The China-India Relationship: Between Cooperation and Competition

Introduction

China and India are the two most populous countries in the world, jointly making up almost 35 percent of the global population, and India surpassed China as the world’s most populous country in April 2023, according to UN estimates. While their rich histories span thousands of years, the countries’ modern economic growth and increasing political prowess have had far-reaching implication—not just in the Indo-Pacific, but also for the global economy and international cooperation.

Despite some areas of collaboration in trade and multilateral institutions, the China-India relationship has often been marked by competition and rivalry. China’s priority is to establish its regional and eventual global dominance through massive investments in developing countries. Meanwhile, India seeks a multipolar regional and global system and has developed diplomatic relationships with various countries to reduce reliance on any one major power. 

Their 2,100 mile-long shared border continues to be a source of conflict, as both nuclear-armed states stake overlapping claims to strategically important territories across the undefined border. While the United States sees India as a strategic partner in countering China’s rise, experts warn there will be limits to India’s willingness to align with U.S. interests—especially as U.S. President Donald Trump’s recent tariffs on India have the potential to disrupt this strategic partnership.

Why is the China-India relationship important today?

The two countries are major economic and political powerhouses in the Indo-Pacific and have the potential to have a significant impact on international governance and trade. Combined, China and India’s gross domestic product (GDP) by purchasing power parity makes up about 28 percent of the world’s total, as of April 2025. 

China has been the world’s largest exporter since 2009, and India is the fastest-growing major economy in the world. They both consider themselves champions for the Global South and models for development. However, Beijing and New Delhi—the former a U.S. rival and the latter a U.S. strategic partner—operate under vastly different government systems. The Chinese Communist Party has ruled China since 1949, while India is the world’s largest democracy. Today, the China-India relationship teeters between competition and cooperation as both countries strive for great power ambitions, yet possess varying views on how to achieve it. 

What’s the history behind China and India’s contested borders?

At the core of China and India’s friction and mistrust is the shared border separating their two countries. Known as the Line of Actual Control (LAC), the demarcation was the ceasefire line after the 1962 Sino-Indian War. The conflict began mainly over China’s attempt to build a highway through the Aksai Chin region in the greater Kashmir region, which aimed to assert control of the territory and connect Tibet to Xinjiang. India responded by increasing troop deployment and the number of outposts beyond the disputed border, leading Chinese forces to simultaneously invade Aksai Chin and the North–East Frontier Agency—now part of Arunachal Pradesh, a state of northeast India. 

The LAC became the de facto border through a 1993 bilateral agreement and stretches across overlapping territorial claims from both countries. Today, two major sections of the border have been the source of recent disputes. India claims the Aksai Chin region as part of its Ladakh union territory, but it is administered by China and incorporated into both the Tibet and Xinjiang autonomous regions. Meanwhile, China claims Arunachal Pradesh as Zangnan, or South Tibet in Chinese. China also does not recognize India’s northeastern Ladakh region as Indian territory (Ladakh also shares a border with Pakistan and is an area of contention between India and Pakistan).

China has periodically initiated provocations around the LAC that it claims as its own territory. The most recent escalation—and among the most serious—was in 2020, where a standoff along the LAC’s demarcation of Ladakh, Tibet, and Xinjiang culminated in the deaths of at least twenty Indian troops and four Chinese soldiers, the first fatalities from border disputes in the area in more than forty-five years. The two countries have continued to experience minor border clashes since then; while China sought to compartmentalize the border issues and conduct business and trade as usual, India was reluctant to do so without a resolution. 

In October 2024, the two countries reached an agreement to end the military standoff along the border and boost communication and cooperation to resolve the conflict. Their first high-level dialogue on easing border tensions occurred two months later. However, the agreement is more a “tactical thaw” than a “strategic shift,” said the Brookings Institution’s Senior Fellow Tanvi Madan on the German Marshall Fund’s China Global podcast.

Why do China and India want control of these disputed territories? 

The appeal of these areas lies in their strategic importance, Kenneth I. Juster, CFR distinguished fellow who previously served as the twenty-fifth U.S. ambassador to India, told CFR. 

Dolkam, an area claimed by Bhutan, for example, “oversees a high vantage point that connects the subcontinent to what’s on the eastern side of Bangladesh,” Juster said. Tawang, a town in India’s northeastern Arunachal Pradesh, has been at the center of recent disputes because of its importance for Tibetan Buddhism outside Tibet, RAND Corp defense analyst Derek Grossman told the New York Times. Grossman argued that China fears that the Dalai Lama, who is in exile in India, could use Tawang “as leverage to galvanize the Tibetan people to try and declare independence from China.” 

For India’s part, analysts say the government is concerned about rural populations shifting their allegiance to China—which has offered housing and financial benefits to its own border villages—due to the lack of development in these remote areas where much of the population lives in isolation. These strategic concerns have resulted in both countries competing to build up cellular and infrastructure connectivity in an attempt to win over communities living along the borders. However, land restrictions stemming from the border disputes have come at the expense of nomadic communities’ way of live, with grazing land denied to the local population.

What are other areas of rivalry between China and India?

Pakistan. A long-standing tension in China-India relations is China’s “all-weather” strategic cooperative partnership with Pakistan, which resurfaced following a 2025 terrorist attack in India-administered Kashmir and a subsequent four-day military conflict between India and Pakistan. China is Pakistan’s dominant arms supplier, providing Islamabad with fighter jets, drones, and air defense systems, and the two cooperate on nuclear arms development. In 2024, China supplied 81 percent [PDF] of Pakistan’s major arms imports, per the Stockholm International Peace Research Institute. 

According to Sushant Singh, a senior fellow at the India-based think tank Center for Policy Research, the China-Pakistan defense partnership represents not just a bilateral challenge but a two-front dilemma. “Covert cooperation means that if India is engaged in an armed conflict with Pakistan, China would provide moral, material, and logistics support to Pakistan, and in case of a collaborative threat, either of the countries could activate a second front militarily in a coordinated manner,” Singh wrote for the Stimson Center.

Tibet. Chinese Embassy officials call Tibet a “thorn in China-India relations.” After China’s occupation and annexation of Tibet in 1950, Tibetans revolted against the Chinese Communist Party in 1959, and India allowed the Dalai Lama and other Tibetans to take refuge in the country’s north. Despite India’s previous efforts to avoid challenging China’s sovereignty claims in Tibet, Indian Prime Minister Narendra Modi has in recent years directly addressed the Dalai Lama, and senior Indian officials have backed the Dalai Lama’s assertion that China will not be involved in his succession. In June 2025, China and India took a step to mend disputes in Tibet; the Kailash Manasarovar pilgrimage, a religious event that crosses through Tibet, resumed in 2025 after a five-year pause following the countries’ border conflict. 

Regional influence. China has expanded its footprint in South Asia and cultivated economic and diplomatic ties with many of India’s neighbors, namely Bhutan, the Maldives, Nepal, Pakistan, and Sri Lanka, in an effort to win over the Indian subcontinent. For instance, the Maldives—strategically located along oil shipping routes from the Persian Gulf—has tilted increasingly toward China since signing onto China’s Belt and Road Initiative (BRI) in 2014. But observers note that despite the Maldives electing a pro-China president in 2024 and expelling Indian soldiers from its territory, the island state signaled a shift in tone when it welcomed Modi for a state visit on its independence day in July 2025. 

Could India economically compete with China?

The World Bank calls India the world’s fastest-growing major economy, but China’s economy is still about five times larger. According to 2024 World Bank estimates, China’s labor force participation—the proportion of working-age people that are actively employed or seeking employment—is higher than India’s, at 65 percent compared to 59 percent. But this participation rate is at an all-time low, while India has had year-on-year increases since 2020, suggesting India’s working-age demographic is growing.

Today, China is India’s second-largest trading partner behind the United States, although there remains a significant trade imbalance, with India in a large trade deficit to China. In 2024, China exported $120 billion worth of goods to India, while India’s exports to China were worth just under $15 billion. India’s import dependence on China has benefitted some industries, namely pharmaceuticals, where imports of the active ingredients from China have made India the world’s leading exporter of pharmaceutical drugs.

When Modi first took office in 2014, his government praised China as an essential partner for India’s growth and development. But as China took a more assertive foreign policy position in the following years and continued growing its expansive BRI, India began to worry about China’s global aspirations. India has been a staunch critic of the BRI, especially its flagship $60 billion China-Pakistan Economic Corridor. Indian officials say the route, which is being laid through the Pakistan-occupied portion of Kashmir and connects China to Pakistan’s port on the Arabian Sea, is a violation of India’s sovereignty and territory. 

Over the past decade, India has sought to take advantage of China’s slowing economic growth and set its ambitions on becoming the next tech manufacturing hub. Modi launched the “Make in India” initiative in 2014 to attract foreign investments by establishing special economic zones that offer tax exemptions and more liberal business regulation. Manufacturing shifts have slowly begun in some sectors; in 2025, Apple moved some of its production of U.S. iPhones from China to India, which now produces 20 percent of the company’s iPhones. 

Even so, analysts observe that India is still heavily reliant on China in the production of goods in the global supply chain. Despite India’s large workforce, developing the specialization and training necessary for manufacturing, especially in tech and renewable energy sectors, will likely take some time. In 2025, more than a decade after Modi launched “Make in India,” the country’s share of GDP generated by manufacturing dropped to below 14 percent, which is lower than when the prime minister formally announced the initiative.

How does India’s military compare to China’s?

China and India have the world’s largest and second-largest militaries, respectively, but China’s military budget dwarfs India’s, totaling at $231 billion in 2024 compared to India’s $75 billion.  Notably, the U.S. Department of Defense estimates that China actually spends 40–90 percent [PDF] more than its announced defense budget. Beijing’s investments to modernize its military have led to rapid technological breakthroughs—including developing domestic stealth fighter jets—which only a handful of countries have. Meanwhile, India is the world’s second-largest weapons importer after Ukraine.

Ultimately, China and India have fundamentally different views on the international order, and these views shape their respective security postures toward each other. While China desires hegemony and regional power, India seeks a multipolar system, aiming to move the world away from getting caught up in the U.S.-China rivalry. 

China’s search for regional dominance. China’s security policy has historically been to compete with India for regional influence and contain its great-power ambitions, but some experts warn this strategy might be misguided. CFR Senior Fellow Rush Doshi told the Economic Times that “having India as neutral should be more valuable to China than trying—and failing—to contain India” and potentially provoking a major incident that could involve the United States and other allies.

India’s multi-alignment strategy. India deters Chinese aggression by responding to Beijing’s provocations and strengthening its relationships with other countries also wary of China’s growing military strength. New Delhi has boosted its defenses along its shared border with Beijing, committing $24 million to upgrade its airfield in the disputed areas in 2023. As part of its multi-alignment strategy, India has developed strategic partnerships with more than thirty countries, including a “special and privileged strategic partnership” with Russia. India and Russia coordinate on defense and energy, which India sees as a way to counterbalance Russia’s closeness with China.

At the same time, India has cultivated stronger relationships with the United States, Australia, and Japan, which make up the security dialogue group known as the Quad. The group has not explicitly mentioned China in its engagements, but unofficial conversations have pointed to Beijing’s aggression—especially its role in supplying Islamabad with weapons used in Kashmir and claims in the South China Sea—as causes for concern. China has accused the Quad of being “a tool the United States uses to contain China and perpetuate U.S. hegemony.”

China and India also separately possess strong military and economic ties with Russia, even after its 2022 invasion of Ukraine. Aside from both countries being major oil importers of Russian oil, India historically relied on Russia for its arms supply—though it has sought deals with the United States and France in recent years—and China has been reportedly supplying critical minerals and dual-use technology to Russia, according to Ukrainian intelligence.

In what ways do China and India influence the Global South?

China and India each seek to position themselves as an advocate and leader of the so-called Global South, a disparate grouping of countries primarily in Africa, Asia, and Latin America and the Caribbean that share economic and sociopolitical challenges. They are founding members of the BRICS group, a multilateral organization whose other early members include Brazil, Russia, and South Africa. China welcomed India into the Shanghai Cooperation Organization (SCO) in 2017, a security and economic forum. In October 2024, Chinese President Xi Jinping and Modi met on the sidelines of the BRICS summit for the first time since 2019, where Xi underscored that both countries are “important members of the Global South” and at a crucial phase in their “respective modernization endeavours.”

However, Beijing and New Delhi have taken different approaches to courting other developing countries, with a shared goal of meeting their diverse economic and political needs. China leverages its global economic presence, largely through the BRI, to forge diplomatic ties with other countries who seek to expand their trade and development opportunities. 

But these investments can come at a cost: Countries could fall into what observers call a debt trap, in which unsustainable loans result in Beijing gaining military influence or seizing assets when borrowing countries fail to repay. Sri Lanka, which counts China as its largest bilateral lender, defaulted on its national debt in 2022 amid its large borrowing for infrastructure projects. 

Meanwhile, India recognizes that its economy will not be able to compete with Chinese investments, experts say. Instead, New Delhi leverages diplomacy—opening doors for developing countries to negotiate in international forums. During its presidency of the 2023 Group of Twenty summit, India proposed granting the African Union full membership, a move that was later accepted that year. 

The long-term effects of both countries’ influence campaigns are still uncertain. Manjari Chatterjee Miller, CFR Senior Fellow for India, Pakistan and South Asia, wrote in the Hindustan Times that “it is not so clear the Global South, while sometimes perfectly willing to accept Chinese and Indian support, sees either of them as either a benign leader or their champion.”

How does the United States influence their relationship?

Washington’s increased role in the Indo-Pacific is on both Beijing’s and New Delhi’s radar, and U.S.-India relations continue to pose a challenge to China’s regional dominance. Since the end of the Cold War—a period when the United States was allied with Pakistan and India was purchasing weapons from the Soviet Union—U.S.-India relations have grown increasingly cooperative on both economic and security fronts. Meanwhile, U.S.-China relations have only worsened over the past decade under greater geopolitical and economic competition.

An important driver of the U.S.-India partnership in recent years has been India’s strained relations with China. While the United States and India are not treaty allies, the two countries are strategic partners, and Washington considers New Delhi a critical player in its Indo-Pacific strategy. The two countries also exchange and jointly produce defense goods, with ongoing discussions of producing F414 fighter jet engines. 

India has also been one of the benefactors of “friendshoring” efforts begun under the Joe Biden administration, which sought to shift global supply chains away from rivals and toward partners. The 2022 CHIPS and Science Act created a $500 million fund to invest in India’s semiconductor industry, but the benefits of friendshoring for both countries will take time to materialize, experts say.

Is the Trump administration pushing India closer to China?

Since Trump returned to the White House in 2025, there has been concern that tariffs on Indian exports could upend more than two decades of effort by the United States and India to strengthen ties. In July 2025, the Trump administration announced tariffs on India totaling 50 percent; 25 percent as a “reciprocal tariff” for what Trump considered an unfair trade imbalance, and an additional 25 percent so-called sanction tariff due to India’s continued import of Russian oil during the Ukraine war. 

“Indian media and strategic analysts are outraged,” Alyssa Ayres, CFR adjunct senior fellow for India, Pakistan, and South Asia, told CFR. “People wonder why the United States, which has been cooperatively building a strong strategic partnership with India for decades, would suddenly treat its close strategic partner worse than some of its toughest competitors.” 

Some experts argue that the spike in U.S.-India tensions could drive India’s geopolitical reorientation, pushing India closer to China. Others argue that the thawing of China-India relations is merely part of India’s broader effort to maintain strategic autonomy in pursuit of a multipolar world order. These theories came to a head in August 2025, when Modi traveled to China for the first time in seven years to meet with Xi on the sidelines of the SCO Summit in Tianjin. The leaders made general commitments to improve ties, calling each other “partners” rather than rivals, in an effort to stabilize their relationship.