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The U.S.-China relationship is the most important geopolitical dynamic of the 21st century influencing global affairs through both competition and cooperation, which creates strategic challenges and opportunities for India.
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Read all about: USA-CHINA RELATIONS: CHALLENGES AND OPPORTUNITIES FOR INDIA l US-CHINA TIES: INDIA'S CONCERNS l INDIA-CHINA RELATIONSHIP: EXPLAINED l INDIA CHINA TRADE PROBLEM EXPLAINED |
USA-China Relations
The relationship between the US and China has shifted from engagement to intense strategic competition across economic, technological, military, and ideological domains in recent years.
Economic Rivalry
Disputes over trade imbalances (US trade deficit with China in 2024 was $295.5 billion for goods), intellectual property theft, and technological dominance.
US implemented tariffs and export controls on Chinese tech firms (e.g., semiconductors, AI).
In 2024: US added 140 Chinese technology companies involved in computer chip and chipmaking tool production to its "Entity List"; US companies doing business with them will likely be denied export licenses.
US strategy aims to "de-risk" supply chains and reduce reliance on China.
China expanded export controls on dual-use goods and sanctioned US entities.
The IMF warns that escalating trade tensions pose risks to global growth, predicting global real GDP growth of 3.2% for 2025, down from 3.3% in 2024.
Geopolitical Competition
Nations competing for global influence, especially in the Indo-Pacific.
Major flashpoints: South China Sea, Taiwan, and China's Belt and Road Initiative (BRI).
US strengthens alliances like the Quadrilateral Security Dialogue (Quad) to counter China's military presence.
Ideological Clash
Deep conflict between US democratic values and China's authoritarian one-party system.
Diplomatic tensions fueled by issues such as human rights in Xinjiang and Hong Kong.
The relationship between the US and China has a major impact on India's strategic, economic, and geopolitical interests.
Strategic Impact
Strengthening Ties with the US
The US considers India an essential partner in its Indo-Pacific strategy to counter China's influence, an objective that aligns with India's concerns about China's assertive posture.
India is part of the Quad, an alliance with the US, Japan, and Australia. The 2024 Quad Leaders' Summit in Wilmington, Delaware, reaffirmed their dedication to a free, open, and inclusive Indo-Pacific region.
The Quad's "Cancer Moonshot" and "MAITRI" (Maritime Initiative for Training in the Indo-Pacific) demonstrate a growing collaboration among member nations, solidifying India's strategic standing.
Maintaining Strategic Autonomy
India historically values strategic autonomy and non-alignment, carefully managing its relationship with the US to avoid becoming a junior partner or being drawn into an exclusive anti-China alliance. This approach allows India to independently pursue its national interests.
Border Tensions with China
India experiences direct security threats from China, exemplified by border disputes such as Doklam (2017) and Galwan Valley (2020). The larger US-China competition indirectly impacts these tensions, as US support can strengthen India's stance.
Economic Impact
Trade Diversification and Supply Chain Resilience
India stands to gain from the US-China trade war and the global push for supply chain diversification, as companies look for manufacturing options outside of China (China+1 strategy).
India's Production Linked Incentive (PLI) schemes aim to capitalize the opportunities. As of March 2025, PLI schemes across 14 sectors attracted ₹1.76 lakh crore in investments, generating over 12 lakh direct and indirect jobs. (Source: DD News)
Widening Trade Deficit with China
In the 2024-25 fiscal year, India's trade deficit with China reached $99.2 billion, driven by a surge in imports of electronics, batteries, and solar components.
In 2024-25, China remained India's second-largest trading partner, with bilateral trade at $127.7 billion, highlighting India's continued dependence on China.
US as India's Largest Trading Partner
The United States remained India's largest trading partner for the fourth consecutive year in FY 2024-25, with total bilateral trade reaching $131.84 billion.
In FY 2024-25, India's exports to the US totaled $86.51 billion and imports were $45.33 billion, indicating a strengthening economic bond.
However, this partnership is now challenged by a 50% US tariff on specific Indian goods (textiles, gems, jewelry, and leather) implemented in August 2025.
Maintaining Strategic Autonomy
Intensified competition between the US and China forces countries to choose sides. India faces the challenge of maintaining its independent foreign policy while leveraging alliances.
Managing the Border with China
Border tensions with China persist despite diplomatic efforts. India needs continuous vigilance and robust defense preparedness due to China's growing military capabilities along the Line of Actual Control (LAC).
Addressing Economic Vulnerabilities
India's economic dependence on China for raw materials and intermediate goods creates vulnerability and challenges for "Atmanirbhar Bharat" (self-reliant India) ambitions.
Technological Gap
India aims for technological self-reliance but lags behind the US and China in AI, semiconductors, and quantum computing. To achieve its goals, India must bridge this technology gap while navigating its relationships with these two leading nations.
Impact of Global Economic Slowdown
A prolonged US-China economic slowdown could negatively impact global demand and investment flows, affecting India's growth prospects.
India requires a comprehensive strategy to navigate the US-China rivalry. This strategy should focus on strengthening its internal capabilities, forging diverse alliances, and promoting a global rules-based order.
Enhance Domestic Capabilities
To achieve self-reliance, the "Atmanirbhar Bharat" initiative should be accelerated in critical sectors by investing in research and development for emerging technologies and boosting indigenous defense manufacturing.
India's defense exports reached ₹23,622 crore in fiscal year 2024-25, with the Ministry of Defence setting a new target of ₹50,000 crore by 2029-30. (Source: PIB)
Diversify International Partnerships
India should strengthen relationships with other like-minded nations and regional blocs, such as the European Union, ASEAN countries, and nations in the Middle East and Africa.
Increase Economic Resilience
Reduce dependence on single-country supply chains, especially from China, by boosting domestic manufacturing, attracting diverse FDI, and exploring new export markets.
Actively Engage in Multilateralism
Continue to advocate for a rules-based international order and reform global institutions to reflect current geopolitical realities.
Active participation in forums like the G20, BRICS, and the Shanghai Cooperation Organization (SCO) allows India to voice its concerns and shape global norms.
Employ Proactive and Pragmatic Diplomacy
Maintain open channels of communication with both the US and China, clearly present national interests, and find common ground, without compromising core principles.
Prioritize Regional Stability
Promoting peace and security in the Indo-Pacific region necessitates ongoing engagement with neighboring nations, offering developmental aid, and resolving regional security issues.
The US-China dynamic offers India both opportunities and challenges. India balances this by fortifying US and Quad partnerships while maintaining strategic autonomy. Through domestic economic resilience, schemes like PLI, and proactive diplomacy, India establishes itself as an influential power in a multipolar world.
Source: INDIAN EXPRESS
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PRACTICE QUESTION Q. Explain how the US-China rivalry has transformed the Indo-Pacific from a geographic concept into the central theatre of 21st-century geopolitics. 250 words |
The trade war presents a mixed bag for India, with challenges like global economic instability, volatile stock markets, and disrupted supply chains, but also opportunities to increase exports and attract foreign investment as companies look for alternatives to China.
The LAC is the de facto border separating Indian-controlled territory from Chinese-controlled territory in the India-China border areas. It is not a clearly demarcated legal border, leading to differing perceptions of where it lies and frequent standoffs between the two armies.
India objects to the China-Pakistan Economic Corridor (CPEC), a component of China's Belt and Road Initiative (BRI), due to its route through Gilgit-Baltistan. This region, part of Pakistan-administered Kashmir, is claimed by India, and the CPEC connects China's Xinjiang province with Pakistan's Gwadar port.
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