India and China, the fifth and second largest economies in the world each, are already preparing for a crucial diplomatic showdown. Indian Prime Minister Narendra Modi stops off in China this week for a major Shanghai Cooperation Organisation (SCO) meeting. His visit will be the first bilateral meeting between Modi and Chinese President Xi Jinping since 2017. Despite their intractable territorial disagreements and recent deadly clashes, the two countries are keen to reset their economic ties. Particularly, they understand the necessity for collaboration to respond to a shifting international order in the Pacific.
The backdrop of this meeting is complex. The last large-scale surge of violence occurred in June 2020 in Ladakh’s Galwan Valley. This fatal conflict was an unfortunate loss of life on both sides. This move touched off the worst violence between the two nations in over four decades. It set off enormous economic consequences. Direct flights between India and China were stopped, the issuance of visas was suspended, and Chinese investments in India at least were delayed. India’s unilateral banning of more than 200 Chinese applications—most notably TikTok—further raised the ire of Beijing.
Recent developments have made that relationship even more complicated. On April 22, a deadly attack on Hindu tourists in Indian-administered Kashmir sparked the worst fighting in decades between India and Pakistan, raising concerns for Delhi about security and international perceptions. The controversial issues keep coming. Among them are territorial disputes in Tibet, the status of the Dalai Lama, and disputes over China’s intent to develop a huge hydroelectric project on a transboundary river.
The geopolitical landscape has shifted significantly. As of Wednesday, the US government has increased tariffs on Indian exports to the US to 50%. In a heavy-handed move, this punitive measure has been implemented over India’s continued purchase of Russian oil. Observers are pointing to an increasingly frosty Indo-American relationship. This is likely one of the factors pushing India to develop closer relations with China, especially in forums like the SCO.
“Dialogue will be needed to help better manage the expectations of other powers who look to India-China as a key factor of Asia’s wider stability,” – Antoine Levesques.
Underneath these tensions is a strong appreciation for the importance of working together. India continues to be highly dependent on China for manufacturing, sourcing critical raw materials and components. India’s economic growth is the envy of the world—booming, bright and booming. The International Monetary Fund (IMF) expects India to continue this growth pattern, staying above 6% and even reaching a $5 trillion economy by 2028.
“Leveraging each of their advantages – China’s manufacturing prowess, India’s service sector strengths, and Russia’s natural resource endowment – they can work to reduce their dependence on the United States to diversify their export markets and ultimately reshape global trade flows,” – Chietigj Bajpaee and Yu Jie.
As Modi looks towards the East for his visit, analysts are saying this could be a transformative point in Sino-Indian relations. Their uneasy relationship points to a “discomforting partnership.” Yet, both nations are deeply engaged in pursuit of their own interests even as they address larger, regional dynamics.
“While the world has traditionally focused on the single most important bilateral relationship in the world, US and China, it is time we shift more focus on how the second and third largest economies, China and India, can work together,” – Qian Liu.
Modi came to BRICS in October 2024 as perhaps the last big summit host before the COVID-19 pandemic. This summit, in conjunction with Xi and Russian President Vladimir Putin’s shared vision to advance alternatives to Western hegemony. Civil society observers are optimistic that more cooperation can strengthen regional supply chains. Strengthening this trilateral cooperation would help advance initiatives such as “Make in Asia for Asia.”
“Asean and Japan would welcome closer cooperation between China and India. It really helps in terms of supply chains,” – Priyanka Kishore.
As exciting as these opportunities are, there are still major obstacles to overcome. Those enduring territorial disputes and national security concerns still hang in the air like oil on water over any potential economic cooperation. Modi’s first state-level talks with Xi will have to confront these stern challenges in order to create a consistently workable relationship.
“Remember at one point, the US and India were coming together to balance China,” – Priyanka Kishore.
Specialists argue that common sense steps could do both countries a world of good. Streamlining visa processes is a pillar of Chinese market access gains. This shift coincides with their efforts to invest in India and adapt to a US market that is rapidly stagnating.
“Faster visa approvals would be an easy win for China as well. It wants market access in India either directly or through investments,” – Priyanka Kishore.