Page 57 - bne IntelliNews monthly magazine September 2024

bne September 2024 Opinion 57
Relations between India and China have improved, but it's more a tactical move than the start of a geniune friendship. / bne IntelliNews
aligning with the West, driven by both security concerns and economic opportunities, Shilan Shah argues, the deputy chief emerging markets economist at Capital Economics.
The long-standing border dispute in the Himalayas with China, particularly the tensions that escalated in 2020,
has reinforced India's wariness of its northern neighbour. Additionally, the US offers significant friendshoring opportunities as global supply chains shift, particularly in sectors like mobile phone and semiconductor manufacturing, where India has seen a surge in its global market share.
But more recently India has warmed to both Russia and China in defiance of international pressure to make Moscow a pariah. Modi was in Moscow in July, where he was warmly greeted by Russian President Vladimir Putin and negotiated for long-term oil and fertiliser supply deals. Modi shrugged off the muted criticism from the West for his Moscow visit, highlighting that he would act in what he saw as India’s best interests, irrespective of how that is perceived in the West.
Likewise, Indian policymakers appear to be warming to the idea of more Chinese investment to fuel the rapid development of India’s economy, which is also leading to better relations with Beijing.
Another consequence of Russia’s war in Ukraine and the resulting extreme sanctions regime has been to push the Global South countries closer together as they seek safety in numbers in the face of increasing aggression by the world’s
leading powers. This change was manifest in both of last year’s G20 summit and the expanding BRICS+ group, but not limited to these two.
Both China and India have indicated a willingness to resolve their border issues, with the creation of five "buffer zones" where troops have been withdrawn and patrols ceased, marking a rare moment of cooperation.
“Both China and India have indicated a willingness to resolve their border issues, with the creation of five "buffer zones" where troops have been withdrawn and patrols ceased, marking a rare moment of cooperation”
And Delhi has reversed its hesitance to host major Chinese industrial investments. A year ago, it blocked BYD’s attempt to establish an electric vehicle factory in India. India’s flagship Annual Economic Survey noted that “developing countries will have to figure out a way of... boosting domestic manufacturing capabilities, sometimes with the
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