Engaging with China: The road that India must take

America’s imposition of sharp tariff hikes on Indian exports has led to an unexpected rapprochement between India and China, one that has momentous global geopolitical and geo-economic implications.

- Mausam Kumar

Against the backdrop of a rather unexpected disorder in trade relations between India and the US, this provides significant tailwinds to a Global South agenda where two of its most populous stakeholders are looking to find ways of working together as the multilateral order suffers serious fractures.

India’s strategy of engagement with China must provide the policy space for both countries to achieve shared goals and impart resilience to a Global South agenda that can navigate the realities of the disrupted global order. There are three key realities that need to be factored in.

China's approach to the Global South has revolved around a strategy of financial investments and loans through State and private actors. This has done reasonably well in reducing the receiving countries’ dependence on Western finance, especially in the infrastructure and energy sectors. This has given China a geopolitical stature that serves its interests well. However, the Chinese-financing approach has limited utility in a pragmatic strategy of engagement with India, a democratic country with its own geopolitical needs and ambitions and its suspicions regarding the China Pakistan Economic Corridor and the Chinese adventures around the Belt and Road Initiative.

India’s own ability to attract global finance is significant. The country has been making tremendous infrastructure and energy investments over the last decade and has a robust capital market of its own. This provides limited avenues for absorbing Chinese finance through pathways deployed in other Global South arenas. Therefore, Chinese financing must evolve beyond the strategy of infrastructure and energy investments to create the necessary policy space for coherent engagement between these countries.