Recently, China has come up with interesting statements on bilateral relations with India. Spokesperson of the Chinese ministry of foreign affairs Lin Jian made a remark at a media briefing on June 8, 2026, that the two sides need to handle the bilateral relations from a strategic height and long-term perspective, expand cooperation, and promote the steady development of China-India relations. He added that China, Russia and India are all emerging economies. Maintaining sound relations is not only in the respective interests of the three countries but also conducive to regional and global peace, security, stability and prosperity. He further added that China is ready to keep in communication with Russia and India on advancing cooperation among the three countries.
During his recent meeting with National Security Advisor Ajit Doval, Chinese Foreign Minister Wang Yi reiterated that Chinese stand that the leaders of the two countries agreed that both China and India are partners instead of rivals, thus forming the most important strategic consensus between the two sides, providing an important impetus and strategic guarantee for the healthy and stable development of China-India relations. Wang Yi was in New Delhi to attend the BRICS NSA conference.
In the changed geopolitical scenario, the Chinese statement on trilateral relations is significant. During the last few years, China has been busy dealing with the US tariff regime under the Trump Presidency on both occasions and the impact it caused on the domestic economy. The recent policy changes announced during the Party Plenum in 2025 and in the Government Work Report of 2026 have addressed the plaguing economic and financial strains affecting the ordinary Chinese people. Thrust has been given to address the growing sense of despair of catching up with the younger generation, the most vulnerable segment of 1.4 billion population. Interestingly, this year’s Government Work Report specifically addressed the question of Involution. Involution—or “neijuan” in Chinese—began as campus slang describing the futility of working harder without getting further ahead. Over time, it evolved into shorthand for destructive competition.
The Central Economic Work Conference held in December 2025 suggested a unified national market legislation, and the rectification of “involution-style competition” should be paired as a single reform priority.
This year’s Work Report emphasised strengthening anti-monopoly and anti-unfair competition enforcement, tightening fair competition review mechanisms and deploying four instruments simultaneously— production capacity controls, standards guidance, price enforcement and quality supervision—to foster a healthy market ecology.
Further, the Government Work Report also emphasised the term Service Consumption. The creation of a formal action programme confirms that service consumption has moved beyond rhetoric and crossed over into official policy territory. According to published data, the services sector employs 60 per cent of China's workforce. Job insecurity is one of the main factors faced by Chinese employees in this sector. This forces employees to impose self-restriction on household spending, although they do have the desire to spend. Chinese society, organically, but also with encouragement from the government, is shifting away from merely consuming for the sake of necessity to consuming for the sake of experience. Beijing’s goal is not just to generate more spending but also to cultivate a middle-class ethos.
Another reason behind China’s renewed emphasis on boosting domestic consumption is the industrial overcapacity. In the past, Chinese manufacturers could rely on exporting goods, particularly to the United States and Europe. However, the tariff standoff with Washington and the sluggish economic climate in Europe have limited those opportunities. Consequently, Chinese policymakers have redirected their focus toward stimulating domestic consumption, aiming to sustain industrial output and keep factories running at full capacity.
According to the Government Work Report of this year, China’s AI-Plus initiative includes a target of achieving over 90 per cent penetration of AI agent applications by 2030, the final year of the 15th Five-Year Plan. It also emphasised the need for employment protection measures in response to China’s rapid AI development.
Interestingly, China’s projected growth for 2026 stands at 4.4 per cent, although the first quarter recorded a 5 per cent year-on-year expansion. The projection for 2026 is noticeably slower than the performance of the previous three years.
The economic policy initiative of the Chinese government signals the mounting pressure from both within and outside the country, including the US tariff regime and the people’s dissatisfaction with the extreme pressures exerted by production houses on their labour forces to get maximum output to face cutthroat competition in domestic as well as in the field of foreign trade. Now the government of China recognised the adverse effect on the economy and, most importantly, people’s conduct even within the rigid political system. China, at this stage, is not prepared to unleash any strict code of conduct for the general public, as it would further deteriorate the system, which is already under extreme strain. This could be a reason for China to address the domestic situation more prudently to keep the people happy and keep them under control. It is interesting that when the world is predicting massive job loss due to large-scale implementation of AI, the Chinese government has stressed a 90 per cent infiltration of AI, especially in production units with employment protection measures. These measures primarily serve as a protective cover, designed to reassure the workforce amid the large-scale integration of AI in production units.
In the course of India’s economic engagements with China, it is frequently observed that India remains heavily reliant on Chinese raw materials and finished goods to sustain its rapid economic growth. At present, the trade surplus tilts sharply in China’s favour, with the gap widening year after year. This imbalance is largely driven by India’s substantial imports of pharmaceutical raw materials and heavy machinery from China.
In his latest book, ‘Taming the Dragon’, Maoj Kewalramani and the co-author argue that India’s dependence on Chinese imports is significant enough to warrant scrutiny for potential vulnerabilities. He highlights the imbalance and persistent asymmetry in the trade relationship, noting that such dependence exposes India to strategic risks. A central question he raises is whether reliance on specific imports from China constitutes a genuine strategic vulnerability—a concept defined as vulnerability shaped by strategic motivations.
They argue that China cannot impose meaningful strategic costs on many of the items imported by India, since their absence would not substantially affect the general population. Case studies of two major import categories—organic chemicals and machinery/mechanical equipment—show that only a small number of products that fall under these categories are difficult to source elsewhere. They also argue that most Chinese exports to India are relatively easy to substitute, hence Beijing’s leverage over New Delhi remains limited.
Militarily, China is facing a daunting task to keep the morale of PLA soldiers at the highest level. Reports emanating from China suggest that out of the seven Central Military Commission members, the highest decision-making body of PLA, five have either been detained, punished or are undergoing trials for serious violations of discipline and law, a term generally used for corruption-related cases in Chinese terminology. The latest inputs suggest that Xi Jinping, the Chairman of the Central Military Commission (CMC) and Zhang Shengmin, who is Secretary of the CMC Commission for Discipline and Inspection responsible for enquiry on corruption charges, are the only two members left in the Central Military Commission. Further inputs suggest that Xi Jinping is not planning to fill the vacancies in the CMC before October 2026, when the Chinese Communist Party is scheduled to convene its next Plenum.
Purging in the Communist Party of China or in the PLA is not a new phenomenon. Since the Mao era, the CPC and PLA had witnessed purges of senior party and military personnel. Even Deng Xiaoping and Xin Zhongxun, the father of Xi Jinping, too faced it. However, the large-scale purges of senior PLA personnel witnessed during Xi’s regime may be unprecedented in the history of the PLA or CPC. It is estimated that more than 100 senior-most PLA officers who had a fallout with the Xi regime were removed, detained and punished. The large-scale purge of senior uniformed personnel would definitely create a vacuum in the line of seniority and, most importantly, an atmosphere of fear and reluctance to make decisions in the top echelons of any military. Ironically, Xi Jinping plans to make the PLA the most advanced and combat-ready force by 2049 a prelude to becoming the superpower of the world.
At this critical juncture, India must undertake a serious assessment of China’s economic and military capabilities in shaping the trajectory of future bilateral relations. The strategic choice before New Delhi is whether to align with the position articulated by George Fernandes in May 1998, which termed China as India’s “potential threat number one,” or to engage with the most recent official Chinese statement urging both countries to adopt the right strategic perception, seeing each other as cooperative partners rather than rivals and handling ties from a long-term, strategic perspective.
As noted earlier, the geopolitical landscape has undergone a profound transformation. China has noticeably softened its stance on bilateral relations with India, influenced by the ongoing trade war with the United States, the Gulf conflict, and its own domestic economic challenges. Internal military pressures also weigh heavily on Beijing’s foreign policy choices. The thinning ranks at senior levels of the PLA, coupled with Xi Jinping’s reluctance to elevate qualified officers to the Central Military Commission, leave China at a disadvantage in terms of comprehensive military leadership. Despite these challenges, China continues to maintain a formidable and technologically advanced military apparatus.
Considering all the factors China is facing now, India should not consider China as enemy number one or a rival. And most importantly, China should not be approached solely as a cooperative partner, considering the adversarial past in the relationship.
India has been regarded as the most developed country in the world, militarily gained strength; border management has improved tremendously. However, India remained behind China as an economic power. India’s GDP in 2026 is about $4.15 trillion, while China’s GDP is far larger at around $20.85 trillion. Military figures also give China an advantage, at least on paper.
The 21st century has witnessed the resurgence of India, both economically and militarily. Advancement of technology in all fields also plays a crucial role. Today, India is recognised as one of the fastest-developing nations in the world, steadily climbing global rankings in economic strength. Militarily, it has emerged as a power to be reckoned with, expanding its capabilities and even venturing into the export of military hardware in recent years. Despite facing two major standoffs with China over the past decade, India has continued to enhance its defence posture, demonstrating resilience and a commitment to strengthening its military might.
India’s resurgence in the 21st century must be reflected in its bilateral relations with neighbouring countries. In dealing with China, India should not hesitate to assert its presence in the region. Rather than framing China strictly as an enemy, rival, or cooperative partner, India would benefit from adopting a distinct posture toward China primarily as a competitor. This perspective allows India to engage with confidence, balancing cooperation where necessary while safeguarding its strategic interests.
India’s drive to create a competitive manufacturing ecosystem is now yielding impressive results across multiple sectors. A striking example is its rapid emergence as a major exporter of Apple iPhones. Just a few years ago, the idea that India could manufacture and export premium smartphones seemed improbable, especially given China’s long-standing dominance as the global hub for smartphone production. Today, India’s success in this area underscores its growing capability to challenge established players and carve out a significant role in high-end manufacturing.
By recognising China as a competitor, India will be driven to enhance production methods for greater efficiency, forge new trade routes to showcase ‘Make in India’ products, and assert itself with confidence in the global marketplace. This competitive mindset extends to the military domain as well, where India’s shift from a predominantly defensive posture to a capable, battle-ready force has bolstered its confidence and prepared it to confront external challenges decisively.
(The author is Senior Fellow with Centre for Public Policy Research, Kochi.)
(The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.)
