India and China have recently seen surprising signs of reconciliation following years of tension and trade disputes, driven in large part by the consequences of the ongoing global trade war. Long engaged in fierce economic competition between themselves, both Asian giants are now showing signs of realigning their relationships as both countries face mounting external trade dynamics, particularly from Western economies such as the US.
India and China have historically been rivals, both economically and strategically, with disputes over border issues and competition for influence across Asia. But as the global trade war reshapes international commerce, both nations are now reconsidering their long-held positions – due to U.S. tariffs against China as well as India’s strategic desire to diversify economic partners – both are exploring potential areas of cooperation while exercising caution in their decision-making.
Shifting Economic Realities
India and China’s recent dynamics are being altered by economic pressures brought forth by the ongoing trade war. Both nations have felt its effects, such as rising tariffs and supply chain disruptions as well as shifting global economic trends. China has suffered from rising tariffs, supply chain disruptions, and changing global trends which have resulted in slowing growth rates – especially export-driven industries – while India grapples with an economic slowdown compounded with the COVID-19 pandemic.
India, long seeking to reduce its dependence on China, is finding it increasingly difficult to ignore the advantages that more cooperative relations could present. China’s decoupling from America has led it to seek new markets and partners within Asia while India reevaluates its role within global supply chains as it strengthens manufacturing and export sectors. Both nations stand to benefit from increased trade and cooperation across areas like infrastructure development, technology advancements, regional trade agreements and bilateral agreements.
Re-engagement through Trade and Diplomacy
Over the past months, India and China have shown clear indications of re-engaging on trade and diplomatic dialogue fronts. Indian Prime Minister Narendra Modi and Chinese President Xi Jinping both expressed interest in strengthening relations, meeting at various international forums to do just that. Both leaders stressed the significance of dialogue and cooperation when confronting global challenges like climate change mitigation strategies, supply chain resilience strategies and regional stability.
At a trade level, China has sought to increase its presence in India’s market through sectors like telecom, electronics, infrastructure and telecommunications services. India, for its part, has sought ways to balance economic interests with national security concerns through areas such as technology and defense – although their cooperation remains tenuous as both sides remain wary of fully accepting each other’s economic influence.
While India and China share enormous economic potential, their relationship remains fraught with hurdles. Chief among them is an unresolved border dispute that has long been an source of tension; though military confrontation has decreased over the years, skirmishes along the border continue to spark tensions, especially in regions like Himalayas.
India remains wary of China’s expanding influence in the Indo-Pacific region, particularly through the Belt and Road Initiative (BRI). India’s concerns about Chinese investments and military presence in neighboring nations cannot easily be put aside; any steps towards cooperation will require significant trust-building between both nations.
India-China Relations in their Future Stage
As the global economic landscape continues to shift, India and China should adopt a more pragmatic approach in their relationship. While a full-fledged partnership seems unlikely in the short term, increasing interdependence of their economies as well as external pressure from a trade war suggest that both nations will find ways to cooperate – just less openly than before.
Trade relations between India and China will likely adapt in response to global trends, and both nations will attempt to mitigate any associated economic risks. At present, however, their tentative embrace is an indicator of shifting geopolitical and economic realities within both their regions and worldwide. It remains to be seen if this tentative cooperation will evolve into something lasting; nonetheless, trade war fallout has unquestionably set the scene for new beginnings between these two powers.