Beijing Needs a Friend

UNDER ATTACK BY US President Donald Trump on trade and technology, China is reassessing who its friends and foes are. India, it believes, tactically for the present, makes a better friend than foe.

Belligerence has given way to treacle. Communist leaders don’t usually use phrases like pas de deux (a classical dance duet in ballet) to describe relations with other countries. China’s Foreign Minister Wang Yi has used that phrase twice in a month for India, saying the dragon (China) and the elephant (India) should dance together and cooperate, not compete.

Chinese spokespersons took the cue. After Prime Minister Narendra Modi told podcaster Lex Fridman that “India and China should engage in healthy and natural competition”, China’s foreign ministry spokesperson Mao Ning said: “In 2,000-plus years’ history of interactions, the two countries have maintained friendly exchanges and learned from each other, contributing to civilisational achievements and human progress.”

Modi had told Fridman, a researcher at the Massachusetts Institute of Technology (MIT), in his podcast: “If you look at historical records, at one point, India and China accounted for more than 50 per cent of the world’s GDP. And I believe our ties have been extremely strong, with deep cultural connections.”

President Trump was impressed enough to link a video of the Fridman podcast to his Truth Social platform.

But behind the new bonhomie between Beijing and Delhi lies geopolitical pragmatism. China needs a period of global tranquillity while it resets its economy. The trade war with the US will slow China’s economic momentum, already under pressure from a chronic real-estate crisis and consumption slowdown.

India, too, welcomes a period of quiescence as it prepares to boost economic growth back to above 7 per cent. But New Delhi isn’t letting its guard down. The deployment of 50,000 troops along the Line of Actual Control (LAC) remains intact though both Indian and Chinese troops have retreated around two kilometres from their eyeball-to-eyeball positions.

India’s security checks on Chinese investments, too, remain intact although exemptions are granted more liberally. Chinese electric vehicles (EVs) manufactured in partnership with Indian business groups like the Jindals have been welcomed. Chinese-made mobile phones are again top-sellers in the price-sensitive Indian market.

What then should India make of the Chinese thaw? China’s former reformist leader Deng Xiaoping said in the 1980s, when China was growing steadily without attracting attention, that Beijing must hide its strength and bide its time. China no longer does that. But after overplaying its hand with the littoral states of the South China Sea and with India in the Himalayas, Beijing has learnt an important lesson that Modi referred to in Fridman’s podcast: compete, but cooperate.

In the disorderly world that President Trump has created, India has multiple options. It has been proved right in remaining neutral in the Russia-Ukraine conflict. If permanent peace breaks out, the world economy will receive a boost. Oil prices will stabilise and trading normalise.

The omens are good. For the first time in years, India’s overall trade balance in February 2025 was in surplus. Total merchandise and services exports were $71.94 billion against total imports of $67.51 billion. The monthly trade surplus of $4.43 billion reveals the growing strength of India’s services sector which, by year-end, could overtake merchandise exports in value. In February, services exports ($35.03 billion) were already on par with merchandise exports ($36.91 billion).

Since 2020, India has suffered successive blows. First came the Covid pandemic, followed months later by the standoff with China on the LAC, and then the Russia-Ukraine and Israel-Hamas wars that disrupted trade. Economic growth has slowed in 2024-25 owing to the lag effect of these disruptions but is likely to now move into higher gear. Going forward, India needs to minimise the impact of Trump’s reciprocal tariffs. Calculations show that if India seeks reciprocal or zero tariffs on, for example, the textile and electronics sector, it will benefit both industries.

There are several other industries that can gain from lower tariffs. India has been a high-tariff, protectionist country for too long, a leftover from a socialist mindset. Structural reforms, including low tariffs, can push India’s annual economic growth rate to 8 per cent. In that sense, the best Chinese takeaway from its pas de deux with India may come seasoned with a Trump garnishing.

Chinese President Xi JinpingDonald Trumpeconomic growthgeopoliticsIndia-ChinaNarendra Moditrade and tariff