Context

• The visit of India’s Foreign Secretary Vikram Misri to China in January 2025 marked a significant diplomatic engagement, signifying a possible thaw in tensions.
• However, while both nations have announced the restoration of key exchanges, several underlying issues, such as border stability, economic concerns, and geopolitical influences, continue to shape the evolving relationship.
• Amid these developments, it is important to examine the factors behind the renewed engagement, the complexities at the Line of Actual Control (LAC), and the need for greater transparency in India's diplomatic approach.

Diplomatic Engagements and Announcements During Foreign Secretary’s China Visit

• During his visit to China, Foreign Secretary Misri met with high-ranking Chinese officials, including Foreign Minister Wang Yi and Liu Jianchao, Minister of the International Department of the Communist Party of China.
• The Indian government later announced the revival of various bilateral exchanges, such as media and think-tank interactions, the Kailash Mansarovar Yatra, and increased connectivity through flights.
• These initiatives suggest a strategic effort to rebuild diplomatic channels that had been largely suspended since 2020.
• However, these developments alone do not confirm a complete resolution of outstanding tensions, particularly regarding military disengagement at the border.

Geopolitical and Economic Factors Influencing India-China Relations

• The Trump Factor and Its Impact on India-China Relations
  • The return of Donald Trump to the U.S. presidency has injected a new element of unpredictability into global geopolitics.
  • Trump’s first term (2017–2021) was marked by a trade war with China, aggressive economic sanctions, and diplomatic hostilities.
  • Given his track record, China anticipates a renewed period of U.S.-China tensions, potentially leading to stricter trade barriers, sanctions, and geopolitical confrontations.
  • For China, stabilising its regional relationships, including with India, might serve as a strategic buffer against future American pressures.
  • Historically, whenever China faces external challenges, it has sought to stabilise relationships on other fronts to prevent multiple simultaneous conflicts.
  • For instance, following the 1989 Tiananmen Square crisis, China made significant diplomatic overtures to India, recognising that it needed to focus on internal stability and economic growth.
• China’s Economic Slowdown and the Need for Stability
  • China’s economy has been facing mounting challenges in recent years.
  • Sluggish growth, a real estate crisis, and declining foreign investments have forced Beijing to rethink its economic priorities.
  • The collapse of major real estate firms like Evergrande, combined with falling consumer confidence and rising unemployment, has led to increased domestic pressures on the Chinese government.
  • In such a scenario, prolonged geopolitical tensions with India, one of its largest trading partners, could further strain China’s economy.
  • India is an important market for Chinese exports, particularly in electronics, pharmaceuticals, and manufacturing components.
  • Despite political tensions, trade between the two countries remains robust. In 2023, bilateral trade exceeded $136 billion, with China enjoying a significant trade surplus.
  • A continued breakdown in relations could jeopardize these economic benefits, making stability a more attractive option for China.
• India’s Economic Growth and Strategic Calculations
  • While China grapples with economic difficulties, India has emerged as one of the fastest-growing major economies.
  • With its expanding manufacturing sector, growing middle class, and increasing foreign direct investment (FDI), India is positioning itself as an alternative to China in global supply chains.
  • Companies looking to diversify away from China have turned to India as a key production hub. However, for India to fully capitalize on this shift, it needs geopolitical stability.
  • A prolonged border standoff with China could deter investors who seek a predictable business environment.
  • By engaging with China diplomatically, India may be attempting to ease tensions enough to create a more stable atmosphere for economic expansion while maintaining its firm stance on border issues.

Unresolved Tensions at the LAC and the Way Forward

• Unresolved Tensions at the LAC
  • Despite these diplomatic strides, ambiguity remains regarding the situation at the LAC.
  • India has not provided a clear statement on whether de-escalation and demobilisation of troops have occurred.
  • Since the Galwan clashes in June 2020, both nations have maintained significant military presence along various flashpoints, including Galwan, Depsang Bulge, Charding Nala, Gogra Post, Hot Springs, and the Pangong Lake region.
  • Without concrete evidence of troop withdrawals, questions persist about whether the border situation has truly improved or if India has merely accepted a status quo that favours China.
  • Furthermore, India has consistently argued that border stability is a prerequisite for broader engagement, while China has taken the opposite stance, insisting that other aspects of the relationship should progress irrespective of border disputes.
  • If India remains silent on whether pre-2020 border arrangements have been restored, it risks conceding to China's narrative that the conflict is no longer a pressing issue.
• The Way Forward: The Need for Clarity and Strategic Caution
  • The Indian government’s guarded approach to communicating progress at the LAC raises concerns.
  • A clearer articulation of India’s position is necessary to reassure domestic and international audiences that its core interests are being upheld.
  • While diplomatic prudence is understandable, a lack of transparency could weaken India’s negotiating position and allow China’s perspective to dominate international discourse.
  • India-China relations have historically been cyclical, fluctuating between periods of cooperation and tension.
  • Given the structural differences in their geopolitical outlooks, their bilateral relationship is unlikely to achieve full convergence soon.
  • Thus, India must exercise caution and ensure that diplomatic engagements do not come at the cost of territorial or strategic compromises. 

Conclusion

• India’s recent engagement with China represents a step toward diplomatic normalization, but critical uncertainties remain.
• While economic and geopolitical considerations may have driven this shift, the lack of clarity on the border situation raises valid concerns.
• As India moves forward, it must balance diplomacy with firm strategic positioning to ensure that any restoration of relations does not come at the expense of its security interests.
• Greater transparency and a principled approach will be essential in maintaining an equitable and stable relationship with China.