India and China Realign Relations Amid Global Trade Shocks and Border Tensions
India and China are cautiously resetting their complex relationship amid US trade tariffs and border conflicts. Both countries are pursuing new alliances, expanding trade and diplomatic ties, and seeking alternative markets to mitigate external shocks. Despite historical mistrust and recent clashes, high-level talks and agreements in 2024-2025 signal efforts to stabilize relations and foster pragmatic cooperation.
The article explores how rising US tariffs and border conflicts have prompted India and China to realign their relations strategically. In 2024-2025, the two largest developing economies faced severe impacts from US tariffs—India particularly affected by a 50% tariff on exports to the US, and China by tariffs up to 145%. These trade shocks pushed India to seek closer ties with China and Russia, marked by Prime Minister Narendra Modi's return visit to China and participation in the Shanghai Cooperation Organisation summit alongside Presidents Xi Jinping and Vladimir Putin. Both countries are diversifying markets into Latin America, the Middle East, ASEAN, and Africa, while promoting domestic consumption. Trade between India and China has increased significantly, reaching $88 billion in early 2025, despite India’s large trade deficit with China exceeding $99 billion. Border tensions remain an obstacle, with deadly clashes in 2020 and recent infrastructure build-up, but 2024-2025 saw a breakthrough through border patrol agreements, resumption of diplomatic engagements, and new confidence-building measures such as a military hotline. Scholars emphasize the need to transform mistrust into cooperation grounded in pragmatic economic and security interests. While their relationship stops short of an alliance, India and China aim to avoid confrontation and maximize mutual development benefits. Concurrently, India deepens ties with Russia, leveraging historical geopolitical cooperation and regional infrastructure projects like the International North-South Transport Corridor. Overall, the article depicts a cautious but pragmatic realignment shaped by geopolitical dynamics, economic imperatives, and regional stability considerations.
