Pulse on China

BYD, a Border Clash, and the Sour Turn in India-China Economic Relations

by Pavan Raghavendra RMV

“Pulse on China” is a series of articles comparing Mainland China’s media coverage of key events with those outside of China. Analysis is conducted by graduate students with native Chinese language skills and focus on Chinese affairs.

In the summer of 2020, Indian and Chinese armed forces clashed in the Galwan Valley in Eastern Ladakh, resulting in casualties along the disputed border for the first time in decades. The Galwan valley incident would have significant repercussions not only for peace and tranquility along the border, but also for the trajectory of India-China economic relations.

The precise boundary between the two nations has been a matter of dispute since the beginnings of modern states of India and China. They fought a war in 1962 that sent the bilateral relations to a deep freeze for decades to come. But relationship improved in the 1990s, and the two nations signed a landmark agreement in 1993 which, in the words of former Foreign Secretary Shivshankar Menon, “effectively delinked settlement of the boundary from the rest of the relationship.” [1]

The 2020 Galwan incident would upturn this status quo, jeopardizing bilateral relations over the years to come.

In the immediate aftermath of the Galwan 2020 clash, the Indian government banned several Chinese apps, including TikTok, citing privacy and security concerns. [2] More recently, the Indian government banned several Chinese lending apps on the grounds of data privacy concerns and users’ complaints about exorbitant interest rates. Mint Media — a business and financial publication of the Hindustan Times — touted the move as a “Digital Strike” against China in an article on February, 2023. [3] Several articles reporting the app-ban mention the 2020 Galwan clash and increasing tensions along the border as the context, framing it as an economic response to a military conflict. [4] [5] 

These securitized framings of economic relations are part of an emerging consensus in Indian foreign policy circles. After the Galwan clash, Indian media houses with a variety of political slants simultaneously changed their tone when covering economic engagement with China, securitizing the issue. 

Nowhere was the change of attitude to Chinese companies by the Indian press more visible than in the case of BYD, a prominent Chinese EV company. Prior to the 2020 Galwan clash, the Indian press was largely supportive of BYD’s economic activities in India. Some articles focused on the importance of BYD in the Indian economy. [6] Indian newspapers touted BYD’s zero-emission promise with its plan to manufacture electric buses in 2016. [7] Financial Express praised the company as a reliable investor with plenty of experience in the EV sector in 2018. [8]

Along similar lines, an article from the Economic Times published in June 2018 argued BYD’s investments could strengthen the Modi administration’s “Make in India” initiative and allow for decreasing dependence on China for importing key components used in EV manufacturing. [9] [10] By and large, BYD’s presence in India was viewed as benign and mutually beneficial, with no mention of national security concerns. By December 2019, the company had secured a sizable market share, and even planned to make India the hub for its business operations in South Asia. [11] 

However, BYD’s fortunes soured after 2020, and the Indian press coverage reflected the change. BYD’s plan to invest $1 billion in EV manufacturing and batteries alongside a Hyderabad-based company was reviewed and rejected in July, 2023. [12] [13] [14] Mint Media portrayed the company as the latest casualty in “India’s undeclared economic cold war with China.” [15]

An article published by Mint in March, 2023, linked the 2020 clashes with the increased scrutiny being exercised by the government against Chinese FDI. [16] Media coverage of the 2023 BYD investment saga indicates that pessimism towards bilateral economic relations resonates strongly with the Indian public. Securitization of bilateral economic relations thus brought BYD’s plans to a screeching halt. In a Times of India article from July 25, 2023 on the Modi administration’s decision to deny BYD permission to set up a manufacturing plant, the comments section largely supports turning away from Chinese FDI. “China cannot earn from India and fight in the borders and waste our money… be a friend and we will be the same,” [17] states one of the top comments on the article.

Aside from national security, concerns surrounding ownership are also being raised. An Economic Times article titled “India not keen on the $1bn investment plan of China’s BYD” [18] argues that joint ventures allow Chinese companies too much control and influence, while the Indian partner lacks agency. Criticism of this nature against Chinese ownership was uncommon before the Galwan clash.

Still, rare glimpses of positivity towards China do exist. One commentary in the Economic Times from July 26, 2023 [19] carries a more positive outlook on the BYD story. This article argues for continued engagement with Chinese firms while cautioning against reckless economic regulations. The author argues that branding an EV-manufacturer as a threat to national security is an exaggerated claim. Going on to argue that “BYD needs the Indian market as much as India needs BYD as a producer,” the article favors de-risking, not decoupling, in India’s relations with China. The author, however, refrained from criticizing the Indian government’s recent investment restrictions against Chinese firms.

Economic Securitization: No End in Sight

Bilateral trade appeared to be unaffected by growing securitization in the immediate years after the Galwan incident. India’s imports from China climbed to a record high despite popular domestic support for boycotting Chinese products, even though it showed signs of decline in 2023. [20] An Economic Times article from June, 2023, highlights India’s continued dependence on China in key sectors, noting that the two economies are still very much entwined. [21] This and other articles serve to remind readers of the economic realities that stand in the way of decoupling. However, the language of securitization still finds popular support. Business-friendly media articles which go against the popular hawkish narrative also advocate a policy of “de-risking” in India’s economic relations with China. 

With India-China ties reaching their lowest point after the border clashes in 2020, media perceptions and consumer reactions indicate that business cannot go back to normal unless a mutually satisfactory consensus on the border dispute is achieved. Even once-popular Chinese investments like BYD’s are facing high scrutiny. To attempt to resolve these disputes, both sides have been engaging in military-level talks. The most recent, 19th round of India-China Corps-Commander talks, in the lead up to Xi Jinping's India visit for the G-20 summit in September 2023, concluded with both sides agreeing to maintain peace and tranquility in the border areas. [22] The joint statement issued after the talks states that both sides have agreed to “resolve the remaining issues in an expeditious manner and maintain the momentum of dialogue and negotiations through military and diplomatic channels”. [23] However, without tangible progress towards disengagement of troops from the border regions, media houses remain pessimistic about future prospects for bilateral relations. [24] [25] [26] 

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End Notes

^{[1] Menon, S. (2016). Pacifying the Border. In Choices: Inside the Making of India's Foreign Policy (pp. 7-33). Brookings Institution Press.}

^{[2] 54 Chinese apps banned in India including Garena Free Fire, AppLock! Check full list of banned apps here. (2023, February 14). HT Tech. Retrieved August 2, 2023, from https://tech.hindustantimes.com/tech/news/54-chinese-apps-banned-in-india-including-garena-free-fire-applock-check-full-list-of-banned-apps-here-71644823709192.html}

^{[3] Digital strike 2.0 on China: Centre blocks over 200 apps with Chinese links. (2023, February 5). Mint. Retrieved August 2, 2023, from https://www.livemint.com/news/world/digital-strike-2-0-on-china-centre-blocks-over-200-apps-with-chinese-links-11675579575774.html}

^{[4] India bans 47 Chinese apps that were clones of the 59 apps banned in June. (2020, July 28). WION. Retrieved August 2, 2023, from https://www.wionews.com/india-news/india-bans-47-chinese-apps-that-were-clones-of-the-59-apps-banned-in-june-316190}

^{[5] Sharma, N. (2022, February 14). India Bans 54 More Chinese Apps That Threaten Security. NDTV. Retrieved August 2, 2023, from https://www.ndtv.com/india-news/54-chinese-apps-that-pose-threat-to-indias-security-to-be-banned-government-sources-2766922}

^{[6] Kumar, R. (2019, December 17). With Make in India, BYD looks to make country EV hub for the region. The Hindu BusinessLine. Retrieved August 15, 2023, from https://www.thehindubusinessline.com/companies/with-make-in-india-byd-looks-to-make-country-ev-hub-for-the-region/article30322844.ece}

^{[7] Thapliyal, A. (2016, March 4). Chinese BYD to bring first zero-emission, pure-electric bus in India. Business Today. Retrieved August 15, 2023, from https://www.businesstoday.in/auto/story/chinese-byd-first-zero-emission-pure-electric-bus-in-india-58629-2016-03-04}

^{[8] Dutta, D. (2018, March 29). A Chinese company backed by Warren Buffet and Samsung could soon be the future of Make in India for Electric Buses. The Financial Express. Retrieved August 14, 2023, from https://www.financialexpress.com/auto/car-news/a-chinese-company-backed-by-warren-buffet-and-samsung-could-soon-be-the-future-of-make-in-india-for-electric-buses/1115267/}

^{[9] Made in India Li-Ion batteries to cut dependence on China: Anant Geete. (2018, June 6). ET EnergyWorld. Retrieved August 14, 2023, from https://energy.economictimes.indiatimes.com/news/renewable/made-in-india-li-ion-batteries-to-cut-dependence-on-china-anant-geete/64472516}

^{[10] Chinese EV manufacturer BYD to 'Make in India' for domestic market, exports. (2018, February 13). Business Standard. Retrieved August 15, 2023, from https://www.business-standard.com/article/companies/chinese-ev-manufacturer-byd-to-make-in-india-for-domestic-market-exports-118021300161_1.html}

^{[11] Srinivasan, R. (2019, December 16). BYD plans to make India a hub for S. Asia business. The Hindu. Retrieved August 15, 2023, from https://www.thehindu.com/business/Industry/byd-plans-to-make-india-a-hub-for-s-asia-business/article30323285.ece}

^{[12] Singh, S. C., & Shah, A. (2023, July 14). Exclusive: BYD proposes $1 billion India plan to build EVs, batteries. Reuters. Retrieved August 15, 2023, from https://www.reuters.com/business/autos-transportation/byd-seeks-nod-1-bln-plan-build-evs-batteries-india-sources-2023-07-14/} 

^{[13] Govt rejects Chinese BYD-Megha Engineering's $1 billion proposal to set up EV plant. (2023, July 24). The Indian Express. Retrieved August 8, 2023, from https://indianexpress.com/article/business/companies/govt-rejects-china-byd-megha-engineering-proposal-ev-plant-8857422/}

^{[14] India rejects Chinese automaker BYD's $1 billion plan over 'security concerns': Report. (2023, July 22). Hindustan Times. Retrieved August 15, 2023, from https://www.hindustantimes.com/car-bike/india-modi-rejects-chinese-automaker-byd-electric-vehicle-1-billion-factory-investment-security-concerns-101690026947442.html}

^{[15] India should be pragmatic about huge Chinese investments. (2023, August 2). Mint. Retrieved August 15, 2023, from https://www.livemint.com/opinion/online-views/india-should-be-pragmatic-about-huge-chinese-investments-11690968929340.html}

^{[16] 54 Chinese investment proposals pending, says Sitharaman. (2023, March 27). Mint. Retrieved August 15, 2023, from https://www.livemint.com/politics/news/54-chinese-investment-proposals-pending-says-sitharaman-11679928722974.html}

^{[17] Kukreja, S. (2023, July 22). Modi govt rejects Chinese EV maker BYD's $1b mfg plant proposal in India! - Times of India. The Times of India. Retrieved August 2, 2023, from https://timesofindia.indiatimes.com/auto/news/modi-govt-rejects-chinese-ev-maker-byds-1b-mfg-plant-proposal-in-india/articleshow/102036056.cms?from=mdr}

^{[18] India is not keen on $1 billion electric vehicle plan of China's BYD: Report. (2023, July 15). The Economic Times. Retrieved August 3, 2023, from https://economictimes.indiatimes.com/industry/renewables/india-is-not-keen-on-allowing-chinese-ev-maker-byd-to-set-up-shop-amid-border-tensions-report/articleshow/101773537.cms?from=mdr}

^{[19] ANKLESARIA, S. S. (2023, July 26). Why India should facilitate entry of $1 billion-investing Chinese company BYD. The Economic Times. Retrieved August 3, 2023, from https://economictimes.indiatimes.com/opinion/et-commentary/why-india-should-facilitate-entry-of-1-billion-investing-chinese-company-byd/articleshow/102147886.cms?from=mdr}

^{[20] Maheshwari, A. (2022, December 20). Can India boycott Chinese goods? The Times of India. Retrieved August 17, 2023, from https://timesofindia.indiatimes.com/blogs/adi-bytes/can-india-boycott-chinese-goods/} 

^{[21] The Make in India dream keeps colliding with the Chinese reality. (2023, June 1). The Economic Times. Retrieved August 17, 2023, from https://economictimes.indiatimes.com/news/economy/policy/the-make-in-india-dream-keeps-colliding-with-the-chinese-reality/articleshow/100675067.cms?from=mdr}

^{[22] Singh, R. (2023, August 14). India, China hold military talks after nearly 4 months. Hindustan Times. Retrieved August 21, 2023, from https://www.hindustantimes.com/india-news/india-china-hold-military-talks-after-nearly-4-months-101692047275589.html}

 ^{[23] Joint Press Release of the 19th Round of India-China Corps Commander Level Meeting. (2023, August 15). Ministry of External Affairs. Retrieved August 21, 2023, from https://mea.gov.in/press-releases.htm?dtl/37010/Joint_Press_Release_of_the_19th_Round_of_IndiaChina_Corps_Commander_Level_Meeting}

^{[24] Pandit, R. (2023, August 15). India China LAC News: No concrete breakthrough in India-China military talks on resolving Ladakh confrontation | India News - Times of India. The Times of India. Retrieved August 21, 2023, from https://timesofindia.indiatimes.com/india/no-concrete-breakthrough-in-india-china-military-talks-on-resolving-ladakh-confrontation/articleshow/102752667.cms?from=mdr}

^{[25] Philip, A. (2023, August 15). India, China talks fail to make headway on Depsang but both sides agree to freeze build-up. ThePrint. Retrieved August 21, 2023, from https://theprint.in/defence/india-china-talks-fail-to-make-headway-on-depsang-but-both-sides-agree-to-freeze-build-up/1715605/}

^{[26] India, China talks see no immediate breakthrough in disengagement of troops at some friction points in Ladakh. (2023, August 15). The Economic Times. Retrieved August 21, 2023, from https://economictimes.indiatimes.com/news/defence/india-china-agree-to-resolve-remaining-issues-in-expeditious-manner/articleshow/102750816.cms?from=mdr}