise of China brings it directly in a confrontational equation with Beijing.

India is aspiring to be one of the pillars of the new world order.

The US and India have substantially expanded their defense budgets incorporating new technologies further enhancing their capabilities. India openly admits that its defense capabilities are aimed against China and supports the US efforts to encircle it.  In the Pacific, Australia, at the behest of the US and as member of QUAD, is now predominantly focusing on the Pacific Islands, Japan, and states situated off the eastern coast of China with difficult bilateral relations with China.

In the northeast of China, we see South Korea clearly demonstrating its preference for the United States in case of any confrontation, while India has been chosen to be the strategic partner in the Indian Ocean region. As a result, India continues to heighten tensions with China and Pakistan. On the other hand, tensions between the United States – and its allies including India – and China are escalating. The violent conflict at Galwan in 2020 clearly emphasized the growing Sino-Indian tensions despite the fact that they are tied together in a complicated tangle of converging and diverging strategic and economic interests. The situation has been made worse by growing nationalism and populism driving internal and international relations in Modi’s India.

China, for its part, is focused on its rivalry with the US. The fact that US Indo-Pacific strategy hinges on India’s support for Washington’s objectives in the region also drives much of the thinking in Beijing about India. China pays particular attention to US-India cooperation on emerging and disruptive technologies, as well as naval logistics. Both India and China are investing in national technological capacities to enhance their prosperity and security in space, communications, cyber security and underwater maritime domains, leaving little room for cooperation.

Despite all this, China has expressed its readiness to work with India to ameliorate their relations and manage their border issues, but the recent strengthening of the relationship between India and Taiwan, especially in technology-related matters, risks turning into a major issue that will make India-China relations more complicated. Both India and China insist that they want to rebuild trust but they cannot agree on the process. Because it currently has the upper hand, China would like trust building to remain a strictly bilateral matter and does not want organizations such as the G20 and the SCO, BRICS and even the ASEAN-led institutions to play any role in the so far hypothetical normalization process.

Both India and China are investing in national technological capacities

At the same time, we see that China has overtaken the US to become India’s largest trading partner, with total bilateral trade reaching $118.4bn in 2023–24. However, the trade balance is heavily in favor of Beijing. India imported over $100bn worth of goods from China in this period, while its exports were only $17bn. India, therefore, has a huge import dependency on China, particularly in the telecommunications, pharmaceuticals, and advanced technology sectors, areas where China is now the world leader. It would, therefore, not be wrong to say that India and China have a binary relationship with internally conflicting dynamic of rivalry and partnership.

India imported over $100bn worth of goods from China in this period, while its exports were only $17bn.

The Indian Ocean is critical to global trade, security, geopolitics and geo-economics. Conflicting alignments of the three dozen littoral states, as countries compete for influence in its crowded waterways, has made this region a potential war theatre. How will the new power dynamics play out – particularly the US-China tensions as well as Pakistan-India and China-India rivalry – is a question that is gaining significance and urgency by the day and further endangering the stability of the region, enhancing challenges for global maritime trade flows. The growing interest of the major powers and the US-China competition in the Indian Ocean has serious implications for Pakistan.

Pakistan is not a member of the Indian Ocean Rim Association (IORA), where India is one of the founders.  Pakistan is directly affected by the actions of these three states as China is a friend, India is a foe and the US a transactional partner. The IOR is the future of world politics. With India becoming the sixth largest economy of the world by bypassing France, it naturally has started to reassert itself in the region. The Indian hegemonic ambitions in the IOR are a matter of deep concern for China as it is heavily dependent on the safe and free access to the important trade routes traversing the Indian Ocean.

Developing countries, particularly Pakistan, will face severe challenges alongside with emerging opportunities. It needs to navigate these turbulent waters with great strategic vision and political sagacity if it wants to successfully emerge from this flux as a politically and economically strong nation. Further strengthening its all-weather strategic cooperative partnership with China while maintaining its friendly relations with the US and the Europe will be challenging but that is the only wise course of action to take for Pakistan. Therefore, the coming decades will be the real test of political and strategic farsightedness and a test for its diplomacy.

Under the new circumstances, the Pakistan and China should stand together even more firmly and push forward the all-weather strategic cooperative partnership. CPEC has entered a new stage of high-quality development, and the cooperation between our two sides will have even greater potential. China supports Pakistan in exploring a development path suited to its own national conditions and is willing to share its high-quality development opportunities and contribute to the country’s industrialization, urbanization and digitization. This will strengthen the development foundation, enabling both China and Pakistan to achieve their development goals. Hence, aiming at achieving the high level of human development and national autonomy associated with a high-income status before the centennial anniversaries towards the middle of this century.