Tensions are flaring as governments from US. to Europe move to cut a dependence on China

Indian and Chinese forces are facing off by a glacial lake in the Himalayas that traverses their fluid frontier. The standoff at 14,000 feet (4,270 meters) is the most visible theatre of conflict between the world’s two most populous nations, but it’s far from the only source of friction.

Despite the remote location, the military buildup at the un-demarcated border at Pangong Tso lake should not be seen in isolation, but set against the backdrop of Beijing’s deteriorating international relations during the Coronavirus outbreak.

Tensions are flaring as governments from the U.S. to Europe, Japan and Australia move to cut a dependence on China exposed by the pandemic, and India spies an economic opening that it’s seeking to exploit. But analysts of India-China relations say Prime Minister Narendra Modi risks stoking tensions with Beijing in siding too closely with Donald Trump at a time when the U.S. president is picking a fight with China.

“India has increasingly been seen as aligning with the U.S. and that can’t benefit India in the long term,” said Phunchok Stobdan, a former Indian diplomat and author of “The Great Game in the Buddhist Himalayas: India and China’s Quest for Strategic Dominance.”

“The Chinese have a saying: kill the chicken to scare the monkey,” said Stobdan. “That’s why smaller powers like India and Australia, who have aligned with the U.S., are witnessing a more aggressive China.”

The origins of the standoff that began May 5 remain unclear. India says it was surprised by China’s deployment of troops at three locations on its border including two in Ladakh, a region of strategic importance nestled between western Tibet and Pakistan-occupied Kashmir that was recently brought under federal control — a move that angered China.

The government concedes the tensions may have been triggered by completion of a road and bridge in the Galwan sector of Ladakh, part of a border infrastructure program that Modi’s government says is intended to develop remote areas rather than aimed at any particular country.

While both sides continue to negotiate a compromise — military officials at the border are due to meet on June 6 — India holds that what it calls incursions were in areas never before disputed by the Chinese.

“China sees India’s infrastructure building along the Line of Actual Control, of which both sides have different interpretations, as overstepping and challenging the status quo, and therefore cannot be tolerated,” said Professor Sun Shihai, director of the China Centre for South Asian Studies in Sichuan University.

India and China — which together account for a population in excess of 2.7 billion, or one third of the world’s people — are no strangers to animosity, and fought a war in 1962. But that was supposed to be behind them as economic and commercial realities took precedence: This year marks seven decades of India’s diplomatic ties with China, its second-biggest trading partner after the U.S.

Now both nations are marshalling extra troops and artillery to the Himalayan frontier even as Beijing and New Delhi try to lower the temperature. The developments have surprised observers lulled by healthy trade and bonhomie between the rivals following resolution of their last military incident, a months long border standoff in 2017. President Xi Jinping last visited Modi only in October.

Then in February, Trump arrived in India. Since March, India has stepped up participation in the U.S.-led Indo-Pacific group of nations, which includes Japan, Australia, New Zealand, Korea and Vietnam, with weekly calls to discuss issues such as pandemic preparations and “vital supply chains.” Modi and his Australian counterpart, Scott Morrison, upgraded their bilateral ties and signed a defense agreement on Thursday.

India’s recent approach marks a shift from the past few years, which saw Modi work on bilateral ties to push for more access to Chinese markets while trying to balance military tensions. It was a strategy evident at their bilateral summits in Wuhan, central China, in 2018, then last year in Mamallapuram, southern India.

Yet traditional mistrust and lack of trade reciprocity from China has hindered progress, according to a senior Indian government official who asked not to be named discussing foreign relations. India shunned a China-backed regional trade pact in 2019. And while India runs a $22 billion trade surplus with the U.S., its deficit with China last year was more than twice the size, at some $50 billion — more by far than with any other country.

“India generally feels that its stark trade deficit with China reflects Beijing not playing fair — not permitting India greater market access in areas of its strengths,” said Alyssa Ayres, Washington-based senior fellow at the Council on Foreign Relations and a former U.S. deputy assistant secretary of state.

Then came the coronavirus, which first emerged in Wuhan, with its devastating impact on health and economic wellbeing. As the Trump administration rounded on Beijing for its initial handling of the epidemic, the government in New Delhi made a bid to lure U.S. businesses to relocate to India from China, reaching out to more than 1,000 companies from medical equipment suppliers to auto part makers offering incentives to decamp.

With its toll from COVID-19 rising, India is pushing for a bigger share in global supply chains to shore up an economy battered by the outbreak and create much-needed jobs after 122 million people were left without work. Even so, Modi’s call to cut dependence on imports may come back to hurt India.

No one expects another shooting war. But the situation is sufficiently precipitous that Trump suggested U.S. mediation over the “raging border dispute,” an offer rejected by both parties. Trump and Modi talked by phone Tuesday.

Asked about the call, Chinese Foreign Ministry spokesman Zhao Lijian told a daily media briefing in Beijing that there was “no need for the intervention of a third party” over the border issue.

Beijing has “strictly abided” by the relevant treaty, and “committed to uphold national, territorial and sovereign security as well as upholding peace and stability in the border region,” Zhao said. Describing the situation as “overall stable and controllable,” he said that China and India have mechanisms and communication channels that give them “the capacity to resolve issues through dialogue and negotiations.”

Months after the 2017 clash, India entered a military communications pact with the U.S., followed by increased participation in an informal strategic grouping with the U.S., Japan, Australia known as the Quad. During his visit to Modi’s home state of Gujarat in February, Trump announced military deals worth more than $3 billion that included 24 Lockheed Martin Corp. Seahawk helicopters for the Indian navy.

“It’s safe to say that China has been perturbed by some aspects of the Modi government’s foreign policy, including trade issues but also its moves toward closer alignment with the U.S. and Japan,” said Jeff Smith, research fellow at the Heritage Foundation in Washington and author of “Cold Peace: China-India rivalry.”

Domestically, the border dispute led to a backlash against China with Indians calling for a ban on Chinese imports and even extending the snub to mobile phone apps. Millions of downloads of “Remove China Apps,” which helped Indians purge their Android smartphones of Chinese games and software, forced Alphabet Inc.’s Google Play to pull the plug on the app from its store, citing violations of its policies. China’s Global Times called the boycott a tactic to shift focus away from India’s ineffective handling of the Covid-19 epidemic.

India must be careful how far it pushes. The government changed rules to allow hydroxychloroquine exports to the U.S. at Trump’s request last month, yet two-thirds of India’s bulk drugs and drug intermediates come from China. There are similar levels of dependency from electronics to auto parts. Chinese investments of more than $8 billion have been made in India, mostly in finance and technology startups.

“It’s almost impossible for a big multinational to completely decouple from China,” said Li Qin, counsel of Link Legal, a law firm headquartered in New Delhi specialising in advising Chinese companies on investing in India.

For Xu Liping, a researcher at the National Institute of International Strategy in Beijing, part of the state-run Chinese Academy Of Social Sciences, it’s “quite unrealistic in practice for India to relocate large-scale production chains from China.” India lags behind China in key areas such as raw material supply and transportation: “China and India are standing at different stages of industrialisation,” said Xu. In any case, supply chains are determined by capital and not politics, so “for now, China is a better choice.”

Politics are driving the debate, however, and U.S.-China differences are only likely to sharpen over the next few months, according to Tanvi Madan, senior fellow at the Brookings Institution in Washington and author of “Fateful Triangle: How China Shaped US-India Relations during the Cold War.”

“The conversations about global supply chains show that globalisation itself is being redefined,” and countries like India “will have to show that they can be reliable trade partners,” said Madan. “While India wouldn’t want to come in the middle of the U.S.-China scuffle, they would want to benefit from what is happening.”