INDIA-CHINA RELATIONS: RESETTING TIES AMID ENDURING TENSIONS

In a significant diplomatic move, India’s External Affairs Minister S. Jaishankar visited China from 13^th-15^th July 2025, to attend the Shanghai Cooperation Organisation foreign ministers’ meeting in Tianjin. This was his first trip to Beijing since the deadly 2020 Galwan Valley clashes, making a cautious attempt to restart direct engagement between the two Asian powers. In a series of high-profile meetings, Jaishankar conveyed greetings from India’s leadership, noted that relations have been steadily improving since the Modi–Xi summit in Kazan that took place in October 2024 while stressing that differences between the states must not become disputes.

Another key issue that stole the limelight of the SCO meet was trade. He urged China to ease recent export restrictions on critical minerals and manufacturing inputs, calling such curbs restrictive trade measures that hamper cooperation. Jaishankar also highlighted recent progress on troop disengagement in Ladakh and expressed support for China’s presidency of the SCO this year while marking the 75th anniversary of diplomatic ties between both states.

Chinese leaders, for their part, emphasized respect and stability as Xi Jinping praised the recent India–China summit while terming it as a new starting point for relations. In brief remarks, Jaishankar also noted the popular resumption of the Kailash–Manasarovar pilgrimage. He also appealed for an open exchange of views between two neighbouring major economies amid a very complex global situation, curtesy to the on-going wars including the tariff war started by U.S. President Donald Trump.

But the real test lies beyond diplomatic courtesies, the core issues remain far from resolved.

THE BORDER DISPUTE

Behind the smiles and handshakes lies a long-running border conflict that continues to strain ties. The 3,800 km undemarcated Himalayan frontier, inherited from a messy past, remains a constant source of tension. The 2020 Galwan clash, which left soldiers dead on both sides, pushed relations to their lowest point in decades.

Though the October 2024 agreement led to partial troop withdrawals in some areas of Ladakh, while several friction points still remain active. Just last month, India’s Defence Minister told his Chinese counterpart at an SCO defence meeting that both sides need to find a lasting solution.

Flashpoints like the 2022 clash in Arunachal Pradesh’s Tawang sector show how easily the situation can spiral. Indian troops successfully blocked Chinese attempts to alter the status quo, but the incident sparked political backlash and public anger. India lodged a formal protest and warned that both militaries must strictly control their actions along the Line of Actual Control.

Talks between senior military officials have resumed, and new measures are being explored to reduce tensions. But for now, the border remains fragile, with trust still in short supply. India continues to press the point, peace at the border is the foundation for any real progress in the relationship.

INDIA RAISES THE STAKES ON TERRORISM

At the same SCO forum which was attended by ministers from China, Pakistan, and Central Asian states, Jaishankar took the opportunity to sharply call out the “three evils” including terrorism, separatism, and extremism. While he avoided naming Pakistan, the target was clear.

Referring to the April 2025 terrorist attack in Pahalgam, Kashmir, Jaishankar described it as a deliberate attempt to derail the region’s tourism revival and fuel communal divisions. India responded with Operation Sindoor, striking terror hubs across the border, signaling a firmer no-tolerance stance.

This public messaging, delivered directly in front of Pakistan’s foreign minister who had earlier praised China as a "brotherly" ally was calibrated and strategic. Jaishankar also highlighted the UN Security Council’s condemnation of the Pahalgam attack, reinforcing global backing for India’s counterterror narrative.

India’s firm stance at the SCO reflects a shift of using multilateral platforms not just for consensus-building, but for targeted signaling. By linking terrorism to economic sabotage and regional instability, New Delhi is attempting to reframe cross-border terrorism as a global threat, not just a bilateral grievance. This puts Pakistan on the defensive without derailing broader diplomatic engagement at the SCO. It also subtly tests China’s commitment to counterterrorism particularly when its “all-weather friend” is implicated.

TRADE, TECH AND DEPENDENCE

Even as tensions simmer along the frontier, trade between India and China is booming. China was India’s second-largest trading partner in 2024-25, with two-way trade reaching about $127.7 billion.

This robust trade masks a huge imbalance in India’s trade deficit with China as it hit a record $99.2 billion in FY2024-25. A huge surge in imports of electronics, batteries and solar cells drove that gap. For example, in March 2025 imports from China were up 25% year-on-year. Indian exports to China, by contrast, actually fell 14.5% in March 2025 compared to the year before. Analysts warn that these figures reveal deep dependencies. In particular, India’s own export sectors often depend on Chinese inputs. For instance, booming Indian industries like electronics, pharmaceuticals and engineering goods rely on components and machinery imported from China.

As per the reports, many Indian engineers and manufacturers lack alternative suppliers. China has leveraged this opportunity and entrenched itself as India’s default supplier for both everyday products and critical industrial inputs. A 2019 FICCI press release quoted industry figures noting that India and China have been the strongest economic partners and that India values the contribution of Chinese companies in its economic growth. The same press release declared that Indian industry is upbeat about its relations with China.

At the SCO meet, Jaishankar addressed this imbalance head-on, calling on Beijing to roll back recent trade curbs. China, in turn, promised to work with India to ensure supply chain stability and support multilateral trade rules. The message was clear, both sides need each other economically, no matter how tense the politics gets. India’s current strategy reflects this reality i.e., tough on security, but pragmatic on trade.

SCO: A DOUBLE-EDGED PLATFORM

The SCO meeting served as a useful platform for India to engage China on neutral ground. Originally launched by China and Russia in 2001, the 10-nation SCO has evolved into a key Eurasian forum, and Beijing sees it as a counterbalance to Western alliances.

China is using its current presidency to promote regional cooperation and strengthen ties with Global South nations. India, meanwhile, supports the forum’s goals on paper but remains cautious in practice. On one hand, New Delhi is actively pushing to internationalize the rupee and provide alternatives to dollar trade. Commerce officials have championed rupee-settled transactions with other emerging economies as a way to “disaster proof” them against dollar shortages while on the other hand, India cannot openly spurn the dollar. While Jaishankar praised China’s leadership and reaffirmed India’s commitment to multilateral cooperation, Indian diplomats remain wary of the SCO being used as an anti-West platform.

India uses the SCO to push its own priorities such as counter-terrorism, regional connectivity, and economic collaboration while avoiding ideological alignment with either side. It’s a careful balancing act of working with China and Russia at the SCO, while maintaining close security ties with the U.S. and its allies.

PICTURE BETWEEN THE WEST AND THE REST

The timing of this diplomatic outreach is no coincidence. Just days before Jaishankar’s visit, former U.S. President Donald Trump threatened new tariffs on all BRICS countries including India and China accusing them of trying to undermine the U.S. dollar.

India’s response has been measured. While quietly exploring rupee-based trade with countries like the UAE and Egypt, it has avoided jumping fully into any anti-dollar push led by China or Russia. New Delhi sees value in reducing dollar dependence but isn’t ready to risk its Western partnerships to do so.

The SCO visit marked a step forward, but only a small one. The underlying mistrust, the trade imbalances, and the unresolved border issues all suggest that true normalization is still a long way off. For now, both sides are talking. That, in itself, is progress but not a breakthrough.

CONCLUSION

India’s participation at the SCO in Tianjin was not just a diplomatic routine but a carefully choreographed message. By engaging with China and confronting Pakistan in the same breath, New Delhi demonstrated that dialogue and deterrence CAN and MUST go hand in hand.

Jaishankar’s firm stance on terrorism, his pushback on trade restrictions, and his emphasis on border stability all signal a shift in India’s foreign policy playbook i.e., less accommodation, more assertion. India is no longer willing to separate diplomacy from security or economic cooperation from strategic leverage.

Yet, the road ahead remains complex. China continues to test boundaries both militarily and economically while leveraging forums like the SCO to shape a new global order. Pakistan remains defiant, leaning on China's support. And global tensions from BRICS currency debates to U.S. tariff threats add further layers of pressure.

In this environment, India is pursuing multi-alignment without compromise and cooperating where it can, pushing back where it must, and always keeping national interest front and center.

The SCO summit offered a glimpse of what future diplomacy will look like in the coming years. For India, engagement with China and its allies is no longer about resetting ties, but about redefining the terms.