Steel, cement, and diesel freight were seen as inseparable from growth, while clean energy was framed as an additive layer cwinz that might slow emissions growth but not reverse it. China’s coal generation rose almost in lockstep with electricity demand for decades. Diesel trucks moved raw materials, intermediate goods, and finished products across vast distances. Under that model, even rapid growth in wind and solar would coexist with rising fossil fuel use.
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However, the agreement is more a “tactical thaw” than a “strategic shift,” said the Brookings Institution’s Senior Fellow Tanvi Madan on the German Marshall Fund’s China Global podcast. The LAC became the de facto border through a 1993 bilateral agreement and stretches across overlapping territorial claims from both countries. Today, two major sections of the border have been the source of recent disputes. India claims the Aksai Chin region as part of its Ladakh union territory, but it is administered by China and incorporated into both the Tibet and Xinjiang autonomous regions.
What are other areas of rivalry between China and India?
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- Finally, India’s evolving engagement with China reflects a strategy of managed rivalry — balancing selective cooperation with strategic hedging.
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Under this model, the most important question is not who emits more today, but who is moving faster away from the structures that lock in future emissions. There is a considerable benefit to building the new when you have less of the old. In India, the total cost of solar projects already undercuts the marginal cost of running existing coal plants. Ember estimates that by 2031, over a third of India’s installed coal capacity could be operating at under 40% utilisation, undermining its economic case.
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Most other countries at this level of economic development have rates below 10%. Coal imports into China fell around 10% year on year even as domestic production barely inched up. LNG imports declined by low double digit percentages, roughly 10% to 15% depending on the data source, despite years of projections that gas would surge as a bridge fuel. Crude oil imports grew modestly, but that growth was increasingly disconnected from transport fuel demand and tied more closely to petrochemicals and exports.
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It added that global foreign direct investment reached an estimated USD 1.6 trillion in 2025, a 14 per cent increase. India’s economic strategy requires selective engagement rather than exclusion. Chinese FDI and manufacturing linkages can support India’s export growth, technology absorption, and supply chain resilience. A calibrated, security-screened investment framework aligns better with India’s long-term industrial objectives than blanket restrictions.
