India, China and the New Asian Order
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India and China occupy extraordinary place in the imagination of Asia due to the strength of their civilisational ideas. However, their contemporary relationship is defined by another question: who will lead the way in the shaping Asia’s future? They are in a constant struggle over territory, technology and recognition behind the diplomatic niceties. It is a battle for power in an Asian century.
Chinese manufacturing business, investments in technology, and its infrastructure projects have given Beijing a great global influence. Whereas, India is in the process of changing itself, which might shift the balance in Asia. Its economy, industry and global partnerships are making it stronger. However, India does not simply want a bigger place in the international order; it is trying to make sure that the new order reflects its geopolitical aspirations. But its biggest challenge is the contested Himalayan border.
The military standoff in the Galwan Valley had shown how 40 years of economic cooperation can be marred by geographic insecurity. No nation can afford to be uncertain about its sovereignty when trying to exert larger influence in the world. Diplomatic engagement with Beijing needs to be accompanied by military preparedness and an insistence that agreements be respected. Both countries do not want a military crisis. Dialogue and communication channels are important because the disagreements have not disappeared and both governments want to ensure that the disagreements must not grow out of hand. The true test of progress will be not in the number of diplomatic meetings but in whether or not diplomatic meetings create predictability. India can have peaceful relationship with others without giving up its territorial claims.
Another contradiction is economics. China is still part of the India’s economic ecosystem. A sector-to-sector dependence on production networks must be minimised if India wants to become a manufacturing powerhouse. But cutting off ties would cause a disruption. The more achievable goal is to develop manufacturing, diversify around the world and build the ability to manufacture goods in India.
India can only be a competitor to China if it develops industrial strength. Indian companies are finding it difficult to take advantage of Chinese opportunities, while the Chinese businesses have been enjoying Indian consumer market. Transparency, regulations and market access are a key to sustainable relationship. India’s economic success will rely on transforming its market into an industrial influence.
During his May 2026 visit to China, US President Donald Trump labelled the ties between Washington and Beijing as G2. For now, there is no G2 institution yet, but the language has brought back an idea that the United States and China could play a role in the management of global questions. The recognition for Beijing would be a chance to market China as a key alternative to Washington. Trump’s idea seems aligned with his approach of favouring straightforward talks and prominent bilateral trade-offs. If there is any understanding that can be reached between Washington and Beijing regarding maritime security or international conflicts, it will have repercussions for those countries that were not involved in the negotiations.
Bipolarism is no longer the basis for the international system. There are interests and capacities in India, Japan, Europe, Brazil and other actors. While the relationship with Washington must be continued by New Delhi, however India should make it clear that Washington and Beijing cannot negotiate India’s foreign policy. This is where the close contact of Japan with India comes into play. Tokyo understands India’s scale and strategic significance and sees it as an essential partner in making the Indo-Pacific a reality. Prime Ministers Modi and Takaichi have deepened cooperation in the field of defence, economic security, artificial intelligence and technological innovation. The two nations have agreed that a key base is their industrial and technological capacities. In August 2026, both countries signed an agreement to enhance maritime security cooperation and to arrange for humanitarian assistance. These developments are important as the Indo-Pacific is not a geographical region, but rather an economic and strategic region in which trade flows.
India’s strategic location in the Indian Ocean and Japan’s naval power provides potential for a strategic partnership. This connection should not be seen as an anti-China pact. India and Japan have economic interests and neither can afford to make every conflict an irreversible one. However, more cooperation provides India with technological alternatives. Japanese investment further advance India’s manufacturing ambitions and maritime coordination in the Indo-Pacific. The New Delhi-Tokyo collaboration is a proof of how Asian countries can build strategic relationships without resorting to the ‘camp’ division.
As far as India-China relations are concerned, both sides cannot limit the relationships to statements. There is a chance for collaboration that both countries must not miss. They can disagree without it being a hindrance to cooperation where their interests align. Cooperation, however, must be based on the respect for each other’s core interests, not on the assumption that booming economic ties translate to political power.
Whether India and China are friends or foes will not be the most complex question to answer in the future of Asia. Whether Beijing will be able to accommodate yet another Asian power, whether Washington can come to terms with the fact that its ties with China are not the primary basis of international politics, and whether India can transform its economic strength into strategic power. India cannot choose between Washington and Beijing. It must be strong so as to be able to keep relationships with both and yet remain free to make important decisions. The expanding cooperation with Japan and its drive to build up domestic capacities are pertinent to this goal.
Disclaimer: Views expressed are of the author(s) and do not necessarily reflect the views of The Statecraft Institute.