India and China recently announced a military disengagement along their disputed boundary at a number of friction points and a resumption of routine patrolling. Although details surrounding the implementation of this agreement are still being ironed out, this breakthrough has enabled a bilateral meeting between Indian prime minister Narendra Modi and China's paramount leader Xi Jinping in Kazan, Russia, their first such meeting in almost five years. While some may suggest that this sets the stage for a full normalization of political, economic, and social ties between China and India to a situation akin to 2003-2020, the reality may not be so straightforward. In large part, this is because China is not the same as it was five years ago.
The events of the past few years have transformed China's domestic politics, economy, security posture, and strategic position in some fundamental ways. Consider domestic politics for example. Xi Jinping's position within his own party has consolidated but is heavily informed by scandals surrounding some of his key associates, purges, personnel changes in the Politburo Standing Committee, and realigned cliques within the Chinese Communist Party. Much more than in 2020, the nationalism of humiliation has given way to a new nationalism of pride, manifested in bouts of wolf warrior diplomacy. Domestic security has also increasingly reflected Xi's philosophy of Comprehensive National Security. Furthermore, reliable information on top level decision-making is increasingly difficult to source and ascertain, even relative to a decade ago.
What about China's economy, now the second-largest in the world? The last few years has seen a structural economic slowdown, although exports and manufacturing remains strong. Some believe China has already reached a peak, although there are many signs to the contrary. More significantly, household sentiment has cratered since the Covid-19 pandemic, leading to lower consumption and accelerating demographic decline. China's leaders face some tricky choices around possible economic stimuli, industrial policy, and reviving the private sector, not to mention growing trade restrictions in other large economies such as the United States and European Union. To date, Beijing's efforts at a post-pandemic industrial strategy has witnessed successes in electric vehicles, batteries, and solar power, but also inefficiencies in many other sectors. At the highest levels, there are questions about the quality of economic policymaking, how political objectives are being translated into policy by central bankers and provincial officials, and the degree to which growth is a priority. Although China remains a major trade partner to many other countries, its overcapacity in many sectors has raised serious concerns, even in countries with which Beijing has positive political relations.
There are even more open questions around the People's Liberation Army (PLA), which has undergone transformative reforms over the past decade. China has recently embarked upon a massive nuclear modernization program, although its objectives and intentions are still poorly understood. PLA reforms have also had implications for employment, inter-service rivalries, and overall military preparedness, and the scourges of corruption and political purges remain relevant. At the same time, China's leaders appear satisfied that their 'greyzone' tactics (using non-military means of aggression) have been successful in the South China Sea, even if they have faced reversals with Japan and India. How Beijing is thinking about military escalation — including in domains such as space and cyberspace — has also evolved.
All of these have implications for the rest of the world. China's actions against some countries and regions are now closely observed by others. The question of Beijing's ability to provide public goods was called into question during the Covid-19 pandemic, but it continues to be viewed positively (or at least as an alternative or opportunity) in many quarters of the world, including in the Global South. People-to-people relations between China and many other countries have picked up this year after a downturn that resulted from Beijing's 'zero Covid' policies, but in some respects have not yet reached pre-2020 levels. Cross-Strait tensions with Taiwan have intensified, as have frictions with the Philippines.
All of this means that a resumption of India-China ties to pre-2020 relations will, at the very least, be complicated. The world has changed in some deep and fundamental ways since the Galwan clashes in the summer of 2020, as have China's domestic politics, internal security, economy, military, and international environment. While the recent breakthrough on the India-China border appears to be a positive development, the path ahead remains far more uncertain than many observers are willing to consider.
Dhruva Jaishankar is Executive Director at ORF America.