Since US President Donald Trump waged a trade war against both countries, India and China have accelerated their efforts to repair ties. India’s Prime Minister Narendra Modi is preparing for his first visit to China in seven years for a major summit on Aug 31.
What’s the relationship like between India and China?
India and China share a rivalry that stretches back to the years just after India’s independence in 1947. They initially enjoyed a brief friendship, but when China took control of Tibet in 1950, it left the two sides with their first shared border in history, giving rise to tensions. India’s decision to grant asylum to the Dalai Lama in 1959, following a failed uprising against Chinese rule, led to the first major source of strain. Three years later, the two sides fought a brief war over their disputed Himalayan border that China decisively won. Left unresolved were competing claims in two key regions — Aksai Chin in the west and Arunachal Pradesh in the east.
Ties remained strained through the Cold War as India grew closer to the Soviet Union, China’s then-rival. In recent decades, China has pulled ahead rapidly as the dominant economic power of the two, but the post-Cold War era also brought an easing of tensions and growth in trade ties. However, Beijing’s increasingly muscular foreign policy, as well as its deepening intervention in India’s neighbourhood through its Belt and Road infrastructure programme, sowed mistrust in New Delhi into the 2010s.
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Ties hit a fresh low after a border standoff in Doklam, a region bordering Bhutan, in 2017. Then, in 2020, a bloody border clash in Galwan in the Indian region of Ladakh sent relations into a deep freeze. India suspended tourist visas for Chinese nationals and erected restrictions against Chinese technology. It banned the sale of telecom equipment made by Huawei Technologies Co and blocked Chinese video-sharing app TikTok.
More recently, India has applied increased scrutiny on inbound investments by Chinese companies, including rejecting separate US$1 billion ($1.3 billion) investment proposals from Chinese auto majors BYD Co and Great Wall Motor Co. to set up factories in the country. The renewed tensions also pushed India to cultivate closer ties with the US, whose rivalry with China was also deepening.
Suspicions over China continue to simmer during India’s brief clash with Pakistan this year. Pakistan claimed Chinese-made J-10C jets were used to shoot down five Indian fighter jets during the conflict. India said China also provided its enemy with air defence and satellite support. Separately, China has grown increasingly wary of India’s push to take manufacturing market share, as Beijing makes it more difficult for employees and specialised equipment to leave its shores and Chinese staff in India get recalled home.
Despite these frictions, India and China have an important economic relationship. China is India’s second-largest trading partner behind the US, thanks to India’s appetite for Chinese consumer goods. The two sides traded US$127 billion of goods last year, although most of that — US$109 billion — was Chinese exports to India.
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How does India need China?
India’s industrial ambitions increasingly hinge on access to Chinese technology. For example, India imported nearly US$48 billion worth of electronics and electrical equipment from China in 2024, which underscores just how much the country relies on Chinese parts for its assembly of electronics, from smartphones to telecom networks. Similarly, its vaunted pharmaceutical industry imports the majority of active pharmaceutical ingredients from China.
India is also heavily reliant on China for rare earth magnets to meet its ambitious goals in the electric vehicle, renewable energy and consumer electronics sectors. China’s curbs on its rare earth magnet exports, which hit India harder than other manufacturing nations, threatened to put its auto sector at a standstill.
But it is not just goods and hardware that India needs from China. For its most critical technology needs — from EV batteries to clean power storage — and its ambitions to build cheap, renewable solutions for its 1.4 billion people, it also needs China’s skillset and technological know-how.
In these sectors, where local expertise is lacking and alternatives are scarce, some of the country’s biggest conglomerates are quietly exploring partnerships with Chinese firms. Indian billionaire Gautam Adani, for example, has visited China to meet executives at CATL, the world’s largest battery maker, and has held preliminary talks with Chinese EV giant BYD about a potential battery manufacturing tie-up. Sajjan Jindal’s JSW has already struck a deal with Chery Automobile Co to source technology and components for its electric-vehicle push.
How does China need India?
Beijing, too, has strong incentives to keep India close. With its domestic growth slowing, China sees India’s consumer market, driven by its mammoth population, as one of its few remaining expansion frontiers. In 2024, India imported and sold approximately 156 million smartphones — this rapid digital adoption is a goldmine for Chinese device-makers Xiaomi, Vivo and Oppo that already dominate Indian sales.
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India, as the world’s third-largest car market with roughly 4.3 million passenger vehicles sold in 2024, is another target market. Chinese automakers, notably BYD, have openly targeted this growth, previously declaring ambitions to capture up to 40% of India’s auto market.
Beyond supply chains, China’s tech giants have poured billions into India’s startup ecosystem. Firms like Alibaba Group Holding and Tencent Holdings actively funded unicorns such as Paytm, Zomato, Ola Electric and Byju’s, betting on India’s rising digital economy and consumer appetite.
And just as Indian firms see benefits in partnering with Chinese companies, Chinese firms too see advantages in collaborating with their Indian counterparts as they navigate India’s complex regulatory landscape and seek access to one of the world’s fastest-growing consumer markets.
Are there signs that India and China’s relationship is improving?
Steps by both countries to repair ties have gained momentum in the last year, with high-level diplomatic visits by officials from both sides and greater outreach by business executives.
Last month, India’s External Affairs Minister Subrahmanyam Jaishankar visited Beijing, his first visit since 2020. And in August, China’s Foreign Minister Wang Yi visited New Delhi for the first time in three years. Both officials expressed a renewed spirit of cooperation between the two countries.
There have been other signs of a thaw. Beijing has loosened curbs on its urea exports to India, New Delhi has reinstated tourist visas for Chinese nationals and airlines in India have been asked to prepare for the restoration of direct flights between the two nations. Meanwhile, Modi is poised to attend the Shanghai Cooperation Organization meeting in Tianjin on Aug 31, where he is expected to meet with Chinese President Xi Jinping. If the visit goes ahead, it would be Modi’s first visit to China in seven years.
Though the closer ties preceded the beginning of the second Trump administration, the thaw is driven to some extent by the US’s about-face on India. During Trump’s first term as president, the US saw India as a close partner in countering China. This time around, Trump has taken a tougher approach toward India, slapping it with high tariffs, criticising its trade barriers and attacking it for its purchases of cheap Russian oil. These moves have put China and India in a similar corner when it comes to Trump’s trade war.
Will India and China fully mend their relationship?
There are reasons to be sceptical that India and China are headed for a full rapprochement — and there is little indication that India plans to ditch its tech curbs and other investment restrictions on China anytime soon. Memories of the 2020 border clash remain fresh on both sides, and the border disputes that fuelled the clashes remain unresolved.
For India, the hesitation is obvious: Becoming too dependent on China risks repeating the vulnerabilities of the past. Supply chain shocks, from rare earth curbs to export restrictions on key components, have shown how Beijing can just as easily cut access as provide it.
For China, the risk is more strategic. Beijing knows India is on the same development path China once took: importing foreign know-how to leapfrog into new industries. That history makes Beijing cautious about transferring too much expertise, since India could emerge as a direct competitor in green tech, electronics and clean mobility.
At stake is whether India can secure the technology it needs to meet climate goals and build affordable solutions for its vast population, or whether China will limit access to protect its global dominance. For Chinese companies, the lure of India’s market is immense, but so too is the fear that today’s partnerships could eventually seed a powerful rival. — Bloomberg Quicktake
