As India and China clash, technology is front and center. Indian intelligence agencies are encouraging citizens to block 52 apps with links to China. Oppo, one of the largest Chinese smartphone makers serving India, canceled an online phone launch. And TikTok, whose largest foreign market is India, is seeing people uninstall the application en masse.
This is just the beginning of what’s to come. While all eyes are on the Himalayas, the real battle is taking place elsewhere. The outcome of this conflict will be determined by technology, not tanks or troops. Are New Delhi and Beijing paying attention? And do technology firms have a strategy?
Deeply connected technology ecosystem
For several years, India and China have been quietly embedding each other in their technology industries.
For some of China’s largest technology firms, India is their biggest market. Xiaomi, Haier and Lenovo all depend on India for revenue and growth. For Xiaomi, India is also a hub of its research and development operations.
But India isn’t just a business opportunity for China. It’s also becoming key to China taking on US technology.
In Indian cities, Huawei is working with developers to build an alternative to Google services. And these services may be part of Huawei’s bigger project: HarmonyOS, a rival to Android. It is Indian talent that is giving rise to the new pillars of Chinese power.
At the same time, India’s technology ecosystem is deeply dependent on China.
Paytm, one of India’s most successful startups, is backed by Ant Financial, an affiliate of Alibaba. Ola Cabs, India’s home-grown rival to Uber, raised funds from Didi. Delhivery, an Indian logistics startup, received money from Fosun International. Swiggy, a food-delivery startup, and Dream 11, a gaming startup, both raised money from Tencent. In fact, Tencent has become the biggest Chinese strategic investor in the Indian market.
Tech shockwaves yet to come
This deep tech dependency is raising eyebrows. It’s why almost all the responses to China that India is mulling have to do with technology. It is looking at banning Huawei from India’s 5G bidding process, stopping Chinese investments in Indian companies, and even pushing “Make in India” initiatives into hyperdrive.
All of this could lead to a new geopolitical status between India and China.
First, both governments may take decisive action to disconnect from each other, focusing entirely on technology. This could mean that China instructs its banks, technology firms and state-owned businesses to divest their Indian holdings. Or, it could mean India bans any future Chinese investments in its technology industry, or even encourages Indian firms to take over the Chinese investments.
Either way, some of China’s most iconic companies could be crippled. And India’s already fragile economy may take a nosedive.
Second, as India and China disconnect, it may lead to more tensions. That’s because, to disconnect fully, India may gravitate toward the US, Japan, Israel, the UK and Australia. The West may start supplying India with technology. This geopolitical realignment may cause China to take more aggressive actions. China may feel that India is no longer neutral.
Third, the tech war may not just be between India and China. It may extend globally. As India and China pursue self-sufficiency in technology, it may give rise to home-grown industries. What happens if India creates its own local semiconductor or software industry? Then India will hold a powerful card, one that could reorient geopolitics even more.
In the 1960s and 1970s, the last times India and China clashed, the calculations were different. It was all about land and ideology. Today, land may be the trigger but technology is the real fight. Why? Because it is in the realms of technology that the next era of geopolitical power is being established. Both India and China know this.
This makes the latest flareup more important than ever before.
India or China could take steps that create new barriers for technology firms. Will China stop its companies from using talent in India? At the same time, either country may take aggressive action on the world stage.
Recently, India became a founding member of the Global Partnership for Artificial Intelligence (GPAI), a new initiative led by the Group of Seven to set the norms for AI. What kind of policies might India propose with China in mind?
Last, international forums like the United Nations or Shanghai Cooperation Organization may fracture or make little progress as India and China air their dirty laundry.
Regardless of what happens next, one can be certain that the relationship between India and China has changed for good. No longer is either side hoping that one day things will get better. No longer is either side trying to adjust or find common ground. Now, the positions are clear. Now, the cards are out in the open.
The Himalayas may connect India and China by land, but technology connects their economies. Perhaps, then, instead of asking what New Delhi or Beijing is thinking, one should be asking what Bangalore and Shenzhen are thinking. After all, it may be in those cities, in those boardrooms, that the true impact of this conflict will be felt.