How India-China Relations Could Transform Trade Dynamics and Impact the U.S. in Asia

New Delhi, India – Five years back, the relationship between India and the US seemed warm as President Donald Trump visited India. At that time, China voiced its disapproval.

In February 2020, Trump addressed a massive crowd in Ahmedabad, celebrating the growing ties between India and the US. This was just before things took a downturn with China. By June of that year, tensions escalated sharply. The Galwan Valley clash led to the deaths of 20 Indian soldiers, marking a significant turning point. India responded by banning over 200 Chinese apps, including TikTok, and increasing military cooperation with the US and the Quad, a strategic alliance involving Japan and Australia.

Fast forward to May this year, and India openly identified China as a major rival. The backdrop was a military clash involving Pakistan, which relied on Chinese defense systems. However, the complex dynamics shifted again. Trump’s tariffs on Indian imports, alongside changing geopolitics, created a new context for India and China to reconsider their relations.

Analysts are noting that Trump’s tariffs, particularly targeting India, are reshaping alliances. Political expert Biswajit Dhar commented that the recent thaw in India-China ties is likely to last, saying, “The pace of improvement has certainly hastened over the past few months.”

A New Dialogue

Recently, Prime Minister Modi met with China’s Foreign Minister, Wang Yi. They discussed mutual interests and agreed to confidence-building measures. This included resuming direct flights and easing visa processes. Wang described their meetings as a step toward better relations, emphasizing the need for trust.

In another significant development, Modi announced he would attend a summit in China, marking his first visit there in over seven years. Wang acknowledged past conflicts, saying, “The setbacks we experienced were not in the interest of our people.”

Analyst Sana Hashmi notes that India’s warming ties with China are driven by necessity. With the US fostering closer ties with Pakistan, India feels pressured to reconsider its stances, especially regarding its ties with China.

Trade Relations

India’s trade relationship with China is complex. In the latest figures, India recorded a $99.2 billion trade deficit with China, primarily due to imports of electronics. China is India’s largest trading partner after the US, but India’s trade gap with China is quite concerning.

Hashmi emphasized that for China, winning India over would extend its influence in Asia. “Closer ties with India would counter US dominance in the region,” she said, highlighting that both countries recognize the significant losses they face due to their rivalry.

The Quad Takes a New Shape

Historically, the US has viewed India as a counterbalance to China’s growing influence in the Asia-Pacific region. Since the George W. Bush administration, this perception has shaped Washington’s approach towards New Delhi. The Quad grouping was formed to enhance collaboration between the US, India, Japan, and Australia.

However, with Trump’s current policies, including pressure on India to distance itself from Russia, the dynamics are shifting. Indian officials have expressed a commitment to maintaining strategic autonomy, creating a delicate balance.

As relations between India and China improve, this could raise challenges for the Quad’s cohesion. Professor BR Deepak from Jawaharlal Nehru University noted that if India aligns more closely with China, it could weaken the US-led coalition’s goals in the Asia-Pacific.

In summary, as India and China continue their tentative rapprochement, the geopolitical landscape remains complex. The evolving ties may foster an atmosphere conducive to trade and cooperation, but underlying tensions are likely to persist.

For more insights on this topic, you can explore resources from the Council on Foreign Relations and Brookings Institution.

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