US President Donald Trump may boast of his “timely” intervention to stop India and Pakistan from escalating military tensions this year, but it is his furious global trade war that did the unthinkable – thawing diplomatic tensions between India and China.
In an increasingly economically polarised world that has been destabilised by Trump’s tariffs, India and China seem to agree that they can work better as partners, not rivals.
As India reels under the highest tariffs of 50 per cent imposed by Trump on its goods, Prime Minister Narendra Modi’s visit to China after seven long years for the Shanghai Cooperation Organisation (SCO) summit in Tianjin this month is expected to defuse tensions in the Sino-Indian ties.
Representing nearly 35 per cent of the world’s population, India and China can play constructive roles in boosting growth in infrastructure, renewable energy, climate change, manufacturing, and digital governance by bringing in expertise and resources.
Also Read: China, India in talks to resume border trade after 5 years
During his recent visit to New Delhi, Chinese Foreign Minister Wang Yi had noted that both countries had sought to enhance bilateral cooperation on global challenges and “bullying” by the US.
Having come a long way since the 2020 Galwan Valley border clash – violence that marked escalations in tensions between the two neighbours after half a century – the world’s second-largest and soon-to-be-third-largest economies can now redefine their strategic ties, rediscover common ground, and take forward their shared legacies in history, culture, and trade.
Of investments and expertise
This month, China eased curbs on exports of urea and rare earth to India – both vital compounds for the largely agrarian country and the fastest-growing major economy.
After years of curbs, India, on its part, allowed tourist visas for Chinese nationals.
India, which is home to the world’s largest young population, is China’s second-largest trade partner after the US. The ban on short-video format platform TikTok notwithstanding, India can do well with key inputs from China to develop its manufacturing and consumer-centric base.
In May 2014, India was invited by China to join the Asian Infrastructure Investment Bank (AIIB). India joined the 5th round of multilateral consultations and subsequently signed the MoU on 23rd October 2014, becoming the largest recipient of funding from the bank.
Although India expects Trump’s tariffs to cost it a competitive advantage in about $64 billion worth of goods sent to the US, the relatively low share of exports in India’s $4 trillion economy may not deliver much harm on the country’s economic growth, which the Reserve Bank of India continues to peg at 6.5 per cent for the current April-March financial year.
According to the Ministry of Commerce of China, Chinese investments to India in the year of 2023 was USD 60.37 million and cumulative Chinese investments to India was USD 3.2 billion till 2023 (since 2015). According to DPIIT data, India’s cumulative Foreign Direct Investment into China till March 2025 (since April 2000) was USD 2.5 billion.
Bilateral cooperation between the two can increase trade volumes exponentially.
Joining the Regional Comprehensive Economic Partnership
If India joins the Regional Comprehensive Economic Partnership – a free trade agreement among the 15 Asia-Pacific nations of Australia, China, Cambodia, Brunei, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Singapore, South Korea, Thailand, Vietnam, and the Philippines that came into force in January, 2022 – it can become a part of the world’s largest free trade area and offset some of the current turbulence in the world’s trade system, quite similar to the 1955 Bandung Conference that brought together leaders from Asia and Africa to cooperate for non-alignment and peaceful development.
Also Read: PM Modi meets Wang Yi, says India China ties making progress
Creating a joint economic cooperation roadmap
Prime Minister Modi’s visit to China is a good opportunity for leaders of the two nations to sketch a roadmap in economic cooperation that ensures not only cross-border collaboration, but also coordinated work in progressing Artificial Intelligence, tourism, green energy, environmental protection, education, infrastructure development, investment deals, and technology.
With peace as the shared goal, the two nations can chalk out a lasting partnership that redraws the outline of a prosperous relationship for the entire continent of Asia.
Follow us
