India’s relations with China involve the four C’s – conflict, competition, cooperation and containment. The areas of conflict are well known – the border, and China’s relationship with Pakistan.
India cooperate on a range of areas with China; India was among the early supporters of the Asia Infrastructure Investment Bank and is, of course, a partner of China in BRICS and of the Shanghai Cooperation Organization (SCO).
New Delhi believes that Beijing’s arms build up at our borders, frequent Chinese flexing muscles by intruding inside our territories to bully us, meddling with our neighbors & the policies in South Asia are aimed at preventing India from playing a larger extra-regional role, which China brushes it off as India's illusion. So we are giving the same feel for China. Now China thinks, India is trying to contain its rise in collaboration with the US, Japan, Vietnam & Australia. India meddling in SCS, building Naval base in Vietnam, boycotting the Belt road meet & Doklam stand off has been a shock of a development for China, that India was willing to take on China & even risk a gamble to give a message to China. China normally always have a tit for tat policy to punish other countries for going against their interests. Though India has its losses, its continuous & unnerving strong posture has made China not take India lightly anymore.
Modi is also scheduled to attend the SCO summit in Shanghai in June. Chinese Foreign Minister Wang Yi has already spoke of the need of the two sides to shed differences and manage their relationship in the spirit of compromise, and that the dragon and elephant could dance with each other, instead of fighting. He spoke of the importance of mutual trust that could help the two sides overcome their difficulties.
The Quad has really made the Chinese very insecure. So each side knows what the other is talking about: The Chinese want assurances that they are not being targeted by the Quad, and India needs some action on the part of China to indicate that Beijing has moved away from its policy of propping up Pakistan to offset India.
While Beijing was not expected to abandon its defense of Islamabad, India negotiated with China to withdraw its support for Pakistan at FATF by giving our support for the Vice President candidature. This is how negotiation & diplomacy works. China knows the increasing power & influence of India in the international forum.
Recent our posture against China has made Chinese go defensive against India. Even last year at the BRICS summit, if you noticed China declared a number of militant groups allegedly based in Pakistan as a regional security threat. Currently, Pakistan’s counter-terrorism policy is being guided by the country’s powerful military with the elected civilian government virtually a dummy. After FATF, you can see the Military officials running around the world from country to country to get support. The PM, FM & other diplomats are running to get loans before June/July. So we have already set the ball rolling
India will first weaken Pakistan to such an extent, that it will collapse on its own without a war unless it surrenders to India. Once that's done, then we can always put our energies on China along with all other parties. China will be petrified if Australia also joins the Malabar exercise & it will show it's frustration by building more hostility against India. So India is utilizing the Chinese fears smartly to negotiate many things in its interests, at the moment.
New Delhi can negotiate serious concessions with Beijing on the BRI, India could benefit from Chinese investment, especially in the area of infrastructure. India can negotiate China not to veto Masood Azhar at the UN. India will negotiate for the NSG membership status with China & many more.
The US or Japan can independently take on China but if Russia suddenly jumps in they will be in for a catastrophe & will have severe casualties & losses. India is the key for containment of China, because India can keep Russia out & also pull in Vietnam, in-case a war erupts. Most important China fears the Indian Naval power not the Air or land force so much.
Australia is in the safest region at times of war, who wont bear any major infrastructure loss or casualties.
So have patience for another couple of years. India has more threats & problems at all its borders than Australia. Once Pakistan becomes defenseless & most of our objectives are realized, we will include Australia in the Malabar exercise. We have to take decisions & make moves according to the situation to our advantage. And don't forget Australia was included & you pulled out keeping Chinese interests & backlash a decade ago.
This is my understanding of the regional political situation