(TibetanReview.net, Sep14’25) – India’s “natural alliance” is not with China, given the deep historical mistrust between the two countries which cannot disappear in a space of just a few months, former Reserve Bank of India Governor Raghu Rajan has said, dismissing the sustainability of the current perceived surge in bonhomie between the two countries.
“I don’t think India’s natural alliance is with China. There’s too much of a history between the two countries for it to disappear in the space of a few months or because of frictions with the United States,” businesstoday.in Sep 14 quoted Rajan as saying in a podcast conversation with SparX’s Mukesh Bansal.
Rajan has cautioned that while friendship with Beijing cannot be ruled out, it would require years of confidence-building measures. “Friendship comes from a long history of confidence-building measures and a history of good behaviour vis-à-vis each other. I think it’s too soon to say that we are strong friends with China,” he has said.
Referring to the recent surge in India’s friendly interactions with China, Rajan has noted that the common factor drawing India, Russia, and China together at forums like the Shanghai Cooperation Organisation is “a kind of unease with what’s going on in the United States.”
He has underlined that India’s deeper bonds lie elsewhere. “There are many more commonalities between India and the United States — both being democracies. There’s a long history of cooperation between the two countries. Remember the grain that came from the United States to feed our people in the 1960s…And of course many Indians today occupy high positions in the United States both in the government and in the private sector,” he has said.
Rajan has stressed that the real solution to India’s current problems with the USA lies in resolving the tariff disputes, dismissing the idea that the country could leverage closer trade ties with China in the short run to offset US tariffs. “Any kind of trade relationship takes some time to establish. We are trying to sell goods which the US doesn’t want to take. And China also is trying to sell goods that the US doesn’t want to take. Establishing those relationships takes a while and it’s not going to happen overnight.”
Rajan is not entirely dismissive of any prospect for India building ties with Beijing, saying the two sides could gradually explore deeper engagement. “Over time if the two countries work together on easing some of the trade and investment impairments, both will develop alternatives. We are going to be the third largest economy in the world. They are the second, probably soon to be first. We could welcome much more Chinese investment which is state-of-the-art and hopefully they will help us learn some of the arts of manufacturing which they’ve done fantastically well. But it has to be a two-way street,” he has said.
According to Rajan, both China and the US have strong incentive to build closer economic ties with India. “India is a prize that both countries, the US and China, would like to have if they don’t have to expend too much to get it. We are a four trillion dollar economy now — that’s not to be sneezed at. India is growing, India is a neighbour, and India is a prize in the geostrategic play that is going on that any side would like to have on its side.”
Rajan feels that India should play its cards strategically. “The size of the Indian domestic market is something that all the countries which have weak demand now, given that the US is erecting barriers, are looking to target and so we can use that as a strategic sort of weapon — opening it up more to countries that offer us a better deal.”
Rajan wants India to focus on learning from successful partners. “We’ve done a very good job working with Japan. There are substantial amounts of Japanese investment in India. That is the kind of model we have to think of, where Japanese investment comes in, trains our workers, and makes quasi-Japanese Indian firms… Maruti Suzuki being an example. More joint ventures of that kind we need to aim for.”