An India-China Complete Re-set? Desirable but Unlikely

Although it makes eminent sense for India and China to pursue a mutually beneficial economic relationship, keep the disputed border peaceful, manage differences by replacing confrontation with cooperation on shared modest but meaningful objectives, the Indian commentariat, led by the reputed ‘China experts’ and known hard-liners, have expressed deep scepticism of any thaw in mutual relations. They assert that competition and conflict will persist.

The basic question persists – the onus is on which of the two parties? Is China addressing Indian concerns, interests and sensitivities? Is India taking equal note of China’s concerns?

These separate concerns, in shorthand, are for India, the boundary dispute since the 1950s, China-Pakistan political and military ties since the 1960s, the non-acceptance of the status of Jammu and Kashmir, the China-Pakistan economic corridor traversing Pakistan-occupied Kashmir, Chinese operational support to Pakistan during the Sindoor operation, China’s veto on India in the Nuclear Suppliers Group, and China’s refusal to condemn Pakistan-sponsored terrorism. China giving stapled visas for Arunachal residents and the increasing presence of China in South Asia and the Indian Ocean are seen as inimical.

For China, Indian adherence to the Raj-era unilateral boundary with China, shelter and support to the Dalai Lama, and India seen as pursuing the US strategy of containment of China, inter alia by the Quad. The anti-Chinese rhetoric by the Indian media and various official and non-official spokespersons rankles, as does India openly canvassing against the Belt and Road Initiative. Beijing’s query about India’s clarification of its One-China policy may be a storm in a teacup but reveals the hyper-sensitivity of both parties on their ‘core’ issues. It needs to be recorded that Prime Minister Modi has never publicly subscribed to the anti-China chorus.

To what extent has US President Trump’s tariffs and latent hostility drawn the two Asian giants together? No doubt there are limitations that are in-built into how closely India and China could cooperate. India, like several other countries, has been trying to derisk its supply chains by reducing overdependence on any one source, but with growing dependence on China, this challenge has only deepened with the new US tariffs. Economist Biswajit Dhar noted that the Trump tariffs are causing a realignment in Asia, saying “The pace of improvement [in India-China relations] has certainly hastened over the past few months. There seems to be a genuine shift in the relations which is here to stay.” A China-India rapprochement creates greater space for Asia-led trade blocs that are independent from Washington. China acknowledges that it has pushed India too close to the US, and New Delhi realises that ties with the US are regarded as transactional in Washington – for the US, the underlying assumption was that closer US-India ties, coupled with historical distrust between New Delhi and Beijing, would guarantee long-term hostility between the two big Asian countries to its benefit.

Nehru believed in the early 1950s that India and China could rise together to herald a new Asia rising again from the ashes of colonialism. That scenario may be passé given the growing gap between India and China economically, technologically and militarily, and the emergence of the Asian ‘tigers’, but the bilateral thaw predates Trump, and rebuilding broken relations began with the Modi-Xi Kazan meeting in 2024. Yet India certainly feels aggrieved by Trump’s evident ties with Pakistan, the Sindoor ceasefire controversy, pressure on purchase of oil from Russia, and his apparent de-emphasis on strategic ties with India. The nomination of an ambassador in India with responsibilities in South and Central Asia will be to India’s distaste. China believes it has faced Trump down on tariffs, and India and China now seek strategic space for manoeuvre which is realistic when the chessboard pieces are in constant motion.

After the Kazan summit India-China ties have progressed apace by isolating border issues without affecting other relations. The Indian Foreign and Defence Ministers and National Security Adviser have been to China, and China’s Foreign Minister to India. Pilgrimages to Tibet, direct flights, visas, and border trade at three border crossings will resume, and Modi will attend the Shanghai Cooperation summit at Tianjin; his first China visit since 2018.

After Chinese Foreign Minister Wang Yi’s visit, Indian sceptics questioned the outcomes; that there was no substantive progress on the border issue or restoration of the status quo in Ladakh, which will deny India leverage in future disengagement talks; disengagement remains unfinished with restrictions on grazing and patrolling in buffer zones, de-escalation yet to be determined; any ‘early harvest’ approach to a piecemeal border settlement is new and unjustified; no change in China’s stapled visa policy; no commitment by China to provide real-time hydrological data though the Brahmaputra dam affects both lower riparians India and Bangladesh; no commitment by China to condemn Pakistan’s sponsorship of terrorism; no measures to reduce India’s trade deficit or address market access imbalances; and generally, an Indian strategic retreat rather than robust engagement, with India ceding ground on territory and economic leverage through failing to secure reciprocal commitments from China, so there is growing asymmetry in the relationship. These Indian pundits call China the primary strategic challenge for India with a yawning gulf in common strategic interests with China, and many have no hesitation in calling China our ‘enemy’.

The balanced opinion however is that stable, predictable and constructive ties will add advantage to both countries in these times of turbulent international relations. The risks of too close an identification with US interests are all too clear. The US is dependent on China for rare earths, some supply chains, trade ties and its US treasury bond holdings. If US strengthens its ties with China, Washington’s relations with India will decline further.

India-China bilateral trade will need attention. In 2024-25, India recorded a trade deficit of $99bn with China, which is India’s largest trading partner after the US, but India’s trade deficit with China is greater than that with the US. If New Delhi were to align closely with Beijing on issues on which they see eye-to-eye like development financing, multilateral reform, de-dollarisation, the illegality of unilateral sanctions and climate change, temper India’s appetite for overtly anti-China positioning within the Quad, and emphasise resilient supply chains, emerging technologies, climate cooperation and maritime security, this could indeed be a global game-changer. For India to stay the course of improved ties with China, it would have to ward off the open or latent hostility of the USA and EU, and play a more assertive role in groupings like SCO and BRICS and its links with ASEAN. The RIC (Russia, India, China) format needs to be revived.

The greatest obstacle to a re-set in India-China relations is the hard-wired historical legacy of anti-Chinese sentiment among Indians at large. Only decisive leadership determined to stay the course can overcome this internal resistance. This will be Modi’s greatest challenge.

China-PakistanDonald TrumpgeopoliticsIndia-China relationshipJammu and KashmirModi-Xi Kazan meetingNarendra ModiTrade tariff warXi Jinping