India-China Rivalry Tests BRICS' Future

India and China are in what experts call 'a cooperation-versus-competition situation'.

In February last year, US President Donald Trump declared: 'BRICS is dead.' He then told reporters that he would impose 100 per cent tariffs on goods from the grouping of Brazil, Russia, India, China and South Africa (primary members) if it launched a common currency.

To date, it hasn't but most countries, whether part of BRICS or not, were caught in Trump's global tariff wars soon after.

Twenty years since BRIC (minus South Africa that joined in 2010) was formed on the margins of a UN meeting in New York, the grouping is not dead.

Named by Goldman Sachs economist Jim O'Neill, who argued that the four would emerge to challenge the G7 in the coming decades, the grouping is preparing for its next summit -- being hosted by India.

Even amid jostling for influence by India and China, the bloc remains relevant in the Trump era, experts said.

Chinese President Xi Jinping is expected to attend the summit in New Delhi over September 12-13. If Xi visits India, it would be his first since 2019, when Prime Minister Narendra Modi hosted him for one-on-one meetings in Tamil Nadu.

China's ministry of foreign affairs typically announces Xi's outgoing visits only a day or so in advance. Xi has not travelled outside China over the past months, except to neighbouring North Korea and Egypt recently.

Xi did not attend the G20 summit in India in 2023. Instead, Chinese Premier Li Qiang did. Xi also did not go to the Brazil BRICS summit last year. Li did.

Modi last visited China, his first in seven years, for the Shanghai Cooperation Organization summit in the port city of Tianjin almost a year ago.

Chinese Foreign Minister Wang Yi was not present for the BRICS foreign ministers' meeting in India in mid-May. Trump was visiting China at the time. China's Ambassador to India Xu Feihong attended the India meeting in Wang's place.

However, National Security Adviser Ajit Doval and Wang met on the sidelines of the BRICS national security advisors' (NSA) meeting in New Delhi in June, following it up with a one-to-one focused on the border in August, this time in Beijing.

A rare joint statement issued after the meeting said, 'The two sides underlined their commitment to advancing negotiations on a framework for the settlement of the boundary question' in accordance with a bilateral agreement signed in 2005 and 'the consensus reached in subsequent SR (special representative) talks in pursuit of a fair, reasonable and mutually acceptable solution'.

Today, a calmer border, China's liberalisation of tourist visas for Indians and an ongoing Chinese-language public outreach programme by the Indian embassy in Beijing all suggest that India-China relations are in a good place.

They are when viewed against the backdrop of the Galwan River valley clashes that killed at least 24 Indian and Chinese soldiers in 2020.

But that does not mean BRICS is frictionless. India and China are in what experts call "a cooperation-versus-competition situation".

The bilateral factor

India is wary of China's interest in bringing in its Belt and Road Initiative (BRI) allies to the grouping, according to Indian foreign policy analysts.

China has also been lobbying for Pakistan's entry and Russia Turkiye's. While historically wary of China-Pakistan relations, India is not keen on Turkiye's inclusion either after it lent military support to Pakistan during the four-day India-Pakistan conflict last year.

"For India, these are principals at bilateral levels," Srikanth Kondapalli, professor, China studies, Jawaharlal Nehru University, New Delhi, said.

On the core boundary question, for instance, Chinese leaders have spoken of an "early harvest", which translates to first settling the least difficult part of the dispute -- the middle sector - and leaving the eastern and the western sectors for later.

India has long rejected a piecemeal approach, because such a settlement has consequences for its national security.

During then prime minister Rajiv Gandhi's ice-breaking visit to Beijing in 1988 (the first since the 1962 War), China's then paramount leader Deng Xiaoping proposed a 'package deal' (mutual concessions in the east and the west), but India sought to first normalise ties and then set up mechanisms for border talks.

India's approach is "delimitation" -- defining the line and its demarcation over the next 10 to 15 years or so -- pending a final settlement, Kondapalli said.

Other creases in the relationship include China building a mega-dam in Tibet on the Yarlung Tsangpo river that flows into India as the Brahmaputra.

India fears China could exercise control over the water, which is not too far from the border.

Then, in the first quarter of last year, China said it issued some 85,000 visas to Indians. Comparatively, India issued fewer visas to Chinese.

"The relationship is not getting worse. It's stabilising and on an upward trend," Andy Mok, senior research fellow at the Centre for China and Globalisation, a Beijing-based think-tank, said.

China has taken "a pragmatic position" of discussing the border and other issues in parallel, Mok said, adding India has resisted that.

At BRICS and elsewhere, China and India are in competition for economic and geopolitical leadership of the global south.

According to the Council on Foreign Relations, a US-based think-tank, the internal differences were visible at a BRICS foreign ministers' meeting in New York in September 2024 when the group failed to agree on new additions to the UN Security Council.

India, Brazil and South Africa want permanent seats.

China, which is a UNSC member, has long raised objections to India's bid. The four other permanent members Russia, the US, the UK and France have backed India.

As an aspiring superpower, China shapes the agenda of BRICS (like the SCO). B R Deepak, professor, Chinese studies, JNU, said New Delhi should not vie for leadership of the global south at this stage of its development.

"Until then, 'hide your strength, bide your time'," he added, quoting a former Chinese leader's foreign policy tip to officials. Many developing countries rely on China for export and supply chain, he pointed out.

The coming BRICS summit might witness more of the competition for the Global South leadership. In addition to military power and economic heft, China is a big spender on projects, Kondapalli said.

China is an institutional player, Mok said, be it at the Asian Infrastructure Investment Bank or the SCO or BRICS. "There are overlaps, certainly, but the thinking is not the Western either/or."

China has brought its BRI partners into the grouping, at times to India's displeasure. That framing gets the causation wrong, Mok said, adding that developing countries want in.

"It is not a strategy to isolate India; India is reading initiative into something that is substantially pull, not push."

The US once held executive power across all major financial institutions and decided when to open the doors to others.

BRICS is not that, he said but conceded that "What happens between China and India shapes the grouping, overall."

China sees the US as a global challenge and India as a regional challenge.

Multilateral issues

But the bloc's differences go beyond India and China to issues such as relations with the US, Russia's invasion of Ukraine and, more recently, the Iran war.

At this year's summit, issuing a joint statement on the ongoing war might be a tough challenge.

China and Russia will side with Iran while US allies in West Asia such as the UAE and Saudi Arabia will oppose it. That could put the host in a tight spot.

On the other hand, India's success in hosting the 2023 G20 summit, where it managed to build consensus around the New Delhi Declaration -- despite geopolitical tensions over the Ukraine war -- will come in handy.

The fact that it brought the African Union -- a hefty group of more than 50 nations -- into the G20 is also seen globally as a sign of leadership.

An alternative

Despite bilateral challenges, BRICS remains an alternative for the developing world in the Trump era. The grouping's combined GDP is between $29 trillion and $30 trillion in nominal terms.

Countries that once saw the US as a reliable partner -- economically and in geopolitical-security terms -- are disillusioned.

BRICS also seeks to coordinate the economic policies of its member countries, and has built financial institutions such as the Shanghai-based New Development Bank (NDB), formerly the BRICS bank.

Its first president was an Indian banker. But what is BRICS' actual agenda? It depends on who you ask. There should be frameworks for general direction and stability, but the grouping should also be dynamic, Mok said.

The bloc needs to identify specific things to do. Today, it is largely a framework that can be implemented in very different ways.

Although some analysts warn that the bloc could undermine the western-led international order, others say ambitions (by some) to create its own currency and develop a workable alternative to existing institutions face potentially insurmountable challenges.

The NDB has approved loans worth some $39 billion since the bank started operating in 2015, according to the bank's 2024 annual report. But it can do more on climate-financing, for instance, Deepak said.

India was keen to work with China on the Kyoto Protocol, an international agreement (1997) to set global emission-control targets.

For a while, India and China, among the world's top emitters of greenhouse gases, coordinated their positions, telling developed countries that they owed far greater responsibility for industrialisation.

Then, China cut its own deal with the US.

Now, China and Russia are keen to reduce dependence on the US dollar. But India and Brazil face "potential currency manipulation" if they go along with a BRICS currency, which will likely be the renminbi, because it's the strongest in the developing world, according to both Indian experts cited above.

"BRICS is not about India versus China as it is about China versus the rest," Deepak said.

China is taking advantage of its massive dollar reserves and Trump's apparent interest in the great-power equation. China is also pushing its cross-border interbank payment system as a BRICS-aligned alternative to Western systems.

"India doesn't find that appealing," Kondapalli said.

The currency issue is sensitive for India, which has said no to the de-dollarisation move by China and Russia, also because India does not want BRICS to become an anti-Western bloc.

As the host at the BRICS summit, it can be an important moderating influence, again taking a leaf from its experience in hosting the G20 summit.

Since then prime minister Manmohan Singh's government in New Delhi, India's main BRICS engagements have been with the NDB.

The NDB and the BRICS' Contingent Reserve Arrangement (CRA) are meant to compete with the World Bank and the International Monetary Fund, respectively.

But neither has made a big splash, according to a 2024 paper by Stewart Patrick, senior fellow, Carnegie Endowment for International Peace.

The NDB, which also includes several non-BRICS countries as shareholders, remains undercapitalised, having disbursed over the past decade only a third of the funds the World Bank committed globally in 2021 alone, he wrote.

The CRA is a self-insurance arrangement to address potential short-term balance of payments pressures.

Shareholders contribute capital to the CRA and in exchange can secure modest resources when facing liquidity crises.

"And, contrary to the BRICS group's egalitarian rhetoric, the NDB has a weighted voting formula not unlike the Bretton Woods institutions."

BRICS members hope that alternative lending institutions can invigorate South-South cooperation and reduce dependence on traditional funding sources, according to the Council on Foreign Relations.

The bloc's annual foreign direct investment inflows more than quadrupled from 2001 to 2021, though they have slowed in recent years.

From India's perspective, BRICS has moved from its founding ideas of emerging economies to become a forum where Chinese and Russian interests dominate, the Indian experts said.

The world will watch with interest for signs of India's moderating and consensus-building influence on the summit at this crucial juncture in world affairs.

Photographs curated by Manisha Kotian/Rediff
Feature Presentation: Aslam Hunani/Rediff