Chinese leader Xi Jinping this weekend will welcome Indian Prime Minister Narendra Modi to the country for the first time in seven years, marking a notable improvement in the neighbors’ tense relationship — and one spurred on in no small part by President Donald Trump’s global trade war.
Modi is one of the world leaders who will attend the Shanghai Cooperation Organization summit starting Sunday. More than 20 heads of state, including Presidents Vladimir Putin of Russia and Masoud Pezeshkian of Iran, will also attend the regional forum. But Modi’s decision to attend, in particular, as the leader of the world’s largest democracy and one that until recently had a warm diplomatic and trade relationship with the United States, underscores the way Trump’s approach has alienated some friends as well as united foes.
Xi, who has cast himself as a reliable global leader in a multipolar world order, is set to take advantage during the summit of concerns about Trump’s unpredictability and irascibility.
The Trump administration on Wednesday imposed a 50 percent tariff on Indian exports, doubling its planned levy as punishment for buying Russian oil. Beijing technically remains in a trade-war truce with the Trump administration, but tensions are still high.
“Trump has facilitated the environment [where] both sides find themselves more agreeable to accommodate the other,” said Manoj Kewalramani, chairperson of the Indo-Pacific studies program at the Takshashila Institution, a think tank based in Bangalore, India.
For Xi, the summit is a chance to cement his growing influence. He wants Modi to show that India is not following the U.S. lead in containing Beijing, particularly in the Global South, analysts say.
“On this occasion, optics do matter,” said Steve Tsang, director of the SOAS China Institute in London. Xi’s priority is to make sure India does not appear aligned with Washington, he said.
End of carousel
Their meeting, however, will not eliminate the structural disputes between the two nations, such as the border or their strategic rivalry, Tsang said.
Relations between the nuclear-armed neighbors sank to their worst in decades following a deadly border clash in 2020, high in the Himalayas, that killed 20 Indian and four Chinese soldiers. It marked a turning point in relations: Dozens of Chinese apps, including the wildly popular TikTok, were banned in India, and there were calls to boycott Chinese-made products. China built up villages at different points along its 2,200-mile border with India to project power and provide infrastructure support to military forces.
Their freeze began to thaw in October — a month before Trump won the election — when Modi met Xi on the sidelines of a BRICS summit in Russia. Earlier this year, the two countries agreed to resume direct flights, shut since the pandemic, and China reopened a Tibetan pilgrimage site for Indians after a five-year halt.
Chinese Foreign Minister Wang Yi, visiting New Delhi last week, called for the two countries to see each other “as partners and opportunities, not as rivals or threats.”
Modi was similarly upbeat. “Stable, predictable, constructive ties between India and China will contribute significantly to regional as well as global peace and prosperity,” he wrote on social media.
The Trump card
Their tentative rapprochement has gained momentum from Trump’s unconventional approach to allies and rivals alike.
India — the world’s fifth-largest economy and one of the U.S.’s largest trading partners — has been hit particularly hard in the trade war and faces one of the highest tariff rates in the world. But Modi has stood his ground and said earlier this month that he was willing to “pay a heavy price” to protect India’s agriculture, seafood and dairy industries.
Trump’s tariff pressure accelerated New Delhi’s motivation to recalibrate ties with Beijing, said Lin Minwang, deputy director of the Center for South Asian Studies at Fudan University in Shanghai.
“Now India urgently needs to bring China closer to counter the United States,” he said. Although India had begun making modest adjustments toward China even before Trump’s election, Lin noted, the U.S. president has been the decisive factor.
China, the biggest purchaser of Russian oil, has jumped to India’s defense opposing the tariffs on New Delhi. “In the face of such acts, silence or compromise only emboldens the bully,” China’s ambassador to India, Xu Feihong, said at an event last week, referring to Washington.
Beijing’s outreach to New Delhi reflects its efforts to ensure stability on its borders, analysts say.
“Overall, China is seeking to stabilize relations with neighboring countries amid a more volatile relationship with the U.S.,” said Yu Jie, a senior research fellow on China at Chatham House, a London-based think tank. “De-escalating tensions with India has been the most successful effort made by Beijing so far.”
The détente might already be beginning to pay some dividends.
China — which controls most of the world’s rare-earth mining and almost all of the processing, and has used its market dominance as leverage in trade talks with the U.S. — appears to have offered a concession to India.
During Wang’s visit to New Delhi, China said it will fulfill the rare-earth material needs of Indian businesses.
Rare earths are essential for key industries, including automobiles, defense, health care and electronics. But Beijing’s recent export controls on heavy and medium rare earths choked supplies of rare-earth magnets critical for India’s auto industry.
At least 50 licenses from the Indian automotive sector have remained pending under the new regime, according to an industry expert who spoke on the condition of anonymity to share details amid ongoing diplomacy efforts. Now, automakers are hoping the Chinese assurance will ease months of disruption.
Sona Comstar, one of India’s largest producers of traction motors for electric vehicles, is among the companies most directly exposed.
“It is a challenging situation,” said group CEO Vivek Vikram Singh. With two weeks of production losses in June due to the shortages, Sona Comstar has shifted to light- or heavy-rare-earth-free magnets. Though workable for smaller two-wheeler motors, they are less efficient and more expensive.
Singh warned that the industry could even face an existential threat if shipments don’t resume soon: “Why would people want to make motors in India? Our customers could just start buying from China.”
Data from China’s customs agency shows that the export of rare-earth magnets to India fell by more than 50 percent in the second quarter compared with the previous three months, because of cuts in heavy-rare-earth shipments. The numbers climbed up in July, which Singh and other Indian industry experts said was due to higher volumes of light-rare-earth magnets shipped.
The frontier challenge
After Wang’s visit, India and China outlined steps to coordinate on border issues, a long-standing flash point. For China, Tibet-related issues — India hosts the Dalai Lama and the Tibetan government in exile — remain a point of strain. China annexed Tibet in 1951 and in recent years has intensified efforts to enforce political and religious control.
Inside India, China’s plans for a major hydropower dam in Tibet have raised concerns over communities downstream. Beijing has also fostered strong defense ties with India’s archrival Pakistan, which claimed that Chinese-made jets and missiles downed Indian fighter jets in the conflict between the two countries in May. Wang visited Pakistan after his trip to New Delhi, and Pakistan’s leader will also attend the SCO forum.
Despite the recent warming of ties, Chatham House’s Yu said the deep suspicion persists between the two sides.
“Such suspicion has determined that China-India diplomatic reset works well on the certain domains but [is] not a monumental shift on their bilateral ties,” she said.
The rapprochement, if it continues, could have repercussions for the United States. Lindsey Ford, a senior director for South Asia at the National Security Council during the Biden administration, said that in multilateral venues such as the BRICS coalition — which is made up of Brazil, Russia, India, China and South Africa — New Delhi has often acted as a brake on initiatives related to global currency reserves that could reduce dependence on the U.S. dollar.
“India has oftentimes, quietly behind the scenes, been the roadblock to China and Russia in those settings,” she said. “And that’s a roadblock that I think we maybe haven’t always appreciated as much as we might, if it’s not there.”
Ford said Beijing may use this moment to extract concessions from India on issues related to Taiwan and military exercises it holds with the U.S. that could pose a risk to the U.S. strategy in the Indo-Pacific region.
The competing rise and ambitions of India and China, and the asymmetry of power, further complicated by the role of the U.S. in the region, make friction inevitable between the two neighbors, said Kewalramani of the Takshashila Institution.
“You have two powers who are rising concurrently, who both see themselves as global powers and whose interests intersect in each other’s spheres of influence increasingly,” he said. “So, you’re going to have these points of friction that exist.”
