Maintaining the military standoff along the Line of Actual Control (LAC) has been economically and strategically draining for both nations. India faced pressure from its business community to ease restrictions on Chinese trade and investment, while China sought to improve its image as a reasonable global actor and strengthen its position within BRICS and the Shanghai Cooperation Organization.
Disengagement refers to troops pulling back from close proximity at friction points, creating physical distance to reduce the risk of immediate clashes. De-escalation involves a reduction in the overall number of troops deployed in the border region. While disengagement from seven friction points has been achieved, de-escalation is the next phase of negotiations.
India insists on peace and stability along the border as a prerequisite for normalized relations with China. While acknowledging "some improvement," India's External Affairs Minister, S. Jaishankar, emphasized that a full "reset" will take years and expressed concerns about China's past territorial acquisitions and the need for a fair boundary settlement.
China has been less vocal about its position, though it has expressed a desire to improve economic ties with India. There is an expectation that China will likely emphasize the need for India to create a more favorable investment environment.
The 2020 border clashes led to a noticeable tilt in India's strategic posture towards the U.S. and the Quad, involving increased intelligence sharing and military cooperation. China views this alignment with suspicion, perceiving it as part of a U.S.-led effort to contain its influence.
The timing of the border agreement, shortly after Modi's re-election for a final term, is seen as strategically significant. It allowed him to make a potentially controversial deal without facing immediate electoral consequences, as defending territorial integrity is often linked to a leader's legitimacy.
The potential for new U.S. tariffs under Trump could impact both India and China, potentially pushing them closer together economically as they seek to reduce reliance on the U.S. market. However, Trump's unpredictable foreign policy, including his stance on alliances like the Quad, adds a significant element of uncertainty.
While both sides have expressed interest in improving economic ties, a return to pre-2020 levels of engagement is unlikely. India is expected to pursue a more selective approach, identifying sectors where Chinese investment is welcome while maintaining restrictions in sensitive areas. China may exhibit more caution and emphasize the need for India to foster a better investment climate.
India's External Affairs Minister S. Jaishankar told the lower house of parliament last week that "some improvement" had been made in resolving the ongoing border dispute with China. But he also cautioned that a lot more work has to be done and that it will take years to "reset" relations with Beijing.
The two sides have pulled back their military forces from seven points along their contested boundary in the Himalayas, so they're no longer in close proximity to one another, but those troops are nonetheless still stationed there and haven't yet been redeployed.
Daniel Balazs, a research fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore, is a specialist in Sino-Indian relations and joins Eric to discuss what's motivating the two countries to negotiate a border settlement.
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