Between Rivalry and Rapprochement: The Trials and Trajectory of India-China Relations

INTRODUCTION

Indian Prime Minister Narendra Modi’s visit to Tianjin for the Shanghai Cooperation Organisation (SCO) summit has promoted new discussions on the direction of India-China ties. The meeting concluded with both sides stating that they should view each other as “partners and not rivals” and as development opportunities and not threats. Regardless, the optics and rhetoric of engagement have done little to alleviate the underlying fault lines between the two countries. This article argues that the structural dynamics between India and China indicate that competition and tension will remain the dominant themes, and the quest for a new equilibrium will be long, slow, tense and fraught with friction.

This article also analyses the evolution of India-China relations in recent years. It begins by examining how the boundary tensions since early 2020 have impacted India’s relations with China, and follows that up with a discussion on the structural factors that impinge on the relationship. The article then surveys the domestic debate within India on this issue, and assesses the possible trajectories for Sino-Indian relations in the months ahead.

THE LONG ROAD TO DIALOGUE

After over five years, the first direct flight connecting India and China travelled from Kolkata to Guangzhou on 27 October 2025. The journey facilitating this link was nearly a year in the making. In October 2024, Indian Prime Minister Narendra Modi had met with Chinese President Xi Jinping at the sidelines of the BRICS summit in Kazan, Russia, with both sides declaring the intent to pursue normalisation of ties. This was the first formal engagement between the two leaders since October 2019. The April-May 2020 standoff in Eastern Ladakh, which resulted in the first loss of life in fighting along the India-China boundary areas since 1975, had hurt the fragile bilateral trust, plunging the India-China relationship to its lowest point since the 1962 war.

Nearly five years of negotiations thereafter resulted in both armed forces eventually disengaging from all friction points. This paved the way for the leaders’ meeting in Kazan, which then gave rise to positive signals. Both sides appeared keen to put the acrimony of the past few years behind them in order to explore a new balance in the relationship. This process has been difficult and slow. Following Kazan, the early meetings between officials at the highest levels in the two countries yielded few breakthroughs. In fact, it was only towards the second half of 2025 that the two sides managed to resume a traditional pilgrimage by Hindu devotees to Tibet, re-establish direct flight connectivity, and ease on visas.

Chinese Foreign Minister Wang Yi’s August 2025 visit to India, had moved the needle forward. The visit resulted in agreements to establish an expert group to explore early harvest in boundary delimitation in the India-China border areas, a working group to advance effective border management, and the creation of General Level Mechanisms in the Eastern and Middle Sectors of the boundary. Both sides also agreed to resume border trade through the three designated trading points, while committing to put economic, people-to-people engagement and other issues back on the bilateral agenda. The Chinese side characterised this as a “dual-track” approach. This implied that both sides would progress on thorny issues related to the boundary while pursuing broader easing in the relationship. That said, significant points of divergence remain between the two countries. For instance, both sides continue to maintain large numbers of troops forward-deployed along the LAC, with de-escalation still elusive.

Nevertheless, Wang’s visit paved the way for the Indian Prime Minister to travel to Tianjin for the SCO summit. The meeting between Modi and Xi in Tianjin did not deliver any tangible outcomes. Rather, it signalled both sides’ intent to continue to pursue a new equilibrium in the relationship. This is indicative of the likelihood of near-term stability. The fact that this meeting came amid the backdrop of US President Donald Trump deciding to impose 50 per cent tariffs on a sizeable portion of Indian exports was read by some as strategic rebalancing by New Delhi. Such assessments underestimate the structural and bilateral dynamics of the India-China relationship, essentially mistaking efforts at putting a floor to the relationship for a strategic reset.

ENDURING STRUCTURAL FAULT LINES

Historically, the relationship between the modern Indian and Chinese states has been characterised by strands of cooperation, competition and even conflict. These continue to co-exist, although increasingly both countries seem to be viewing each other through the threat rather than opportunity prism. This situation is likely to persist for the foreseeable future, owing to three structural factors.

First, both India and China have emerged as major global powers and economies. Over the past three decades, their simultaneous expansion in interests and capabilities has produced growing friction. On legacy issues such as the disputed boundary, their enhanced capacities have translated into sharper competition and efforts to gain advantage. Chinese officials, for instance, have often cited India’s border infrastructure development as a cause of the standoff in Eastern Ladakh. Conversely, Indian security officials and former diplomats argue that such infrastructure upgrades have increased contact between forces and improved mobilisation capabilities. The parallel rise of both countries has also created overlapping and expanding spheres of interest, generating new areas of contention. This is evident in New Delhi’s unease over Beijing’s growing presence in the Indian subcontinent and the Indian Ocean Region, as well as in India’s deepening economic and security engagement across East Asia.

Second, while both countries have experienced a simultaneous rise, the pace of this growth has been sharply uneven. Consequently, structurally, there now exists a deep power asymmetry between the two countries. From a state of near parity in the early 1990s, the Chinese economy has grown to be more than five times the size of the Indian economy. In addition, over the years, China has been far more effective than India in channelling the gains from rapid GDP growth towards the development of human capital and hard power capabilities. For instance, China today counts as a leading innovation power, competing for global leadership in key domains of science and technology. Rapid GDP growth has also permitted China’s defence spending to expand significantly in absolute terms, while officially hovering at around 1.5 per cent of GDP. China’s official defence budget for 2025 was estimated at around $250 billion, which is well over three times India’s defence allocation. Despite the recent slowdown in China’s growth, this gap is unlikely to be bridged anytime soon.

Beyond its material implications, the strategic predicament generated by such asymmetry lies in the shifting perceptions of the self, the other, and the relative balance of power. Beijing today views itself as a great power, and India as an inferior regional power. Moreover, it believes that the essence of power lies in its exercise. This was underscored by Xi Jinping in his speech at the 20^th Party Congress in October 2022, where he argued that “China’s international influence, appeal, and power to shape have risen markedly”. Policy, therefore, flows from this self-perception, desiring the shaping of a new pattern of China’s engagement with the world at large. After all, what value does power hold if it cannot be exercised? And can a state truly be considered a great power if it cannot shape favourable political outcomes through the capabilities it has cultivated? This mindset is reflected in China’s proactive and assertive global diplomacy, articulated through the framework of building a “community of shared future for mankind” and increasing use of force along its periphery.

The third structural factor weighing heavily on the India-China relationship is the evolving global role of the United States. The past decade has witnessed the gradual re-emergence of great power competition, with the US and China being the chief protagonists. While there exist significant disparities, assessed on broad metrics of power, the two countries are today the dominant global actors. Despite the prevailing ideological flux and policy incoherence in Washington under President Donald Trump, including references to a G2 order, Chinese officials continue to believe that strategic competition with the US is likely to persist, if not intensify. Moreover, the Indo-Pacific region is where this competition is most likely to play out.

Beyond its material implications, the strategic predicament generated by such asymmetry lies in the shifting perceptions of the self, the other, and the relative balance of power. Beijing today views itself as a great power, and India as an inferior regional power.

In this context, China expects New Delhi to accommodate its interests in light of the altered global balance of power and the asymmetry between the two countries. From Beijing’s perspective, Indian acquiescence is essential to securing its pre-eminence in the Indo-Pacific and countering what it views as American containment. In fact, one key challenge in the India-China dyad is that Beijing consistently views Delhi from the prism of its competition with Washington. In doing so it undervalues Indian agency, and misinterprets Indian interests and aspirations. Since independence, India’s governing elite have harboured a sense of manifest destiny—a deep-seated belief that India is destined to be a global power and pole in its own right. The current administration’s conception of India as a “leading power” is a continuation of this long-held view. To this end, Indian policy has been focussed on pursuing deeper ties with the US and the broader geopolitical West. This also facilitates India’s internal and external balancing vis-a-vis China. Despite recent frictions that have strained political trust between Washington and New Delhi, both sides remain engaged on a potential trade deal, while the security pillar of the relationship has remained largely insulated from broader turbulence. Moreover, the ongoing strategic competition between Washington and Beijing over economic security issues is unlikely to ease soon, despite the Trump-Xi truce in Busan. These structural dynamics continue to underpin a long-term convergence of interests between India and the US.

THE INDIAN DEBATE ON CHINA

The June 2020 clash in the Galwan valley severely impacted Indian elite and public opinion with regard to ties with China. In the immediate aftermath of the incident, the mood across the country shifted quite precipitously towards viewing China as a strategic adversary. This was reflected in the statements of senior officials and retired diplomats, along with the views expressed by the leadership in the armed forces. From the perspective of the Indian security establishment, China today is among the biggest security challenges confronting the country. The brief conflict between India and Pakistan in May 2025 further underscored this, given the latter’s tremendous military dependence on Beijing and perceptions of China actively aiding Pakistan during the conflict.

Despite the friction over the past five years, bilateral trade between India and China has continued to grow. In fact, India’s trade deficit with China was around US$100 billion in 2024, accounting for 10% of China’s global trade surplus.

The view that the state of the border determines the state of the relationship has become central to India’s China policy. Placing border stability at the heart of the relationship allowed friction to seep into all other areas. Trade, investment, and technology flows came under tighter scrutiny, while people-to-people exchanges have weakened substantially. For instance, following Galwan, New Delhi adopted a range of diplomatic, economic, and technological measures to impose costs on Beijing and Chinese entities. It also worked to deepen ties with the US and its allies, as evident in the deepening of the Quad partnership. From New Delhi’s perspective, rebuilding the relationship requires Beijing to adhere to “mutual respect, mutual sensitivity, and mutual interest”. In other words, it must accommodate India’s sensitivities and aspirations.

That said, there are competing views within the country around the pathway to achieve a desirable equilibrium in the bilateral relationship. For instance, the Indian government’s 2024 Economic Survey called for openness to Chinese capital. The country’s Commerce Minister Piyush Goyal, however, has periodically baulked at any such suggestion. In the interim, there is clearly a rethinking that is underway with regard to Chinese investments. Reports over the past 18 months have indicated that the Indian government is open to select investments in the auto, electronics and technology sectors. Earlier this year, NITI Aayog, the government’s apex public policy think tank, called for easing of the investment scrutiny that was placed on Chinese entities via Press Note 3, which was issued in April 2020. It recommended that Chinese companies be allowed to take a stake of up to 24 per cent in an Indian firm without any approval being required.

Likewise, on the issue of trade with China, there exists a diversity of nuanced views across the country. Despite the friction over the past five years, bilateral trade between India and China has continued to grow. In fact, India’s trade deficit with China was around US$100 billion in 2024, accounting for 10 per cent of China’s global trade surplus. This is, of course, a political and long-standing policy challenge for Indian leaders. From a policy perspective, the Indian government has long sought a deeper trade dialogue with China focussed on balancing trade by ensuring greater access to the Chinese markets for Indian agricultural, pharmaceutical and service goods. Moreover, it recognises that the import of capital and intermediate goods from China has been beneficial in expanding Indian exports. At the same time, there are deep concerns around the flow of cheap Chinese manufacturing goods having a largely deleterious impact on India’s medium, small and micro enterprises. By and large, the Indian MSME sector has sought greater government protection given this situation, which has often taken the form of anti-dumping measures. In contrast, large enterprises in sectors like consumer electronics, automobiles, telecommunications, new energy, and railways are keen on deepening trade and enterprise linkages and removal of barriers from both sides. This is tricky in an environment where there is also greater anxiety around Beijing’s weaponisation of economic dominance in select sectors. Recent tensions of Chinese restrictions on the export of fertilisers and tunnel boring machines and rare earths export controls are a case in point. This, along with the dominance of Chinese electronic imports, have prompted a pronounced debate on de-risking from China.

Finally, in terms of broader public opinion, the picture is not very positive. At its height, towards the end of the first decade of the 2000s, China’s favourability rating among Indians was around 40 per cent. The most recent Pew survey found that Indians’ perceptions of China had turned sharply negative since then, with only 21 per cent of Indians having a favourable view of the country. Surveys conducted by Indian think tanks have also reflected the worsening of public and elite opinion in India. Most of these have indicated weakened trust, but a willingness to continue economic engagement.

THE FUTURE TRAJECTORY

Taking into account the above discussion, it is not surprising that the Indian government has moved ahead with a cautious and gradual approach towards re-engagement with China. Despite Xi Jinping and Narendra Modi meeting twice within a period of 12 months, political trust remains deeply fractured. This is reflected in the time that it has taken for the two sides to pluck what should be relatively low-hanging fruits like easing visa policies and expanding flight connectivity. That said, the current process of engagement does come at a moment when both countries are dealing with domestic economic challenges while adapting to tremendous global uncertainty. For China, the external environment—particularly future access to Western markets, capital and technologies—remains extremely challenging. For India, the strategic incoherence in American policies is raising concerns about the efficacy of the policy of multi-alignment.

The strategic environment, therefore, creates incentives for both sides to pursue some sort of rebalancing. To this end, it is very likely that New Delhi will pursue expanded bilateral dialogue, including at the military level; sustain and expand multilateral engagement where interests coincide; maintain trade linkages while pursuing de-risking; and ease up on select Chinese investments. Such a policy will be driven from the perspective of pragmatism and the objective of expanding India’s strategic autonomy. That said, it is very unlikely that India will acquiesce to China’s global and regional initiatives. Effectuating such an outcome will require concessions from Beijing, particularly with regard to India’s interests, aspirations and initiatives, such as on the issue of terrorism, representation in international forums and support for propositions like the International Solar Alliance and Coalition for Disaster Resilient Infrastructure. Beijing, alas, appears to believe that the current balance of power does not warrant such generosity.

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This is an adapted version of ISEAS Perspective 2026/1 published on 7 January 2026. The paper and its references can be accessed at this link.