Normalization gives China and India a fresh start

China and India have normalized relations.

Following years of tensions over a disputed border, the leadership of both countries successfully agreed to de-escalate the situation, with Indian Prime Minister Narendra Modi meeting Chinese President Xi Jinping at the Kazan BRICS summit. Modi later wrote on X (formerly Twitter): "India-China relations are important for the people of our countries and for regional and global peace and stability. Mutual trust, mutual respect, and mutual sensitivity will guide bilateral relations."

The India-China relationship is one that, if utilized to its full potential, has huge significance for the global economy and prosperity. This, after all, concerns the two most populous countries in the world, with over 2.8 billion people. Long ago, both countries dominated the old-world economy, with India's Mughal Empire accounting for 24 percent of global GDP at its peak in 1700 and China's Qing Dynasty accounting for up to 30 percent in the same period, constituting over half of global output in total.

Once again, the leadership of India is aspiring to drive economic development and firmly establish itself as a modern industrialized country. India sees itself as a "rising power" in a multipolar geopolitical environment. However, New Delhi had come to believe that China's existing success in global trade and manufacturing was suppressing its own progress, leading to protectionist policies and an orchestrated deterioration of ties with Beijing in favor of the United States. They assumed that greater alignment with the West would prove a lucrative choice in their attempt to lure manufacturing away from China.

However, such did not work out. First, the geopolitical environment has significantly changed, leading India to acknowledge that it cannot rely solely on its existing doctrine of strategic autonomy in global affairs. This doctrine continues to serve its national interests, particularly given the strain on its ties with Western countries. Second, even as India continues to promote its domestic industry, economic development is never a spontaneous process but an incremental one. China's success stems from decades of building supply chains as a coordinated, integrated and efficient nexus, not from so-called "unfair practices," as the West has misleadingly claimed.

To manufacture, you require infrastructure such as railways, roads and ports; energy to power your factories; access to resources for product creation; specialized expertise and knowledge to produce specific products and items; specialist tools and equipment; and finally, suppliers. In the end, a manufacturing supply chain consists of numerous layers that, when combined in a specific geographic location, enable the production of goods quickly, efficiently and economically. This cannot be replicated overnight. India, while building its industry, has realized the criticality of its reliance on China as a supplier.

In other words, India and China are economically integrated and interdependent. While India seeks to enter the supply chain as a low-end manufacturing hub, using its own cheap and plentiful labor source, China's manufacturing has been "moving up" global supply chains, focusing on greater items of value. Thus, China has become the source of specialist goods, tools and equipment for the rise of India's manufacturing dream. Hence, India might be able to assemble an iPhone, but it is not capable of creating the specialist components required to do so. Thus, the policy of attempting to exclude China from the Indian market and a preference for protectionism has proven to be counterproductive.

India's leadership now appears to have realized this and instead eyes a new opportunity to provide Chinese firms a "gateway" to the West amid geopolitical tensions. For instance, if the United States was to target Chinese products with tariffs or other obstacles, New Delhi's solution would be to have those Chinese goods assembled in India as a third party, aiming to benefit from the process rather than unrealistically hoping for China's isolation. India's strength, after all, has never been through clear-cut alignment but through positioning itself in a geopolitical "middle ground" seeking positive relationships with all relevant powers.

Therefore, it has never been in the interests of either country to render the other an enemy, and this has been a very significant diplomatic breakthrough that will be heralded in both Beijing and New Delhi. It is time to make the most of the China-India partnership again and work towards attaining a peaceful, pragmatic, stable and prosperous coexistence.

(The author, a postgraduate student of Chinese studies at Oxford University, is an English analyst on international relations. The views are his own.)