Sino-Indian Rivalry in the Indian Ocean Through the Lens of Prospect Theory

Full Text

Introduction

The Indian Ocean region (IOR) has long been a critical artery for global trade, particularly for energy resources and essential commodities that are vital to the economic growth of major economies like China, India, Japan, and Australia. As a vital route for oil, natural gas, and coal, the Indian Ocean’s strategic importance has only intensified, particularly with China’s growing reliance on this region for secure energy supplies. The region’s geopolitical significance has escalated, becoming a focal point for power competition among global and regional players, particularly between China and India.

The phrase “String of Pearls” is frequently used in Western strategic literature to describe China’s infrastructure investments and port access in the Indian Ocean (Khurana, 2008; Li, 2017, p. 496). However, there is some controversy surrounding this term. Beijing has never officially declared a “String of Pearls” doctrine; official narratives emphasize economic cooperation, BRI, maritime security and the fact that China “never threatens any country or seek[s] any sphere of influence.”^[1] In this paper, we treat “String of Pearls” as a framing device used by some analysts to capture perceptions of Chinese outreach, while also examining how Beijing officially characterizes its activities.

However, from the perspective of countries in the Indian Ocean region, China’s presence there raises many security concerns, including for India. Traditionally viewing the Indian Ocean as its strategic backyard, India faces a direct challenge from China’s expanding influence, prompting India to strengthen its naval presence and engage in multilateral initiatives like the Quadrilateral Security Dialogue (QUAD). This competition between China and India reflects a broader shift in global power dynamics, where both countries perceive the region as vital not only for economic reasons but also for national security.

Beyond this bilateral rivalry, external powers, especially the United States and its Indo-Pacific allies, remain active in the IOR to ensure freedom of navigation and preserve the balance of power (Berlin, 2006, p. 66). However, the competing visions of regional order between China and India are increasingly challenging efforts towards cooperative maritime governance.

To analyze this rivalry, the study applies Prospect Theory, which explains how both countries’ strategic choices are shaped by loss aversion and the desire to preserve influence in a high-stakes geopolitical environment.

Literature Review

Numerous academic studies have examined the intensifying strategic competition between China and India in IOR, reflecting its growing significance in the broader Indo-Pacific geopolitical landscape. Among these, several works stand out for their detailed analysis of state behavior and regional implications. For instance, Anirban Sen (2023), in “India’s Role in the Indian Ocean Region and Its Links to the Indo-Pacific”, explores India’s maritime strategy through the lens of expanding influence and securing sea lines of communication. His study emphasizes India’s use of naval diplomacy and multilateral engagement to enhance its strategic footprint.

Krothwal & Kumar (2023), in “Theater of India-China Strategic Rivalry: The Indian Ocean”, specifically frames the Indian Ocean as a contested space where China and India engage in a game of influence, analyzing each nation’s deployments, base-building strategies, and diplomatic alignments in order to assert dominance.

Nguyen et al. (2022), in “India—China Strategic Competition in the Indian Ocean”, provide a comparative analysis of the two countries’ naval modernization and economic investments, particularly focusing on their competition for port access and defense cooperation with smaller regional states. Their study also outlines how this rivalry affects the strategic autonomy of littoral countries and the broader stability of the IOR. Additionally, Hassan (2019), in “Growing China—India Competition in the Indian Ocean”, delves into China’s BRI, especially the maritime components, and evaluates how India views China’s implementation of this initiative as an encroachment on its traditional sphere of influence.

Chinese scholarship on the Indian Ocean has evolved from strategic reflection to institutional and normative construction. Zhao first argued that although China lacks a formal Indian Ocean strategy, its rise as a maritime power requires integrating the Indian Ocean into a broader blueprint of China’s maritime strategy. He emphasized the shift in U.S. global posture and India’s naval expansion as structural factors compelling China to safeguard maritime access and navigation rights.^[2] Li (2017) advanced this logic, framing the “Malacca Dilemma” as the core of China’s maritime insecurity and calling for a long-term, security-oriented Indian Ocean strategy under the 21^st Century Maritime Silk Road.

Wu, Qin, Zhang & Cheng (Wu et al., 2018) extended the discussion by highlighting the need to diversify China’s Indian Ocean passages to reduce overdependence on the South China Sea and Malacca routes. Kang, Zhang & Yu (2021) repositioned the debate within China’s “Community of Shared Future for Mankind”, linking Indian Ocean research to regional cooperation and academic system-building. Finally, Zhu emphasized a cooperative vision centered on island nations, advocating a “blue partnership” and cultural diplomacy to promote peaceful development.^[3] Together, these works trace China’s evolving approach from strategic vulnerability to proactive regional engagement and normative leadership.

While existing literature has deepened understanding of the India—China competition in the Indian Ocean, much of it remains rooted in realist paradigms that prioritize material power, naval capability, and balancing behavior. These studies largely assume that states act as rational entities maximizing security and relative power within an anarchic system. This study builds on that foundation but departs from conventional approaches by applying prospect theory to examine the cognitive and psychological drivers of decision-making. Such an approach highlights how competition in the IOR is not only about physical control of maritime space but also about perceptions of loss, the framing of strategic narratives, and shifting risk tolerances in the 21st century.

 Methodology

This study adopts a qualitative research approach, primarily based on secondary sources, including academic publications, policy reports, and strategic papers from India, China, and reputable international institutions. A comprehensive literature review supports the analysis of evolving China—India dynamics in the IOR, ensuring a diverse and balanced perspective. The study is built on the theoretical framework of prospect and geopolitical theory, which concludes that states confronting a rising power do not always adopt a traditional balance of power strategy, offering a nuanced perspective on China and India’s competition in the Indian Ocean region.

Prospect Theory (Kahneman & Tversky, 1979, p. 277) explains decision-making under risk by showing that losses loom larger than gains. In international relations, this helps to clarify why leaders often take greater risks to defend status or recover from setbacks than to pursue new advantages. States may become risk-acceptant after territorial or reputational losses, but once gains are secured, leaders turn loss-averse and overcommit to their protection (Levy, 1997, pp. 93–94). Table 1 illustrates how these dynamics appear in China and India’s strategies in the Indian Ocean, consistent with the propositions of Kahneman & Tversky (1979) and Levy (1997).

Table 1. Application of Prospect Theory to International Relations

No.	Theoretical element	Academic interpretation
1	Reference points	States evaluate gains and losses relative to their existing or expected strategic position
2	Loss aversion	Perceived losses provoke stronger responses than equivalent gains States act to prevent a decline in strategic position
3	Risk-seeking in losses	In the domain of losses, states are more willing to take risky actions to regain lost ground
4	Framing effects	The way a strategy is framed influences its acceptance both domestically and internationally

Source: compiled by T.V. Chu and M.H.L. Tran on the basis of: (Kahneman & Tversky, 1979; Levy, 1997).

These four factors are closely interconnected and influence each other (Figure 1). The model shows that a country’s strategic decisions are driven by reference points, where they assess what is gain or loss. When perceiving the risk of loss (loss aversion), the country responds strongly and may easily shift to risk-seeking behavior to recover its position. However, how the situation is framed (framing effects) can alter the reference point, increasing or decreasing the fear of loss and the tendency to take risks, thereby influencing the entire decision-making cycle.

Figure 1. Prospect Theory-Based Strategic Competition Model
Source: compiled by T.V. Chu and M.H.L. Tran.

Although not the central theory, the study approaches the issue from a geopolitical perspective to highlight how the region’s strategic position fuels both China and India’s ambitions for maritime dominance (Mallick, 2025). Central to this rivalry are key geographic factors, such as control over sea lanes and chokepoints like the Strait of Malacca, which shape their strategies to exert influence and secure regional power. The theory of balance of threats suggests that states respond to perceived threats rather than shifts in power alone. India views China’s expanding presence in the Indian Ocean as a threat, while China’s actions, such as building ports in Pakistan and Sri Lanka, aim to counterbalance India. Walt (1985) argues that balancing policies arise out of fear, as states tend to balance against those they perceive as threats rather than merely more powerful states. Additionally, Schweller (1994) suggests that smaller states, when confronted by a major power, often adopt a bandwagoning strategy to maximize their interests and avoid conflict.

This study examines the evolving geopolitical rivalry between China and India in the Indian Ocean Region (IOR), focusing on three key questions:

• Why does the IOR hold strategic importance for both nations and has become a space of intense competition?
• How does prospect theory help explain their risk-sensitive behaviors driven by fear of loss?
• What challenges and future prospects shape this ongoing competition?

The Importance of Indian Ocean in China and India’s Strategy

The Indian Ocean has become a pivotal focal point in 21st-century geopolitics, acting as a strategic arena for global powers (Song & Bai, 2009, р. 35), particularly China and India. Stretching from the Strait of Malacca to the African coast, the ocean serves as a critical maritime route for global trade, energy transport, and military activity. Despite being the third-largest ocean, its importance is magnified by several key chokepoints (Hassan, 2019, p. 78), such as the Strait of Hormuz, Bab el-Mandeb Strait, and the Strait of Malacca, through which a substantial portion of the world’s essential oil, gas, and goods flows (Hashmi, Haider & Zahid, 2023, р. 87). Over 80% of the world’s seaborne oil trade transits these vital passages, underscoring the Indian Ocean’s indispensable role in global economic and energy security.^[4] 

Its energy geopolitics is shaped by both regional and global powers, including the United States, which maintains a strong military presence to ensure the free movement of goods and safeguard its allies. As global energy demand rises by 45% by 2030, China and India will account for nearly half of this growth.^[5] Over 85% of the oil destined for China passes through the Indian Ocean and the Strait of Malacca, emphasizing the region’s critical role in global energy supply (Kaplan, 2009, p. 20).

The presence of external powers such as the U.S., France, the UK, Russia, and China add to the region’s complexity (Khan, 2022, p. 29). Historical calls for a “zone of peace” (Pant, 2014, p. 189) contrast with today’s reality of naval modernization and strategic rivalry. For China and India, dominance in the Indian Ocean is not optional but central to securing economic lifelines and projecting power (Ramadhani, 2015, p. 147; Berlin, 2006, p. 60).

For China, the Indian Ocean is crucial to its strategic goals, particularly regarding energy security and trade. Over 80% of China’s crude oil passes through the region, making the Strait of Malacca, its “Malacca Dilemma,” a critical vulnerability.^[6] While China’s primary strategic focus has historically been on the East and South China Seas, along with Taiwan, the IOR has still become increasingly important due to secondary strategic factors. Although territorial claims and regional dominance remain central to China’s geopolitical goals, the IOR is vital for energy security, as key maritime routes, particularly the Strait of Malacca, serve as chokepoints for energy imports. Additionally, BRI aimed at building infrastructure and alternative trade routes, heavily engaging the IOR, making it integral to China’s long-term trade and economic growth. Therefore, while China’s primary focus remains on its immediate periphery, the IOR plays a key secondary role in securing energy flows, enhancing logistical networks, and expanding global influence. To mitigate the Malacca Dilemma, Beijing has advanced the BRI by investing in infrastructure across South Asia and East Africa, diversifying trade routes, and securing supply lines. Ports like Gwadar, Hambantota, and Doraleh, as part of the Maritime Silk Road, strengthen China’s economic and strategic presence, ensuring shipping lanes and projecting naval power. The establishment of its first overseas base in Djibouti further highlights China’s ambition to secure maritime routes under the guise of peacekeeping and anti-piracy operations, while signaling its broader pursuit of global maritime influence.^[7]

For India, the Indian Ocean is its primary maritime domain and central to its economic and strategic interests. Around 95% of India’s trade by volume and over 70% by value transits the IOR,^[8] along with most of its energy imports from the Middle East. Ensuring stability and secure sea lanes is therefore vital for New Delhi. India’s long-term goals include regional hegemony in South Asia and the Indian Ocean, seeking influence in the Middle East, Central Asia, and Southeast Asia, alongside aspirations for broader great-power status.^[9] To this end, New Delhi has expanded naval capabilities, adopted a proactive maritime posture, and pursued “Look East” and “Act East” policies to deepen ties with Southeast Asia.^[10] India also counters China’s growing influence by strengthening partnerships with the U.S., Japan, and Australia through the QUAD, while building security ties with island nations such as the Maldives, Seychelles, and Mauritius. Simultaneously, its fortified presence in the Andaman and Nicobar Islands provides a strategic vantage point to safeguard vital trade routes and monitor Chinese naval activity.^[11]

As Table 2 demonstrates, clear asymmetries structure China’s and India’s Indian Ocean strategies. Economically, China’s much larger GDP and extensive port investments give it broad, often dual-use access across the region, whereas India pursues more targeted, relationship-based projects. Politically, Beijing leverages state finance and bilateral MOUs to cultivate diffuse influence; New Delhi emphasizes historical ties, defense diplomacy, and capacity-building to secure proximate states. Militarily, China’s larger defense budget and growing expeditionary navy expand its long-range reach, while India’s geographic advantages, including the Andaman and Nicobar archipelago, and regional bases favor local dominance and chokepoint control. These asymmetries indicate competition for access and influence, rather than symmetric, high-intensity confrontation.

Table 2. Comparative Capabilities between India and China in the Indian Ocean

Indicator	India	China
Military Strengths Ranking (2025)	4	3
Aircraft carriers (operational / in trials)	2 operational (INS Vikramaditya; INS Vikrant)	2 operational (Liaoning, Shandong) + Fujian in sea-trials / nearing commissioning (Type-003)
Military ships: – including aircraft carriers – including submarines	290 2 18	1025 3 73
Overseas bases / formal military support facilities	India relies on access/agreements (Duqm, MOUs with Seychelles/Mauritius, facilities in Andaman & Nicobar)	1 confirmed overseas military support facility (Djibouti) + multiple port investments/logistics arrangements (Gwadar, Hambantota involvement, Doraleh links, etc.)
Commercial port investments in the IOR	Chabahar (Iran) India operates/partners at Shahid Beheshti terminal Projects in Sittwe (Myanmar), Agalega (Mauritius) emerging	Gwadar (Pakistan) Hambantota (Sri Lanka) Doraleh (Djibouti)
Energy imports via Indian-Ocean routes	High dependence on seaborne imports (India imports ~80–90% of its oil; a large share transits the Indian Ocean / Strait of Hormuz to Arabian Sea routes)	~80% of China’s seaborne oil imports transit via routes that include the Strait of Malacca/Indian Ocean chokepoints (i.e., high dependence on IOR SLOCs)
GDP (in 2024)	USD 3.76 trillion	USD 18.95 trillion
Military expenditure (in 2024)	~USD 86.1 billion	~USD 314 billion

Source: compiled by T.V. Chu and M.H.L. Tran on the basis of: Thakkar M. World’s Most Powerful Militaries of 2025: Global Firepower Index Top 10 // The Economic Times. January 11, 2026. URL: https://economictimes.indiatimes.com/us/news/worlds-most-powerful-militaries-of-2025-global-firepower-index-top-10/articleshow/126461667.cms?from=mdr (accessed: 13.04.2026); China’s Belt and Road Initiative // International Institute for Strategic Studies. 2023. 1st edition. P. 20, 23. URL: https://www.iiss.org/publications/strategic-dossiers/chinas-belt-and-road-initiative/ (accessed: 19.09.2025); Downs E., Becker J., de Gategno P. China’s Military Support Facility in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base // CNA National Security Analysis. July 2017. P. 2. URL: https://www.cna.org/reports/2017/07/DIM-2017-U-015308-Final3.pdf (accessed: 12.03.2026); GDP, Current Prices (2024) // International Monetary Fund. URL: https://www.imf.org/external/datamapper/NGDPD@WEO/ARE?year=2024 (accessed: 13.04.2026); Liang X., Tian N., Lopes da Silva D., Scarazzato L., Karim Z., Guiberteau Ricard J. Trends in World Military Expenditure, 2024 // SIPRI Fact Sheet. April 2025. P. 2. URL: https://www.sipri.org/sites/default/files/2025-04/2504_fs_milex_2024.pdf (accessed: 19.09.2025).

The Current Status of Sino-Indian Competition in the Indian Ocean Through the Lens of Prospect Theory

Viewed through the lens of prospect theory, the Sino-Indian rivalry in the Indian Ocean reflects loss aversion rooted in fears of declining control and influence, risk-seeking behavior when the core interests appear threatened, and the strategic use of framing through narratives of cooperation, development, or stability. These dynamics shape policy choices and underscore the depth of strategic competition between the two powers.

 Reference Points

The Sino-Indian rivalry in the Indian Ocean (Figures 2, 3) is shaped by their distinct reference points rooted in strategic interests and security perceptions. For China, the priority is securing energy supplies and expanding global influence. Its reliance on the Strait of Malacca has driven initiatives such as BRI and the Maritime Silk Road, aimed at building ports, infrastructure, and alternative trade routes across the region.^[12] In the IOR, the PLAN regularly deploys guided-missile destroyers (Type 052D/052C), frigates (Type 054A), amphibious/landing ships (LPDs), replenishment/logistics vessels and occasional hospital and survey ships. Since 2008, it has sent dozens of rotating escort task forces (46+ through 2024), each typically made up of two combat ships and a replenishment ship; from the 33rd task force in 2019 most task forces have consisted of a Type 052D, a Type 054A and a replenishment vessel.^[13]

Djibouti hosts China’s first overseas military support base, which was opened in 2017, alongside Chinese-linked Doraleh port facilities. The PLA personnel are stationed there. The site functions as a logistics hub for the PLAN to resupply and refuel escort task forces, support anti-piracy, escort and peacekeeping operations, and carry out humanitarian missions in the Gulf of Aden and off Somalia, while also serving commercial maritime infrastructure.^[14]

Gwadar (Pakistan) is a strategic civilian port investment under the CPEC intended to provide access to the Indian Ocean and offer logistical capability when needed. Hambantota (Sri Lanka) is a long-term leased commercial port operated by Chinese companies, with the potential to support naval logistics.^[15]

The Maldives and Seychelles have security-cooperation MOUs and port-call rights to allow resupply and extend maritime influence.^[16] The strategic outposts in Pakistan, Sri Lanka, and Djibouti reflect Beijing’s intent to safeguard sea lanes, secure energy flows, and project influence across Asia, Africa, and the Middle East.^[17]

India, by contrast, views the Indian Ocean as its ‘strategic backyard’ and natural sphere of influence.^[18] China’s growing presence is perceived as a direct challenge to its dominance. India’s strategy centers on naval modernization, strengthening military infrastructure, and securing chokepoints. Its control over the Andaman and Nicobar Islands, positioned near the Strait of Malacca, provides a strategic vantage point to monitor Chinese movements and protect trade routes^[19] (see Figure 2).

Figure 2. India’s Presence in Indian Ocean
Source: Saloni S. Indian Navy: A Formidable Blue Water Force in the Making // SP’s Naval Forces. February-March 2020. Vol. 15, no. 1. P. 3. URL: https://www.researchgate.net/publication/340443158_Indian_Navy_A_Formidable_Blue_Water_Force_in_the_Making (accessed: 19.09.2026).

Both countries’ investments in infrastructure, naval buildup, and regional partnerships reflect efforts to protect or maximize their reference points. For China, this means ensuring energy security and expanding its geopolitical reach. For India, it is about maintaining its regional primacy and preventing external encroachment. Their competition in the IOR is therefore a contest of competing reference points, with each side seeking to secure its economic lifelines, strategic space, and global standing.

 Loss Aversion

Both China and India display strong loss aversion in their Indian Ocean strategies, where the fear of losing influence or security outweighs the pursuit of gains. For India, the region has long been its natural sphere of influence, making Chinese expansion a direct threat. The presence of Chinese-controlled ports and naval facilities in the Maldives,^[20] Djibouti,^[21] and Sri Lanka, including a 99-year lease of Hambantota,^[22] has heightened fears of strategic encirclement. India has responded with naval modernization, stronger partnerships through the QUAD, and closer ties with Seychelles and Mauritius to secure chokepoints and preserve dominance.^[23]

China’s loss aversion stems from its dependence on Indian Ocean routes, particularly the Strait of Malacca, for energy supplies. Disruptions here would endanger economic stability, prompting investments in ports at Gwadar, Hambantota, and Djibouti to safeguard trade and project influence.^[24] These strategic footholds reflect Beijing’s determination to reduce its reliance on vulnerable chokepoints and protect vital maritime corridors.

In essence, India’s actions reflect its fear of losing regional primacy, while China’s efforts are driven by the fear of losing secure access to energy and trade. Both countries’ policies in the IOR are thus shaped less by potential gains than by the psychological weight of potential losses (see Figure 3).

Figure 3. India and China Compete for Control of the Indian Ocean Region
Source: Brewster D. India And China Face Off // Indo-Pacific Defense Forum. April 22, 2019. URL: https://ipdefenseforum.com/2019/04/india-and-china-face-off/ (accessed: 23.04.2025).

Risk-Seeking in Losses

Both China and India demonstrate risk-seeking behavior when their reference points are perceived to be threatened, demonstrating a willingness to undertake actions aimed at preventing further relative losses. For China, the establishment of a military base in Djibouti and the signing of a defense agreement with the Maldives reflect measures intended to secure key maritime routes and maintain its strategic presence in the Indian Ocean. Although these steps involved potential diplomatic and reputational costs, they were pursued as part of efforts to prevent perceived erosion of strategic influence.

India, facing China’s growing activities in the region, has adopted a similar risk-seeking approach to protect its strategic position. It has expanded defense cooperation through the QUAD and participated in the Malabar Exercise with the United States, Japan, and Australia,^[25] along with bilateral exercises such as JIMEX with Japan and AUSINDEX with Australia. In addition, India has conducted a range of joint naval exercises, including SIMBEX with Singapore, Varuna with France, INDRA with Russia, Konkan with the UK, Zayed Talwar with the UAE, Dosti with the Maldives, and Naseem Al-Bahr with Oman,^[26] focusing on maritime security and counterterrorism. These activities enhance operational readiness and reflect India’s efforts to mitigate perceived strategic disadvantages in the Indian Ocean. India’s ongoing naval modernization and evolving maritime doctrines (Khan, 2022, p. 18) further indicate its intention to address potential losses through assertive policy choices.

In both cases, the readiness to take diplomatic and strategic risks aligns with the prediction of Prospect Theory, which states that actors become more risk-seeking when operating in the domain of perceived losses. As the strategic competition in the Indian Ocean intensifies, both China and India are likely to continue employing strategies that involve higher levels of calculated risk to preserve or regain their reference positions.

 Framing Effects

Both China and India employ strategic framing to shape perceptions and legitimize their actions in the Indian Ocean. China presents its initiatives as cooperation-oriented, emphasizing economic development, mutual benefit, anti-piracy efforts, and humanitarian assistance (Li, 2017, p. 489), thereby minimizing attention to the military dimension of port projects and base construction. India, by contrast, frames its activities through the narrative of being a “net security provider,” highlighting “freedom of navigation” and denying hegemonic intent.^[27] Both states thus utilize framing to align their policies with widely accepted international norms, presenting their maritime actions as supportive of security, commerce, and stability rather than competition.

In practice, both countries use institutional and diplomatic platforms to reinforce these frames. In 2023, India hosted the 8th Indian Ocean Naval Symposium,^[28] portraying it as a venue for promoting maritime security and cooperation (Sen, 2023, pp. 118–119). Similarly, in 2024, China organized the Third China—Indian Ocean Region Forum on Blue Economy Development Cooperation, emphasizing economic growth and sustainability, while de-emphasizing military objectives.^[29] Through these forums, both actors seek to present their strategic engagement as cooperative and mutually beneficial, even as underlying competition persists.

China’s engagement in the Indian Ocean combines strategic, economic, and cultural dimensions aimed at sustaining influence and reducing perceptions of threat. The proposed China-Indian Ocean Council (2022) was intended to complement the Belt and Road Initiative by fostering cooperation in the blue economy and disaster prevention, though the exclusion of India generated criticism.^[30] Beyond economic and security initiatives, Beijing has established Confucius Institutes in the region to promote Chinese language and culture, extending its soft power presence (Martin & Elias, 2021, p. 1655). While some observers have raised concerns about political messaging in the activities of these institutions (Zhou & Luk, 2016, p. 632), they remain an important component of China’s broader framing strategy, portraying its presence as economically and culturally constructive.

India’s activities similarly combine strategic and humanitarian elements. Operations such as Raahat in Yemen^[31] and relief missions following natural disasters in Indonesia, Sri Lanka, Myanmar, and Bangladesh demonstrate India’s capacity for rapid response, based on maritime domain awareness and advanced naval assets (Parmar, 2012, p. 94). Initiatives such as Security and Growth for All in the Region (SAGAR) (Baisla, 2024) emphasize cooperation with littoral states including Mauritius, Seychelles, and Sri Lanka through security assistance and capacity building.^[32] India’s growing defense partnerships with the QUAD and other Indo-Pacific actors following the Galwan clashes^[33] reflect its continued investment in safeguarding its maritime interests, while presenting such measures as contributions to regional stability (Hu & Meng, 2020, p. 158).

Overall, both China and India undertake similar activities, such as port development, military exercises, and humanitarian assistance, but they frame these actions in ways that emphasize cooperation, shared security, and adherence to international norms. This framing serves to legitimize their strategies, mitigate perceptions of rivalry, and sustain domestic and international support. From a Prospect Theory perspective, such framing functions as a cognitive mechanism that redefines potential losses as opportunities for cooperative engagement, allowing both states to pursue assertive policies, while maintaining a narrative of constructive intent.

Challenges of China—India Competition to the Indian Ocean’ Security

The ongoing China—India competition presents significant challenges to the security landscape of the Indian Ocean. One major concern is the growing military asymmetry, as China’s expanding naval capabilities are growing faster than India’s modernization efforts. While the Andaman and Nicobar Islands enhance India’s strategic posture, the widening capability gap has prompted both states to increase defense expenditure. This reciprocal buildup heightens the risk of an arms race, shifting the regional dynamic from cooperative engagement toward increased militarization. Smaller littoral states may face pressure to align with one side or the other, potentially complicating collective approaches to regional security.^[34]

Another challenge relates to India’s effort to maintain its traditional influence amid China’s expanding economic and strategic presence under the Belt and Road Initiative.^[35] Projects such as Sri Lanka’s Hambantota Port have generated debate over their dual-use potential, reinforcing India’s perception of strategic vulnerability (Tran, 2023, pp. 116–117). At the same time, growing economic dependence on Chinese financing has created concerns among smaller states regarding debt sustainability.^[36] To address these challenges, India has responded through increased development assistance, defense cooperation, and diplomatic outreach. However, sustaining such engagement demands considerable resources and long-term commitment.

A further dimension involves India’s strengthened cooperation with external partners through mechanisms such as the Quadrilateral Security Dialogue. These partnerships aim to uphold rules-based maritime order and balance regional power dynamics (Sullivan de Estrada, 2023, p. 380). However, such alignments could also prompt countermeasures from China, including deeper collaboration with regional partners or enhanced military presence in the Indian Ocean. The involvement of extra-regional powers such as the United States, Japan, and Australia could further intensify competitive dynamics, making regional stability more complex to manage. For India, the challenge lies in maintaining strategic autonomy, while mitigating potential escalation with China. The fluidity of regional alliances and shifting threat perceptions contribute to a security environment marked by uncertainty and risk.

From a Prospect Theory perspective, these dynamics illustrate how perceived losses and reference point shifts shape both countries’ strategic behavior. China’s pursuit of expanded access and India’s emphasis on counterbalancing efforts can each be seen as risk-seeking responses to relative decline or encroachment. Consequently, the security challenges in the Indian Ocean stem not only from material competition, but also from cognitive framing and mutual perception of loss, which reinforce cycles of strategic competition and defensive posturing.

Prospects of the Indian Ocean amid Sino-Indian Rivalry in the Third Decade of the 21st Century

The competition between China and India in the Indian Ocean has become a major challenge to regional security and stability. The most visible challenge is the growing military imbalance. China currently has a superior naval presence in the Indian Ocean,^[37] while India leverages its Andaman and Nicobar Islands to threaten China’s critical maritime trade routes. Although India has modernized its navy, China’s larger and more technologically advanced fleet continues to expand, compelling both sides to increase defense spending.^[38] This escalating militarization risks transforming the Indian Ocean from a potential space for cooperation into one of heightened conflict.^[39] Control over sea lanes, chokepoints, and regional influence is increasingly viewed as a zero-sum competition, where military investments are no longer optional but necessary, pushing smaller states into difficult choices that could fragment the region’s security architecture.

Another critical challenge is India’s diminishing traditional influence in the IOR amid China’s rapid rise. Through the BRI, China has expanded its footprint via massive infrastructure investments and strategic partnerships, such as the Hambantota Port project in Sri Lanka (Tran, 2023, pp. 116–117). These developments alarm India, as they can potentially serve dual-use purposes, undermining its security sphere.^[40] Smaller states, facing economic crises and mounting debt burdens linked to Chinese investments, as in Sri Lanka and the Maldives,^[41] are increasingly drawn into Beijing’s orbit, heightening India’s challenge to sustain its historical role. India’s response, including economic aid, military assistance, and diplomatic outreach, reflects the costs of countering China’s growing economic leverage. This competition for influence underscores how economic ties have become a critical vector of strategic rivalry, directly affecting regional stability and the sovereignty of smaller states.

A third challenge arises from India’s strategic partnerships designed to counterbalance China’s presence. Through mechanisms like the QUAD, India seeks closer ties with the U.S., Japan, and Australia to promote freedom of navigation and a rules-based order (Sullivan de Estrada, 2023, p. 380). However, these alignments risk further antagonizing China, which perceives them as a direct threat. Beijing may respond by deepening its military footprint in the Indian Ocean, strengthening ties with Pakistan or other regional actors, and expanding new infrastructure projects to secure strategic footholds. This dynamic invites external power competition, with the U.S., Japan, and Australia on one side and China’s countermeasures on the other, risking a destabilizing spiral of influence.

India thus faces the challenge of managing these complex relationships while avoiding confrontation that could further escalate tensions. The unpredictable nature of shifting alliances compounds this difficulty. By aligning more closely with like-minded democracies, India may inadvertently provoke more aggressive Chinese responses, accelerating militarization and undermining prospects for regional stability.

According to the analysis, current military trends and alliance dynamics indicate several potential conflict scenarios in the Indian Ocean, mostly at a low-intensity level, such as shadowing, harassment, or encounters between patrol and civilian vessels near the Andaman—Nicobar Islands. These incidents reflect competition in surveillance and sovereignty signaling, yet the risk of escalation remains moderate as both sides face reputational pressure. Localized clashes, including collisions or temporary detainments, may occur if one side misinterprets the other’s intent or tests boundaries, though such crises are usually contained quickly through diplomatic channels. At a higher level, the likelihood of chokepoint disruptions or limited clashes around Gwadar or the Andaman Sea is very low, despite potentially severe consequences if triggered by domestic or strategic stress. From a Prospect Theory perspective, China and India may display risk-seeking behavior when perceiving losses in status or control; however, both understand the costs and risks of open confrontation. As a result, restraint and gradual cooperation remain the dominant trend across the region.

Conclusion

The IOR has emerged as a central arena of strategic interaction between China and India, where control over sea lanes, energy security, and regional influence are perceived as essential to their national interests. For both powers, the IOR represents not merely a geographical space, but a crucial domain for maintaining status and safeguarding long-term strategic objectives.

Viewed through the lens of Prospect Theory, the risk-prone behavior of China and India can be seen as efforts to defend psychological reference points tied to maritime access and regional presence. When these reference points are perceived as threatened, both China and India exhibit loss-averse tendencies, resulting in more assertive strategic choices. China’s establishment of port facilities and connectivity projects under the Belt and Road Initiative has often been interpreted as part of a broader maritime strategy to secure sea lines of communication. India, perceiving these developments as potential constraints on its strategic space, has responded through naval modernization, enhanced partnerships such as the QUAD, and initiatives like the Act East policy to sustain its regional influence.

Competition, therefore, is likely to remain a defining feature of their interaction in the IOR, although selective cooperation in certain areas such as counter-piracy, humanitarian assistance, and maritime safety remains possible. The region thus embodies a delicate balance shaped by ambition, perceived vulnerability, and pragmatic adaptation. The growing involvement of external actors, including the United States, Japan, and Australia, adds further complexity to the situation., highlighting that the future of the IOR will depend as much on perceptions and cognitive framing as on material capabilities or alliances.

 

^{1 See: Chair’s Statement of the Third Belt and Road Forum for International Cooperation // Ministry of Foreign Affairs of the People’s Republic of China. October 18, 2023. URL: https://www.fmprc.gov.cn/mfa_eng/zy/gb/202405/t20240531_11367501.html (accessed: 12.06.2026); Full Text: China’s National Defense in the New Era // The State Council of The People’s Republic of China. July 24, 2019. URL: https://english.www.gov.cn/archive/whitepaper/201907/24/content_WS5d3941ddc6d08408f502283d.html (accessed: 12.06.2026).}

^{2 Zhao G. Yinduyang: Zhongguo haiyang zhanlüe zai dingyi de dongyin [The Indian Ocean: Drivers Redefining China’s Maritime Strategy] // Shanghai Guoji Wenti Yanjiuyuan [Shanghai Institutes for International Studies]. April 8, 2013. (In Chinese). URL: https://www.siis.org.cn/lw/310.jhtml (accessed: 20.04.2026).}

^{3 Zhu X. Zhongguo yu Yinduyang daoguo hezuo de xianzhuang yu qianjing [Current State and Prospects of Cooperation between China and Indian Ocean Island States] // Hu’nan Ligong Daxue Waiguoyu Xueyuan [School of Foreign Languages, South China University of Technology]. January 3, 2025. (In Chinese). URL: https://www2.scut.edu.cn/sfl/2025/0103/c35370a574202/page.htm (accessed: 20.07.2026).}

^{4 Weber J. China’s Expansion in the Indian Ocean Calls for European Engagement // Mercator Institute for China Studies. October 11, 2019. URL: https://merics.org/en/comment/chinas-expansion-indian-ocean-calls-european-engagement (accessed: 12.03.2025).}

^{5 World Energy Outlook 2008 // International Energy Agency. 2008. P. 38. URL: https://pure.iiasa.ac.at/id/eprint/8660/1/weo2008.pdf (accessed: 20.02.2026).}

^{6 Wu Q. Qingting lishi de sushu — Hu Jintao fangwen Malacca haixia ceji [Listening to the Story: Notes on Hu Jintao’s Visit to the Strait of Malacca] // China News Service. November 12, 2009. (In Chinese). URL: https://www.chinanews.com.cn/gn/news/2009/11-12/1960299.shtml (accessed: 10.03.2026). See also: (Li, 2017, p. 482).}

^{7 China’s Maritime Silk Road Initiative: Implications for the Global Maritime Supply Chain // U.S. Government Publishing Office. U.S. House of Representatives. October 17, 2019. URL: https://www.govinfo.gov/content/pkg/CHRG-116hhrg41367/html/CHRG-116hhrg41367.htm (accessed: 10.03.2026).}

^{8 Indian Shipping Industry: A Catalyst for Growth // Export-Import Bank of India. Occasional Paper. 2010 (October). No. 142. P. 1. URL: https://www.eximbankindia.in/sites/default/files/2025-07/25file%20%281%29.pdf (accessed: 02.03.2026).}

^{9 Pardesi M. S. Deducing India’s Grand Strategy of Regional Hegemony from Historical and Conceptual Perspectives. Institute of Defence and Strategic Studies Working Paper No. 76. Singapore : Institute of Defence and Strategic Studies, 2005. P. 55. See also: (Berlin, 2006, р. 61).}

^{10 Rajendram D. India’s New Asia-Pacific Strategy: Modi Acts East // Lowy Institute for International Policy. December 2024. P. 12, 14. URL: https://www.files.ethz.ch/isn/186677/indias-new-asia-pacific-strategy-modi-acts-east.pdf (accessed: 02.03.2026). See also: (Sen, 2023, р. 112).}

^{11 Pant H.V., Bose S. Andaman and Nicobar Can Lift India’s Maritime Capacity // Observer Research Foundation. January 14, 2023. URL: https://www.orfonline.org/research/andaman-and-nicobar-can-lift-indias-maritime-capacity (accessed: 12.07.2025).}

^{12 China’s Belt and Road Initiative // International Institute for Strategic Studies. 2023. 1st edition. P. 20, 23. URL: https://www.iiss.org/publications/strategic-dossiers/chinas-belt-and-road-initiative/ (accessed: 19.09.2025).}

^{13 See: Blasko D. J. Recent Changes in the PLA Navy’s Gulf of Aden Deployment Pattern // China Maritime Studies Institute Note #8. August 13, 2024. URL: https://digital-commons.usnwc.edu/cgi/viewcontent.cgi?article=1007&context=cmsi-notes (accessed: 13.04.2026); Liu Z. Chinese Navy Vessels on Goodwill Mission to Hong Kong // South China Morning Post. April 26, 2019. URL: https://www.scmp.com/news/china/military/article/3007778/chinese-navy-vessels-goodwill-mission-hong-kong (accessed: 12.06.2026).}

^{14 Wang X. China’s First Overseas Military Base Opens in Djibouti // CGTN. August 1, 2017. URL: https://news.cgtn.com/news/3d6b7a4e3241544e/share_p.html (accessed: 11.03.2026).}

^{15 Sri Lanka Says Southern Port Agreement with China Purely Commercial // Xinhua. June 29, 2018. URL: http://www.xinhuanet.com/english/2018-06/29/c_137290595.htm (accessed: 12.06.2026).}

^{16 See: Seychelles Strengthens Security Ties at the 1st China-East Africa Ministerial Dialogue on Law Enforcement and Security Cooperation // Ministry of Homeland Security and Civil Affairs, Republic of Seychelles. May 8, 2025. URL: https://mia.gov.sc/news-and-press/press-releases/seychelles-strengthens-security-ties-at-the-1st-china-east-africa-ministerial-dialogue-on-law-enforcement-and-security-cooperation (accessed: 17.09.2025); Maldives Ready to Deepen Cooperation with China for Prosperous Future: President // Xinhua. October 1, 2025. URL: https://english.news.cn/asiapacific/20251001/b337a00f440743fd812ff4b393ec29a6/c.html (accessed: 12.06.2026).}

^{17 Templeton E. Navigating the String of Pearls: Strategies for India to Secure the Indian Ocean // Leeds Policy Institute. March 16, 2025. URL: https://www.leedspolicyinstitute.org.uk/post/navigating-the-string-of-pearls (accessed: 14.06.2026).}

^{18 Ghiasy R. Maritime Order in the Indian Ocean: Regional Security and Strategic Competition // The Hague Centre for Strategic Studies. 2021. P. 3. URL: https://hcss.nl/wp-content/uploads/2021/01/Maritime-Order-in-the-Indian-Ocean_0.pdf (accessed: 02.03.2026). See also: (Kumar, 2020, p. 238).}

^{19 Nishant R. India’s Expanding Naval Presence in the Indo-Pacific // IDSS Paper. 2025 (February 18). No. 013/2025. P. 2. URL: https://rsis.edu.sg/wp-content/uploads/2025/02/IP25013.pdf (accessed: 19.06.2026).}

^{20 Tran M. H. L. China—Maldives Defence Ties Threaten India’s Influence // East Asia Forum. April 11, 2024. URL: https://eastasiaforum.org/2024/04/11/china-maldives-defence-ties-threaten-indias-influence/ (accessed: 11.03.2025).}

^{21 Downs E., Becker J., de Gategno P. China’s Military Support Facility in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base // CNA National Security Analysis. July 2017. P. 2. URL: https://www.cna.org/reports/2017/07/DIM-2017-U-015308-Final3.pdf (accessed: 12.03.2026).}

^{22 Stone R. China Is Losing Ground in Sri Lanka // Rupert Stone. August 22, 2022. URL: https://rupertstone.com/2022/08/22/china-is-losing-ground-in-sri-lanka/ (accessed; 13.03.2026).}

^{23 Bhattacharya S. India’s Strategic Role in the Western Indian Ocean: Convergence of Interest with the Littoral Nations // Centre for Joint Warfare Studies (CENJOWS). August 2024. URL: https://cenjows.in/wp-content/uploads/2025/12/Sanchaly_Bhattacharya_Web_Article_Aug_2024_CENJOWS.pdf (accessed: 12.07.2025).}

^{24 China’s Belt and Road Initiative // International Institute for Strategic Studies. 2023. 1st edition. URL: https://www.iiss.org/publications/strategic-dossiers/chinas-belt-and-road-initiative/ (accessed: 19.09.2025). See also: (Rahim & Ali, 2018).}

^{25 Koenig S. India Hosts Australia, Japan and U.S. Forces in Exercise Malabar 2024 // U.S. Navy. October 9, 2024. URL: https://www.navy.mil/Press-Office/News-Stories/Article/3931242/india-hosts-australia-japan-and-us-forces-in-exercise-malabar-2024/ (accessed: 18.08.2025).}

^{26 Maritime Cooperation with Regional Partners // Press Information Bureau, Government of India. March 21, 2022. URL: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1807607&reg=48&lang=2 (accessed: 02.08.2025).}

^{27  Izuyama M., Kurita M. Security in the Indian Ocean Region: Regional Responses to China’s Growing Influence // East Asian Strategic Review 2017. Tokyo : The National Institute for Defense Studies, 2017. P. 39. URL: https://www.nids.mod.go.jp/english/publication/east-asian/pdf/2017/east-asian_e2017_02.pdf (accessed: 19.06.2026).}

^{28 Indian Ocean Naval Symposium (IONS) — 2023 // Press Information Bureau, Government of India. December 19, 2023. URL: https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=1988673&reg=48&lang=2 (accessed: 04.06.2025).}

^[29] Li Y., Peng C. China to Boost Indian Ocean Region // China Daily. December 17, 2024. URL: https://www.chinadaily.com.cn/a/202412/17/WS6760ceb7a310f1265a1d33ea.html (accessed: 04.06.2025).

^[30] Kumar S. Second China-Indian Ocean Region Forum: Agenda and Outcome // Indian Council of World Affairs. December 21, 2023. URL: https://www.icwa.in/show_content.php?lang=1&level=3&ls_id=10303&lid=6571 (accessed: 11.06.2025).

^[31] Sakhuja V. India’s Yemeni Evacuation // Indian Defence Review. June 19, 2015. URL: https://indiandefencereview.com/indias-yemeni-evacuation/ (accessed: 14.09.2025).

^[32] Padmaja G. Revisiting ‘SAGAR’ — India’s Template for Cooperation in the Indian Ocean Region // National Maritime Foundation. April 25, 2018. URL: https://maritimeindia.org/revisiting-sagar-indias-template-for-cooperation-in-the-indian-ocean-region/ (accessed: 27.05.2025).

^[33] India—China Competition: Perspectives from the Neighbourhood / ed. by A.G. Shivamurthy // Observer Research Foundation  Special Report. 2022 (August). No. 197. P. 2. URL: https://www.orfonline.org/public/uploads/posts/pdf/20230413185420.pdf (accessed: 01.03.2026).

^[34] See: Beyaz F. Threat Perception, Competition and the Quest for Hegemony in China—India Relations // E-International Relations. August 6, 2026. URL: https://www.e-ir.org/p/threat-perception-competition-and (accessed: 19.08.2026); Manhas N. S. How Does China’s Rising Defence Budget Affect India? // Australian Institute of International Affairs. March 18, 2025. URL: https://www.internationalaffairs.org.au/australianoutlook/how-does-chinas-rising-defence-budget-affect-india (accessed: 01.06.2025); Shuja S. F. The Indian Ocean Battle No One’s Talking About // South Asia Times. 2024. URL: https://southasiatimes.org/the-indian-ocean-battle-no-ones-talking-about (accessed: 01.06.2025).

^[35] Khurana G. S. India as a Challenge to China’s BRI // National Maritime Foundation. April 30, 2019. URL: https://maritimeindia.org/india-as-a-challenge-to-chinas-bri/ (accessed: 12.06.2026).

^[36] Muralidharan M. P. Maritime Security Issues from the Perspectives of India, Sri Lanka and Maldives // India and the Island States in the Indian Ocean: Evolving Geopolitics and Security Perspectives. New Delhi : Indian Council of World Affairs, 2023. P. 26. URL: https://www.icwa.in/pdfs/IndiaIslandStatesIndianOcean.pdf (accessed: 19.09.2025).

^[37] Beyaz F. Threat Perception, Competition and the Quest for Hegemony in China—India Relations // E-International Relations. August 6, 2026. URL: https://www.e-ir.org/p/threat-perception-competition-and (accessed: 19.08.2026).

^[38] Manhas N. S. How Does China’s Rising Defence Budget Affect India? // Australian Institute of International Affairs. March 18, 2025. URL: https://www.internationalaffairs.org.au/australianoutlook/how-does-chinas-rising-defence-budget-affect-india (accessed: 01.06.2025).

^[39] Shuja S. F. The Indian Ocean Battle No One’s Talking About // South Asia Times. 2024. URL: https://southasiatimes.org/the-indian-ocean-battle-no-ones-talking-about (accessed: 01.06.2025).

^[40] Khurana G. S. India as a Challenge to China’s BRI // National Maritime Foundation. April 30, 2019. URL: https://maritimeindia.org/india-as-a-challenge-to-chinas-bri/ (accessed: 12.06.2026).

^[41] Muralidharan M. P. Maritime Security Issues from the Perspectives of India, Sri Lanka and Maldives // India and the Island States in the Indian Ocean: Evolving Geopolitics and Security Perspectives. New Delhi : Indian Council of World Affairs, 2023. P. 26. URL: https://www.icwa.in/pdfs/IndiaIslandStatesIndianOcean.pdf (accessed: 19.09.2025).

About the authors

Thanh Van Chu

University of Languages and International Studies, Vietnam National University

Email: chuthanhvan1979@gmail.com
ORCID iD: 0009-0004-2904-7440

PhD (International Relations), Lecturer

No. 2 Pham Van Dong Ward, Cau Giay District, Hanoi, Vietnam

My Hai Loc Tran

Ho Chi Minh City University of Economics and Finance

Author for correspondence.
Email: loctmh@uef.edu.vn
ORCID iD: 0000-0002-3877-3215

PhD (International Relations), Lecturer, Vice Dean (International Relations)

141-145 Dien Bien Phu, Gia Dinh Ward, Ho Chi Minh City, Vietnam

References

Supplementary files