New Delhi: One of the notable consequences of US President Donald Trump’s global tariff war is the growing strength in trade relations between China and India. Since relations between the two neighbouring nations had been tenuous in recent times, the development is remarkable.
As China and India mark the 75th anniversary of diplomatic ties, Presidents Xi Jinping and Droupadi Murmu had congratulatory messages this week, reports confirmed, reiterating their pledge to stabilise relations between the two Asian giants.
The event, though, highlights a relationship that is as much about friction as camaraderie—a complex dance of ancient civilizational ties, modern geopolitical competition, and mutual ambitions for global influence. India, on April 1, 1950, was the first non-communist country to open diplomatic relations with the newly created People’s Republic of China. The 1954 Panchsheel Agreement, which stressed “peaceful coexistence,” reflected nascent hopes. However, the 1962 border war destroyed this romanticism, and there remains, to this day, a legacy of suspicion.
In his letter, President Xi greeted the countries as “ancient civilisations and important members of the Global South,” emphasising that their ties “serve the fundamental interests of the two countries and peoples.” President Murmu made a similar appeal, citing “stable, predictable, and amicable” relations to serve not just their collective 3 billion people but the world at large.
But beneath these diplomatic gestures lies a deeper complexity. The 2020 clash in the Galwan Valley—the most lethal border confrontation in 45 years—killed 20 Indian and at least four Chinese troops, sending relations into a deep freeze. In the face of 20 rounds of military commander-level talks since, disengagement at contested sites such as Depsang and Demchok continues to elude them.
Another significant issue is continuous trade, which has continued to be the most concrete pillar of engagement. Bilateral trade expanded from $3 billion in 2000 to $136 billion in 2023, with China becoming India’s largest trading partner. Despite this, New Delhi has been fuelled with resentment by India’s $100 billion trade deficit that was spurred by imports of machinery, electronics, and key chemicals.
Nonetheless, India has responded in recent years with tariffs on Chinese steel, solar panels, and medicines and banned more than 300 Chinese apps, including TikTok, on grounds of national security. “China’s dumping practice undermines our manufacturing dreams,” Indian Commerce Minister Piyush Goyal stated in a speech in 2024.
China, for its part, has protested against India’s actions at the World Trade Organisation (WTO), accusing New Delhi of “protectionism.” The trade war between the US and China further complicates the dynamics as India positions itself as an alternate supply chain hub via programs like Make in India and the Production-Linked Incentive Scheme. Chinese companies, however, continue to dominate major sectors, ranging from smartphone production to mega infrastructure projects like the Chennai-Bengaluru High-Speed Rail.
Conversely, as original BRICS members, China and India have a platform for counter-hegemony against the West. The bloc’s enlargement in 2023 with Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE has made its voice louder on topics such as IMF reform and regulation of digital currencies. Nevertheless, Sino-Indian competition brews under the surface.
China’s hegemony in BRICS is seen through projects such as the New Development Bank (NDB) and Belt and Road Initiative (BRI). India has boycotted BRI, though, on sovereignty issues , while promoting alternatives such as the International North-South Transport Corridor with Russia and Iran.
During the 2024 BRICS summit, Prime Minister Narendra Modi stressed “inclusive, demand-driven partnerships,” a diplomatically coded reference to China’s debt-based BRI model. In parallel, India’s increasing strategic relationship with the U.S.—testified by its membership of the Quad and recent defence agreements—has earned Beijing’s wrath.
“BRICS is a marriage of convenience,” said Wang Huiyao, founder of the Beijing-based Centre for China and Globalisation. “China and India work together on multilateral reforms but compete with each other to exert influence in the Global South.”