Not long ago, Indian military leaders were accusing China of covertly aiding Pakistan during a tense border conflict. Now, in what appears to be a twist of geopolitical irony, Donald Trump’s trade war is driving Beijing and New Delhi into cautious cooperation.

But this diplomatic thaw is less about reconciliation and more about recalibration - two powers, pragmatically navigating rivalry for dominance in Asia under shifting global pressure.

The Thaw

Immediately after meeting with China’s foreign minister Wang Yi, Indian Prime Minister Narendra Modi took to X (formerly Twitter) to note that “since my meeting with President Xi [Jinping] in Kazan last year, India-China relations have made steady progress guided by respect for each other’s interests and sensitivities.” That notably public and conciliatory comment came as Modi arrived in China to attend the Shanghai Cooperation Organization (SCO) summit - marking the first visit by an Indian prime minister to China since tensions boiled over in the Galwan Valley in 2021.

This recent uptick in diplomatic energy is significant. For the past few years, India-China relations have been overshadowed by the deep freeze following Galwan military clashes, where the loss of lives on both sides triggered a sharp deterioration in trust. Yet today, the two Asian giants are taking concrete steps to normalize engagement. Both countries have decided to reopen visa services and resume flight connectivity - a small but symbolic move indicating intent to re-engage, if not reconcile.

Importantly, this thaw doesn’t appear to be rooted in trade concerns. It is tempting to interpret diplomatic openings through the lens of economic necessity, particularly when the two nations share such a large volume of bilateral trade. However, the data tells a different story. India-China trade not only survived the post-Galwan diplomatic crisis, but it flourished quite significantly. According to figures from the Indian embassy in Beijing, bilateral trade stood at USD 86.40 billion in 2020-21. By 2024-25, it had risen to USD 127.71 billion.

The economic relationship, in essence, remained insulated from the political rupture. This reveals something more complex about the India-China dynamic: territorial disputes have not bled into economic pragmatism. We can, therefore, conclude that New Delhi and Beijing were not primarily motivated by the desire to lift their trade ties. Territorial tensions, too, did not provide the spark for high-level visits to take place. While there have been no clashes in Galwan, or in any other disputed region, the dispute itself stands unresolved. Therefore, in the absence of any breakthrough on the territorial front, the India-China thaw owes directly to the trade shocks New Delhi has received from Washington in recent weeks.

The Washington factor

New Delhi’s sudden normalization with China after its top military officials described Beijing as an “adversary” and vowed to prepare India for a “two front war” has its roots directly in events taking place elsewhere. The fact that India has not been able to sign a trade deal with the US and that the US President has imposed 50% tariffs on New Delhi also for buying - and reselling - Russian oil has created a wedge between two erstwhile allies. India’s refusal to acknowledge Donald Trump’s role in defusing India-Pakistan tensions by making them agree to a ceasefire has further annoyed the US President, who sees in this role an opportunity to win the Nobel Peace Prize!

Trump’s issues with the Modi government have, as reports in the mainstream US media show, unravelled decades of US policy vis-à-vis India - a policy that aimed to steer India away from China as much as possible. Between 2021 and 2025, India’s geopolitical pivot towards the US and West was quite evident, as it increasingly positioned itself as an alternative hub to replace China’s role in global supply chain.

During the same period, India’s role in BRICS and the SCO was also little more than lukewarm. For instance, India very recently refused to support the BRICS statement on Israel’s war on Gaza and the SCO statement condemning Israel’s war on Iran. However, once the US President’s trade war hit New Delhi, it was forced to change its position at least vis-à-vis China.

The timing is unmistakable, insofar as Beijing itself is in the middle of a trade war with Washington. But Washington’s new policy vis-à-vis India is not simply to wean it away from China in a geopolitical sense but to force a divorce between New Delhi and Moscow, two very long-term allies. The message from Washington to New Delhi is, thus, clear: ties with Washington come at a heavy geopolitical and economic cost. India will have to forego it’s with Russia, downplay ties with China, and open its markets to US products at zero to very low tariffs.

Is there an India-China reset?

With Washington having successfully pushed India away from itself and more towards China (and Russia), the question remains: are India-China ties headed towards a fundamental geopolitical reset? The answer, at least at this stage, is no. Not only the territorial issue between both states remains unresolved, but India has different problems with China as well. For instance, while the overall India-China bilateral trade volume has been increasing the year over year, it is also a fact that it has tilted more in China’s favour.

India’s trade deficit with China was just over USD 44 billion in 2020-21. In 2024-25, however, it reached almost USD100 billion - a whopping increase that New Delhi must decrease for its bilateral relations to become solid. Just how this highly asymmetrical trade pattern can be reset is, however, lost on New Delhi, at least for now. Most importantly, as both India and China ultimately eye dominating Asia, a huge gulf of trust deficit also remains to be filled.

Therefore, as India’s PM Modi prepares to possibly meet China’s Xi again, it’s clear that India and China are looking for a way to coexist amid several disagreements. As such, let’s be clear, what is happening today is a détente rather than a reset. Far from a complete reconciliation, it is, at best, led by a sense of tactical pragmatism.

Salman Rafi Sheikh, research analyst of International Relations and Pakistan’s foreign and domestic affairs. Courtesy

https://journal-neo.su/2025/09/02/realignment-in-the-himalayas-what-the-india-china-thaw-really-means/