India and China cautiously mend ties as tariffs cloud economic outlook

Mint

a day ago

In a visit to India this week, China's top diplomat said the two Asian nations should deepen cooperation amid international threats to free trade, a sign that President Trump's trade war could accelerate a thaw in the frosty relationship between Beijing and New Delhi.
Both countries have faced hefty tariff threats from Trump over their trade policies, with India singled out in recent weeks for its large-scale purchases of Russian oil.
In remarks in New Delhi on Monday at a meeting with his Indian counterpart, Subrahmanyam Jaishankar, China's Foreign Minister Wang Yi made a veiled reference to the U.S. by noting that New Delhi and Beijing should find ways to coexist against a backdrop of 'unilateral bullying."
China and India 'should view each other as partners and opportunities rather than adversaries or threats," said Wang on Monday, according to a statement from China's Foreign Ministry,
In his opening remarks, Jaishankar said the nations are seeking to move ahead after a 'difficult period in our relationship."
'Differences must not become disputes, nor competition conflict," he said.
India has said it would resume issuing tourist visas to Chinese nationals.
Wang's schedule included a meeting with Indian Prime Minister Narendra Modi on Tuesday. At the end of the month, Modi is expected to make his first visit to China in seven years for a meeting of the Shanghai Cooperation Organization, a security group that also includes Russia.
The nuclear-armed neighbors are edging closer to resuming normal bilateral relations after facing their worst tensions in decades following the 2020 border clash that killed 20 Indian troops and four Chinese soldiers, analysts said. Both sides in recent years have amassed tens of thousands of troops at their disputed border, while round after round of high-level military talks failed to defuse tensions.
A breakthrough came last October, when the two countries hammered out a patrolling agreement at the border, paving the way for talks between Modi and Chinese leader Xi Jinping in Russia.
In recent months, China has allowed Indian pilgrims to visit holy sites in Tibet, while India has said it would resume issuing tourist visas to Chinese nationals.
Analysts said the slow but steady improvement in China-India relations could gain momentum from the trade war kicked off by Trump. The countries recognize they may need to lean on other trade relationships to fend off heavy damage on their economies, analysts said.
In recent weeks, Trump slapped a 25% tariff on Indian imports and has threatened to double it before the end of the month. That 50% tariff would roughly match the duties that the U.S. levies on many Chinese goods.
'Mr. Trump and his actions may have given it a greater sense of urgency than before," said Harsh Pant, head of strategic studies at the Observer Research Foundation, a New Delhi think tank. 'The Chinese seem to be playing to this idea of 'Look, we are the more reliable partner.'"
The India-China trade relationship, at close to $130 billion, is roughly the same size as U.S.-India trade. But India buys far more from China than it does from the U.S.
India's growing manufacturing prowess in electronics, for example, remains heavily dependent on Chinese parts, and some in India see more economic collaboration with China as necessary to propel India's manufacturing sector.
Beyond trade, Trump's actions have cast a question mark over the direction of the U.S.-India relationship, described rosily by both countries over the past decade as a robust partnership that had shed the prickliness of the past. A strong relationship was natural, political experts argued, given shared concerns over China's growing economic and military heft.
India remains deeply invested in the U.S. partnership, an Indian official said, and hopes to work out trade differences. The official noted that the China-India meetings occurring this month have long been in the works.
Talks between China and India over how to avoid conflict at the border continued on Tuesday with a meeting between Wang and India's national security adviser Ajit Doval. Both officials applauded the upward trajectory of China-India relations.
'Borders have been quiet, there has been peace and tranquility, our bilateral relations have been more substantial," Doval said during opening remarks.
But the two countries face fundamental strategic differences that are unlikely to be resolved. Border disputes could still flare up, as both countries have built permanent infrastructure along it in recent years to prepare for a possible future conflict.
India hosts the Dalai Lama, the Tibetan Buddhist leader in exile who is seen as a separatist by Beijing for his advocacy for greater autonomy for the Tibetan region, which is controlled by China. China, meanwhile, is the strongest ally of rival Pakistan, which deployed Chinese jets in the most recent conflict against India.
'There are inherent tensions in this relationship," Pant said. 'But where the focus will be in the relationship going forward is, can they build a relationship now based on the positives?"