By Satyabrat Borah
In the intricate tapestry of global geopolitics, the relationship between India and China stands as one of the most pivotal and complex, embodying both immense potential for cooperation and persistent undercurrents of rivalry. As the world’s two most populous nations and fastest-growing major economies, India and China share a border spanning over 3,400 kilometers, a history of ancient civilizational exchanges, and a modern dynamic shaped by competition for regional influence and resources. The phrase “out of the freezer, not warm yet” aptly captures the current state of Indo-China ties in 2025: a cautious thaw following years of deep freeze, but far from the warmth of full-fledged partnership. This incipient reset, driven by pragmatic economic necessities and the need to manage border tensions, reflects a strategic recalibration amid shifting global winds, including the unpredictable tariff regime of U.S. President Donald Trump. Yet, underlying mistrust, unresolved territorial disputes, and diverging strategic ambitions ensure that relations remain tepid, with both sides proceeding with measured steps to avoid overcommitment.
The historical trajectory of Indo-China relations has been marked by highs and lows, from the idealism of the 1950s,epitomized by the Panchsheel principles of peaceful coexistence,to the devastating 1962 war that shattered early optimism. The border conflict, rooted in undefined boundaries inherited from colonial and imperial legacies, has been a perennial flashpoint. The Line of Actual Control (LAC), an ill-defined de facto frontier, has witnessed skirmishes in 2017 at Doklam and the deadly Galwan Valley clash in 2020, where at least 20 Indian and four Chinese soldiers lost their lives in hand-to-hand combat. These incidents not only escalated military deployments but also spilled over into economic and diplomatic domains. India responded with bans on over 500 Chinese apps, including TikTok, heightened scrutiny on Chinese investments, and restrictions on cross-border data flows, while China retaliated by limiting visas for Indian journalists and halting direct flights. Bilateral trade, however, defied the chill, surging to record highs, underscoring the economic interdependence that has long outpaced political harmony.
The turning point came in late 2024, when India and China announced a patrolling agreement along the LAC, effectively ending the four-year standoff in key friction areas like Depsang and Demchok. This deal, reached after multiple rounds of military and diplomatic talks, allowed both sides to revert to pre-2020 patrolling practices, with coordinated schedules to prevent confrontations. Verification patrols confirmed disengagement, and by early 2025, troop densities had begun to reduce, though full de-induction remains pending. High-level engagements followed swiftly: Indian Prime Minister Narendra Modi and Chinese President Xi Jinping met on the sidelines of the BRICS summit in Kazan, Russia followed by Foreign Secretary Vikram Misri’s visit to Beijing in January 2025. These discussions emphasized “strategic trust” and outlined steps like resuming the Kailash Mansarovar Yatra pilgrimage, sharing hydrological data on transboundary rivers such as the Brahmaputra, and facilitating journalist visas. In March 2025, the 23rd Special Representatives’ meeting in Beijing yielded a six-point consensus on boundary management, including expert groups for delimitation and confidence-building measures. By mid-2025, the 33rd Working Mechanism for Consultation and Coordination on Border Affairs affirmed progress, with both sides committing to monthly reviews to monitor compliance.
Economic imperatives have been the primary engine of this thaw, compelling both nations to prioritize pragmatism over prolonged antagonism. Bilateral trade, which crossed US$118 billion in FY24 and reached an estimated US$136 billion in 2023, continues to grow despite India’s persistent deficit of nearly US$100 billion. China remains India’s largest trading partner after the U.S., supplying critical inputs for industries like electronics (over 70% of imports), pharmaceuticals (90-100% of certain active pharmaceutical ingredients), and solar panels (82.7% of cells). Indian exports to China, dominated by raw materials like iron ore and marine products, totaled US$9.2 billion in the first eight months of 2024, highlighting an asymmetrical relationship where India exports low-value commodities while importing high-tech goods. The COVID-19 pandemic and the 2020 Galwan clash temporarily disrupted supply chains, but global events like the U.S.-China trade war in 2018 inadvertently boosted India as an alternative manufacturing hub under the “China+1” strategy. However, India’s domestic capabilities lag, making full decoupling unfeasible; for instance, the electric vehicle sector depends on China for 93% of rare earth magnets, and recent Chinese export controls in April 2025 delayed shipments, threatening production under India’s Production Linked Incentive scheme.
Investments form another pillar of economic ties, though they have been more volatile. Cumulative Chinese foreign direct investment (FDI) in India stands at US$3.2 billion since 2015, with over 100 Chinese firms active in infrastructure, electronics, and renewables. Indian FDI in China totals US$2.5 billion since 2000, concentrated in pharmaceuticals and manufacturing. Post-Galwan, India imposed stringent scrutiny, blocking proposals like BYD’s electric vehicle plants and raiding tax compliance on firms like Vivo. Yet, by 2025, signs of easing emerged: in July, during Wang Yi’s visit to New Delhi, China agreed to address India’s concerns over export curbs on fertilizers, rare earths, and tunnel boring machines, responding to requests from high-level talks. Institutional mechanisms like the Joint Economic Group and Strategic Economic Dialogue, dormant since 2019, are being revived, with working groups on infrastructure, energy, and high technology slated for reactivation. Public procurement, including engineering, procurement, and construction projects, shows resilience; Chinese firms continue to bid despite policy hurdles, with revenues uncorrelated to border tensions but new contracts influenced by bilateral goodwill.
The digital economy adds another layer of complexity. Venture capital flows from China into Indian startups peaked at US$3.5 billion in 2020 for 18 unicorns but plummeted post-app bans and data localization rules. Internet applications from Chinese firms, once ubiquitous, faced restrictions, reducing data flows from India to China. However, 2025 has seen tentative progress: Shein’s re-listing on Indian app stores and discussions on cross-border e-commerce signal normalization. Multilaterally, both nations collaborate in forums like BRICS, the Shanghai Cooperation Organisation (SCO), and the Asian Infrastructure Investment Bank (AIIB), where India holds the second-largest shareholding at 7.6%. The New Development Bank, co-founded by both, has funded joint projects, though India rejects China’s Belt and Road Initiative due to sovereignty concerns over the China-Pakistan Economic Corridor passing through Pakistan-occupied Kashmir.
External factors, particularly the Trump administration’s policies, have inadvertently accelerated this reset. Trump’s 50% tariffs on Indian imports—imposed in August 2025 over India’s Russian oil purchases—have strained the U.S.-India partnership, once bolstered by the Quad alliance with Japan and Australia. Accusations from White House advisor Peter Navarro of India acting as a “clearinghouse” for Russian crude have fueled perceptions of unreliability, prompting New Delhi to hedge by mending fences with Beijing. China, facing its own 20% U.S. tariffs, views a warmer India tie as a counterbalance, offering market access to offset losses. Analysts note schadenfreude in Beijing, as the U.S.-India rift diminishes Washington’s leverage in the Indo-Pacific. Trump’s “America First” approach, including threats to Taiwan and reduced Quad commitments, has made India wary of over-reliance on Washington, echoing its historical non-alignment doctrine. This has opened space for Asia-led initiatives like the SCO summit in Tianjin, where Modi and Xi are set to meet in late August 2025—Modi’s first China visit in seven years.
Yet, the thaw is fragile, with “not warm yet” encapsulating persistent challenges. Border stability remains tenuous; while disengagement has occurred, full de-escalation and troop reduction are incomplete, and China’s renaming of 27 locations in Arunachal Pradesh in May 2025 reignited sovereignty disputes. Beijing’s mega-dam on the Yarlung Tsangpo (Brahmaputra) raises downstream flood concerns for India, despite hydrological data-sharing pledges. Strategically, China’s “iron brother” support to Pakistan—evident in military aid during the May 2025 India-Pakistan crisis—undermines trust, as does Beijing’s blocking of India’s UN Security Council bid and Nuclear Suppliers Group entry. In South Asia, China’s inroads via the Belt and Road in Nepal, Bangladesh, and Sri Lanka challenge India’s neighborhood primacy, while India’s deepening ties with Taiwan and the U.S. irk Beijing. Economically, vulnerabilities persist: India’s dependence on Chinese APIs and rare earths exposes it to coercion, as seen in 2020 export halts during the pandemic.
Regionally, the reset influences South Asia’s power dynamics. A stable India-China border reduces escalation risks, benefiting smaller neighbors caught in the fray, but China’s expanding footprint alters balances. Globally, it signals multipolarity: both nations advocate for Global South solidarity in BRICS and G20, countering Western dominance, yet diverge on issues like the South China Sea and climate finance. For the U.S., a closer India-China duo erodes the Quad’s edge, potentially isolating Washington if Trump alienates allies further.
Looking ahead, Indo-China ties in 2025 and beyond hinge on sustained dialogue and mutual concessions. The six-point consensus from December 2024 border talks, including new mechanisms for eastern and middle sectors, offers a framework, but implementation requires political will. Economic de-risking can mitigate vulnerabilities without full decoupling. India must balance U.S. alignment with Chinese engagement, leveraging forums like BIMSTEC for regional connectivity alternatives. China, as the larger power, holds leverage in addressing India’s deficit concerns and investment scrutiny. A true partnership demands resolving the border through final delimitation, but absent that, incremental steps like resuming direct flights in January 2025 and reopening Nathu La pass trade can build momentum.
Ultimately, “out of the freezer” signifies relief from the 2020-2024 deep freeze, but “not warm yet” underscores the realism both sides exhibit. In a Trump-era world of tariff turbulence and great-power competition, pragmatic cooperation serves mutual interests: economic growth for India’s ambitions and regional stability for China’s rise. Yet, without addressing core grievances the relationship risks slipping back into chill. As Modi noted after Wang Yi’s August 2025 visit, stable ties contribute to “regional and global peace and prosperity,” but achieving that requires navigating the fine line between competition and collaboration. The stakes are high, for Asia and the world, as these two civilizations redefine their shared future.
