China's Belt and Road Initiative and India's options: Competitive cooperation

Abstract

India and China have a competitive yet cooperative relationship. India has not signed on to the Belt and Road Initiative as it has concerns over some aspects of it-especially the China-Pakistan Economic Corridor and the Maritime Silk Road-and has proposed its own "Spice Route" or SAGAR project, with India at the centre of Indian Ocean relations. Nevertheless, India has joined the new financial institutions of the New Development Bank, the Asian Infrastructure Investment Bank (AIIB) (as its second largest shareholder after China) and most recently the Shanghai Cooperation Organisation (SCO). These new banks are a potential source of long-term infrastructure finance for India, however small in magnitude. China and India have growing, yet somewhat unbalanced, economic linkages-with a large trade deficit in favour of China. This paper explores how China and India can contain their contentious issues as they find ways to cooperate for mutual benefit.