India And China: Cautious Rapprochement Amidst US Policy Volatility: The Return of Diplomacy

In 2025, India and China are experiencing a measured thaw in their previously frosty relations. This shift emerges as both capitals recognise the limits and unpredictability posed by US policy under President Donald Trump’s administration.

The backdrop of this tentative reconciliation is marked by the recalibration of global alliances, regional friction, and a pragmatic assessment of mutual dependence, particularly as India and China remain economic heavyweights in Asia.

Recent high-profile diplomatic exchanges—most notably the handshake between Indian External Affairs Minister S. Jaishankar and Chinese President Xi Jinping at the SCO Summit in Beijing—signal that both nations are intent on easing border irritations and resuming normalized engagement, albeit with lingering caution and mutual scepticism.

US Influence: Trump’s Policies As A Catalyst

Donald Trump’s assertive, often unpredictable foreign policy has played a key role in drawing India and China closer, if only temporarily. Examples include:

Washington’s Leanings: The US’s approach during the recent mini-war between India and Pakistan was seen in New Delhi as unhelpful and tilted, prompting a reassessment of its reliability as a partner.

Policy Volatility: Trump's threats of massive tariffs and renewed diplomatic overtures to Pakistan fostered uncertainty in India, even as the US continued to pressure both Asian giants to align with its strategic agenda.

Mutual Need for Autonomy: Both India and China are now motivated to hedge against the whims of US foreign policy by enhancing direct lines of communication and exploring alternative coalitions.

Steps Toward Normalisation

Several signals and actions in 2025 demonstrate this incremental warming:

Restoration of People-To-People Links: India has resumed issuing tourist visas to Chinese citizens after a five-year gap, and direct flights restarted in January.

Diplomatic Milestones: The recent meetings between Jaishankar and Xi Jinping, and India’s participation at the highest levels in SCO-led events, represent a significant uptick in formal diplomatic engagement.

Resolved And Ongoing Border Issues: Both countries reached new patrolling arrangements along the LAC in October 2024, reducing the salience of the Galwan standoff, though full trust and permanent settlement remain elusive.

Selective Economic Engagements: India is carefully opening the door to Chinese investment, with Niti Aayog proposing an easing of rules to allow Chinese companies up to a 24% stake in Indian entities without prior approval, reflecting a nuanced approach to economic interdependence.

Key Confidence-Building Measures Since Late-2024

MeasuresDateSignificance
Patrolling restoration in Depsang & Demchok21 Oct 2024Ended last active face-offs on LAC
Direct commercial flights agreed “in principle”28 Jan 2025First since COVID-19; facilitating people-to-people links
Kailash Mansarovar Yatra reopened30 Jun 2025Symbolic soft-power gesture, six-year hiatus ends
Tourist visas for PRC nationals resume24 Jul 2025Closes COVID/border-related ban
Jaishankar–Xi handshake at SCO FMs meet15 Jul 2025Highest-level bilateral encounter since 2019
Russian proposal to revive RIC backed by Beijing17 Jul 2025Tri-lateral seen as hedge against U.S. hegemony
NITI Aayog pitch to relax FDI caps for Chinese stakes (≤24%)18 Jul 2025Signals selective economic re-engagement


Economic Realities: Cooperation And Competition

Despite entrenched rivalry, India’s economy remains closely interlinked with China:

Trade Dependence: India faces a substantial $85 billion trade deficit with China, relying heavily on Chinese electronics, machinery, rare earths, and chemical technology.

Policy Response: While the Modi government advances “Atmanirbhar Bharat” (self-reliance) and the Production-Linked Incentive (PLI) scheme to cut import dependence, progress remains gradual; Indian companies still depend on Chinese imports in multiple key sectors.

Pragmatism Over Ideology: India has not fully opened up to Chinese FDI but is incrementally relaxing restrictions where there is clear mutual gain and low security risk.

The Triangular Equation: Russia’s Role And The RIC Revival

Amidst US unpredictability, Russia has stepped in to revive the Russia-India-China (RIC) troika, a move received positively in both Delhi and Beijing.

Multipolarity And Hedge: Supporting Russia’s proposal, China and India seek to resist US hegemony by shaping non-Western multilateral institutions and strengthening the RIC bloc as a platform for consultation on regional and global security issues.

Strategic Buffer: The RIC forum provides India and China a means to engage constructively, reduce strategic loneliness, and balance their positions without overtly siding with the West.

Remaining Challenges And Cautious Optimism

Despite the diplomatic choreography and resumed exchanges, deep-rooted mistrust and divergent strategic objectives persist. The border issue, historical suspicions, and geopolitical competition for regional leadership still constrain the relationship.

Key observations from experts underline that:

The warming in bilateral relations is tactical, not transformative.
The economic relationship continues to be marked by significant asymmetry.
Ongoing US unpredictability is as much a driver of cooperation as it is a source of renewed caution.

Outlook: Scenarios Through 2030


ScenarioLikelihoodFeatures
Pragmatic Co-existenceHighStatus-quo LAC; incremental economic opening; RIC ministerial resume; Quad continues but with de-emphasised military drills near LAC.
Relapse into CrisisMediumPatrol incident or infrastructure race triggers fresh standoff; U.S. offers intelligence tilt to India; sanctions spiral resumes.
Strategic AlignmentLowComprehensive Economic Partnership; joint high-speed rail or semiconductor fab; coordinated positions at UNSC.

Conclusion

The apparent thaw in India-China relations in 2025 represents a pragmatic, cautious hedging rather than an ideological realignment. US unpredictability, especially under President Trump’s confrontational policies, has acted as a catalyst, nudging both Asian powers toward diplomatic and economic recalibration. The current engagement is shaped not by full trust or strategic convergence but by a realistic assessment of mutual dependence, necessity, and the search for stability in an increasingly complex world order.

IDN (With Agency Inputs)