India’s tactics against China: A game theory perspective
Ever since a clash took place between Indian and Chinese troops in the Galwan Valley earlier this year, leaving casualties on both sides, a wave of anti-China sentiment has swept across India. We have seen this mainly in the form of protests to boycott Chinese goods, as well as calls for India to modify its trade policy to reduce dependence on China.
While it looks like India and China are locked in competition, for now, using a game theory analysis of India’s tactics we can see that India’s tactics are much more effective than we think.
Strategic importance of the Galwan Valley
Given its proximity to the Line of Actual Control (LAC), a loosely defined geographical border that separates the Indian and Chinese controlled territories, the Galwan Valley holds great strategic importance. That’s because the Galwan River is the highest ridgeline in the area and allows the controlling army to dominate over the Shyok route passes. Further, the Galwan Valley is close to the world’s highest landing ground, the Daulat Beg Oldi (DBO) and hence, it serves as an important aerial supply line. Any infrastructure built on the DBO will give massive advantages to the builder. For example, when India built a roadway that runs parallel to the LAC it cut traveling time from Leh to DBO from 2.5days to a mere 5-6 hours.
The prisoner’s dilemma and its application
Within the game theory, the ‘prisoner’s dilemma’ is a game that deals with decision-making between two parties that are in competition but not in communication with each other and hence cannot coordinate their decisions. Thus, the prisoner’s dilemma is particularly useful tool for analyzing India-China relations regarding the border dispute and helping us in assessing the different decisions both countries can make as well as their respective outcomes.
Both India and China have two options: either be aggressive or negotiate an agreement.
This results in the following four situations:
Case 1: India and China both decide to negotiate an agreement.
This is the most mutually beneficial option for both nations. Such an agreement could be in the form of an international treaty where one nation willingly gives up the region to the other. In the Sino-Russian boundary dispute, Russia willingly gave up the upstream end of Bear Island to China, which had a positive impact on Sino-Russian relations. Alternatively, the United Nations could intervene through various methods such as deploying international peacekeeping forces, continuous monitoring, and establishing international control. A peaceful agreement would result in improved international relations between India and China, which has the potential to lead to more trade deals and foreign direct investment.
However, this outcome is not possible because of the “commitment problem,” which occurs when two parties refuse to enter into an equally advantageous arrangement because they have different expectations of their future. Here, both believe they can garner control over the area in the future, resulting in a commitment problem.
Case 2: India tries to negotiate an agreement while China becomes aggressive. This situation heavily favors the aggressor.
This will lead to total control of the Galwan valley area by the Chinese. Going forward, India will never be able to go on the offensive against the Chinese along the border because without this strategic advantage India will lose in most situations. With this, China will gain a military advantage over India which, along with the already existing $48.66 billion trade surplus with India, will ensure that China will maintain an upper hand against India. India will lose its status as an Asian counterweight to China and will have to do China’s bidding.
Case 3: India becomes aggressive while China tries to negotiate an agreement. Similar to case 2, this situation favors the aggressor.
This will lead to India controlling the Galwan Valley. China will become less aggressive with India because India now has a very obvious tactical military advantage. China will have to accept that it cannot dominate India in the same manner as Pakistan, Nepal, or Sri Lanka. By cementing India’s status as a counter-weight to China, India will likely attract more foreign direct investment from the West and improve international relations as well. India will be able to negotiate as an equal with China, which could help decrease the massive trade deficit.
However, given that China’s military strength far outweighs that of India this outcome seems unlikely.
Case 4: Both India and China become aggressive. This is the least advantageous situation for both sides.
Both nations, in an attempt to control Galwan Valley, become aggressive, creating a bigger conflict regarding the area and fracturing international relations further. Both nations will try to decouple but India does not possess the necessary infrastructure to completely replace Chinese imports while Chinese companies will lose millions of customers and billions of dollars of investment. This is a lose-lose situation.
Despite this, Case 4 is the equilibrium in this situation. This is because as demonstrated in cases 2 and 3, both nations have many incentives to becoming aggressive with each other. If either nation does not act when the other nation becomes aggressive, they will suffer heavy losses. Hence, case 2 and case 3 are extremely unlikely to occur and the only realistic scenario is case 4.
As the economically and militarily weaker of the two nations, India has limited options with the most attractive being the “tit-for-tat” strategy. In this strategy, the player cooperates with the opponent on the first move and then does whatever the opponent did in the previous move. This strategy has been proven to be a consistent winner through repeated academic simulations conducted by renowned game theorists since the 1980’s. India clearly knows the benefits of the tit-for-tat strategy as it has been employing against Pakistan for years now.
Following the conflict at the LAC, India used the tit-for-tat strategy, banning 59 Chinese affiliated apps to punish China. As India is the biggest overseas market for Chinese smartphone manufacturers and is viewed as a major growth market for internet-based companies, this ban will cost these Chinese apps $3.7 billion in advertising revenue.
The app ban has also had an unexpected positive externality, with Indian alternatives taking the place of banned Chinese apps. This is nowhere more apparent than Roposo, an Indian alternative to Tik-Tok, which along with two other similar foreign apps, saw a combined growth of 155 percent in the weeks following the ban.
So far, China’s response has remained relatively restrained. Zhao Lijian, a spokesperson for China’s Foreign Ministry, said that China is “concerned” by India’s decision to ban apps, it did not take any significant action against India. China has realized the pressure that India has put them under and that if they cooperate, India will too. If China goes on the offensive, either militarily or economically, India will do the same. Thus, with this strategy, India can always keep the pressure on China.
Since the competition between India and China is inevitable, both countries must approach this situation carefully. For India, this occurs in the form of the tit-for-tat strategy. While there is a common belief that the tit-for-tat game that India is playing with China is petty and self-destructive, this strategy has been proven to be pretty useful in the current faceoff.
With the app ban and several other economic offensives, India has pushed China back and managed to give itself some breathing room. All this, because of an extremely effective game theory strategy!