India, China and America

India and China have agreed to step up trade flows and resume direct flights in a major diplomatic breakthrough, as the two most populous nations try to rebuild ties damaged by a 2020 deadly border clash and amid US President Donald Trump’s unpredictable foreign policy.

The two rivals also agreed to advance talks on their disputed border during Chinese Foreign Minister Wang Yi’s two-day visit to India.

The rebuilding of India-China ties coincides with friction between New Delhi and Washington, following the recent imposition of steep tariffs on India by the Trump administration.

So why did India and China decide to mend their ties, and what steps were taken to address their border dispute?

Discussions covered a range of issues related to withdrawing tens of thousands of troops that both countries have amassed along their Himalayan border, boosting investment and trade flows, hosting more bilateral events, and enhancing travel access.

The Asian neighbours agreed to reopen several trading routes–namely the Lipulekh Pass, Shipki La Pass and Nathu La Pass. An expert group will also be established to explore “early harvest” steps (i.e. mini-agreements that can be implemented quickly before the conclusion of a more complex deal) to improve border management, a move India had previously opposed.

In the past, India was keen to avoid a situation where China secured partial gains up front, but where its territorial integrity concerns remained unresolved. India’s opposition has accused the government of ceding territory to China.

Elsewhere, China has reportedly agreed to address India’s concerns over its export curbs on fertilisers, rare earth minerals and tunnel-boring machines, according to media reports.

“As a matter of principle, China is willing to strengthen dialogue and cooperation with relevant countries and regions to jointly maintain the stability of the global production and supply chain”.

New Delhi and Beijing also agreed to resume direct flights between the two countries, enhance river-sharing data and drop certain visa restrictions for tourists, businesses and journalists.

During his two-day trip, Wang Yi held meetings with Indian Prime Minister NarendraModi and India’s National Security Adviser AjitDoval, encounters that will pave the way for Modi’s first visit to China in seven years at the end of August.

“Stable, predictable, constructive ties between India and China will contribute significantly to regional as well as global peace and prosperity,” Modi posted on X after his meeting with Wang.

Meanwhile, Doval said that China and India had achieved a “new environment” of “peace and tranquillity”. He added that “the setbacks that we faced in the last few years were not in our interest”, and “delimitation and boundary affairs” had been discussed.

Trump’s additional 25 percent tariff places India among the most heavily taxed US trading partners and puts its $86.5 billion in exports at a disadvantage to rivals such as China, Vietnam and Bangladesh. India’s refusal to stop purchasing Russian oil and opening agriculture to US multinationals seems to have tempted Trump to impose 50 percent tariff on Indian exports. In truth China is the biggest importer of Russian oil; China imported a record 109 million tonnes of this product last year, representing nearly 20 percent of its total energy imports, indirectly helping Moscow in its war on Ukraine, now in its fourth year.

 By sparing China from high tariff America proves its precarious dependence on China’s rare earths No doubt America has upper-hand now but if the trade standoff persists, the real winner will be China, not America. Unequal treatment reflects a cold combination of political and economic calculations. After all China is a rising superpower with its imperial project of Belt and Road Initiative moving very fast though Beijing has only one military base abroad at Djibouti against Washington’s 750 across the world.

Former US President Barack Obama famously predicted that the United States and India would form the 21st century’s “defining partnership”. With Trump in saddle now the relationship is at its lowest point. The downturn in US-India ties comes amid a spate of high level diplomacy between New Delhi, Moscow and Beijing.

27.08.2025

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Frontier
Vol 58, No. 12, Sep 14 - 20, 2025