India-China relations: How to choreograph an elephant-dragon dance

While the leaders of both exchanged warm words, differences remain—especially over our mutual border. According to China’s Xi Jinping, we should not wait for the settlement of territorial disputes to jointly address major development challenges, including those arising from trade uncertainty. 

Prime Minister Narendra Modi did not dispute this, but made it clear that an unsettled border cannot but cast its shadow over common efforts. Another area of divergence is terror. While Modi stressed the need for the SCO to clearly disavow and combat terror, China’s backing of Pakistan could be taken as a lack of commitment on Beijing’s part. 

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Still, there is much that India, China and the world stand to gain from the two Asian giants working together, not just bilaterally but alongside other Brics members. Once we have a  reasonable assurance of stability at the border, both New Delhi and Beijing could ease norms for bilateral trade and investment. 

While prospects of gains may tempt visions of an economic tango, we must not have our toes stepped upon or key interests scorched. We cannot expose our vital infrastructure to the risk of sabotage that may arise if we use Chinese equipment and software in our power grid, financial network, health system, database management and dashboards that control everything from traffic lights and railway signals to air traffic and water sluice gates. 

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Moves in world affairs would call for both sides to be especially nimble. An agenda could conceivably emerge from a shared view of challenges arising from the US giving up its post-World War II role as the under-pinner of global security, trade and financial arrangements. As a champion of the Global South, Brics could work to preserve the multilateral trade system, complete with a device to resolve disputes, now  that the US has chosen to secede from it. 

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The policies of US President Donald Trump have shaken the dollar’s credibility as a global currency. While its hegemony may endure, Brics could promote a stablecoin pegged to the value of the IMF’s unit of account, the SDR, backed by holdings of dollar, euro, yen and other assets to satisfy US norms under its new law for digital currencies. This could be used for intra-Brics settlements to begin with. 

Together with a Brics reinsurance arm and clearing house, this framework could offer the world a useful option. Even if the West stays suspicious of anything with China behind it, proposals backed by India might appeal not just to the Global South, but also to US allies reeling under the shock of a White House that doesn’t seem to have the word ‘cooperation’ in its dictionary.