[Answered] China’s actions against India are a calibrated strategy for its own internal interests. Examine the lessons India can learn to counter such challenges and safeguard its core strategic and economic interests.

Introduction

China’s assertive economic and geopolitical posturing against India reflects its need to preserve internal stability and global dominance. India must decode this strategy to fortify its own national and economic resilience.

Understanding China’s Calibrated Strategy

China’s actions against India — from the withdrawal of engineers in key projects to restrictions on critical raw material exports — are not isolated incidents but elements of a deliberate geo-economic strategy. These actions aim to:

1. Arrest India’s rise as a global manufacturing competitor, especially in high-value sectors like electronics and EVs.
2. Prevent technology and know-how transfer, crucial to India’s ‘Make in India’ and ‘Atmanirbhar Bharat’ goals.
3. Preserve export-driven growth vital for Beijing, especially as domestic consumption falters due to an ageing population and a persistent property crisis.
4. Stabilise internal socio-political order, by ensuring sustained revenues to finance security and social welfare amidst mounting economic pressures.

China’s Internal Drivers of External Aggression

1. Demographic crisis: China’s working-age population peaked in 2015; it is expected to shrink by 400 million by 2100 (UN data).
2. Property and debt crisis: Real estate accounts for 30% of China’s GDP; defaults by firms like Evergrande signal systemic fragility.
3. Overcapacity in manufacturing: With falling domestic demand, China increasingly dumps cheap goods abroad (e.g., BYD’s EV pricing), threatening competitors.
4. Dependence on exports: China’s trade surplus neared $900 billion in 2023, a lifeline for maintaining military spending and domestic security.

These pressures make any economic challenger like India a threat — prompting subtle acts of economic coercion and tech-denial strategies.

Lessons and Policy Pathways for India

1. Strengthen Indigenous Capabilities: Accelerate PLI schemes in electronics, semiconductors, solar PVs, and EVs. Develop local capacity for critical minerals refining—India has lithium reserves in J&K and Karnataka. Invest in chip-making: Micron’s ₹22,500 crore Gujarat plant is a good start, but broader semiconductor ecosystem development is essential.
2. Reduce Strategic Dependencies: Diversify import sources of rare earths and minerals through tie-ups with Australia, the U.S., and Africa. Localise production of capital machinery via MSME cluster support and Technology Upgradation Fund.
3. Institutional and Governance Reform: Streamline clearances via single-window systems, reform land and labour laws to attract large-scale investment. Build logistics and power infrastructure, critical for manufacturing competitiveness.
4. Create a Strategic Buffer Against Chinese Tactics: Build a national Technology Transfer Protection Framework, to safeguard against brain-drain or coercive technology withdrawal. Leverage India’s diplomatic capital: Promote friend-shoring with Japan, South Korea, EU nations to build supply chain resilience. Strengthen Quad and IPEF engagements to counterbalance Chinese dominance in Indo-Pacific trade and tech chains.
5. Strategic Communication and Global Positioning: Project India as a stable alternative to China: political stability, democratic governance, and youth-driven workforce. Guard against complacency — recent U.S. tariff hikes on Indian exports underscore the fragility of overreliance on any single partner.

Conclusion

China’s economic coercion underscores the need for India to build self-reliance, strategic autonomy, and resilient partnerships. A calibrated, long-term strategy must anchor India’s rise in a turbulent multipolar world.