The volatile geopolitical environment has seen China and India address frictions and rebuild bilateral relations. But fundamental grievances remain.
China–India relations have improved since the October 2024 border agreement, with resumed leadership exchanges, restored connectivity and incremental steps on trade and border management. But these developments reflect pragmatic stabilisation rather than a strategic reset. Key sources of tension such as border disputes, trade imbalances and broader strategic mistrust remain unresolved, while external pressures, including shifting US policy and regional realignments, reinforce incentives for limited engagement rather than durable reconciliation.
A thaw in the China–India relationship has been underway since October 2024 when the two governments announced a border agreement. This followed clashes in 2020, which marked the worst period of hostilities in over four decades. Both sides have taken numerous actions to normalise people-to-people interactions, including the resumption of direct flights, relaxation of visa restrictions and the restart of a Hindu pilgrimage to Tibet. But these developments point to pragmatic stabilisation, not a substantive reset of the bilateral relationship.
Senior leadership interactions resumed with Indian Prime Minister Narendra Modi and Chinese President Xi Jinping’s meeting on the sidelines of the October 2024 BRICS Summit in Kazan, Russia. Modi then visited Tianjin in August 2025 to attend the Shanghai Cooperation Organization Summit — the first visit by an Indian leader to China in seven years. This will likely be reciprocated with Xi’s visit to India when New Delhi hosts the BRICS Summit in September 2026.
There have been numerous efforts to address sources of friction in the bilateral relationship. On the border dispute, both countries resumed the Special Representatives framework in December 2024 after a five-year gap. Notable progress was made during the August 2025 meeting, when the readout noted the establishment of an Expert Group to explore an ‘early harvest’ solution, which alludes to a phased approach towards boundary delimitation.
A key catalyst for the normalisation of bilateral relations was New Delhi’s recognition that its ambitions to emerge as a global manufacturing hub would require India to maintain cordial relations with Beijing. China remains a key trade partner for India and plays a central role within its supply chains — a point made clear in the 2023–24 report of the Economic Survey of India, published by India’s Ministry of Finance.
Beijing lifted restrictions on exports of rare earth magnets, fertiliser and tunnel boring machines to India in August 2025 — though this remains a work in progress. In March 2026, New Delhi relaxed investment restrictions with amendments to Press Note 3, a 2020 regulation requiring government approval on investment from countries that share land borders with India but targeted primarily at China.
A more volatile geopolitical environment, fuelled by Trump’s return to the White House, has reinforced the strategic significance of the thaw in bilateral relations. Shared exposure to Trump 2.0’s disruptive policies have reaffirmed the need for Beijing and New Delhi to stabilise relations. Both countries initially faced some of the highest tariff levels under Trump’s reciprocal tariff policies. And the February 2026 US–Israel attack on Iran has inflicted further shocks. Beijing and New Delhi both hold historically close relations with Iran and remain heavily dependent on energy imports transiting through the Strait of Hormuz. US attacks on Venezuela, Iran (and possibly Cuba) are also an affront to Beijing’s and New Delhi’s claims to being leaders or ‘voices’ of the Global South.
But despite the positive rhetoric of an emerging ‘dragon–elephant tango’, mutual trust and understanding remain poor and none of the underlying grievances in the bilateral relationship have been resolved. There remains no mutual consensus on the Line of Actual Control that demarcates disputed territory. Limited de-escalation efforts have yet to translate into a more permanent de-militarisation or de-induction of forces along the border.
Efforts to strengthen confidence-building in other military domains have been limited. A Maritime Affairs Dialogue that held its first meeting in 2016 has stalled despite its necessity amid China’s growing naval presence in the Indian Ocean. Both countries also lack a nuclear strategic dialogue despite their growing nuclear arsenals and evolving doctrines. Third parties further complicate the bilateral relationship as Beijing maintains its ‘all-weather’ relationship with Pakistan and deepens relations with other South Asian countries, while New Delhi strengthens cooperation with Japan, the Philippines, Vietnam and Taiwan.
The trade imbalance in China’s favour remains a source of tension. While bilateral trade has surpassed US$150 billion in 2025, more than US$100 billion of this comprises Chinese exports to India. New Delhi has attributed this to Beijing’s persistent use of non-tariff barriers. Even under the relaxed investment restrictions, only minority, non-controlling investments of up to 10 per cent are permitted without government approval. Meanwhile, Beijing has sought to undermine New Delhi’s ambition to position itself as a global manufacturing hub by restricting the movement of Chinese nationals to India.
Several other flashpoints remain in the bilateral relationship. China’s construction of the world’s largest hydropower project across the Brahmaputra/Yarlung Tsangpo river, which traverses both countries, is a source of growing concern to New Delhi. While some tentative steps have been taken to share hydrological data, there remains no formal water-sharing agreement between the two countries.
And the Tibet issue — a long-standing source of tension since the 14th Dalai Lama fled to India in 1959 — threatens to flare up again. As the Dalai Lama turned 90 in 2025, there have been growing concerns that bilateral tensions could intensify if his successor is reincarnated among the Tibetans living in exile in India.
The changing geopolitical context exacerbates these fault lines. The United States has long looked to India as a bulwark against the rise of China. But this narrative has lost some weight under the Trump administration’s transactional and value-neutral foreign policy, particularly because New Delhi and Washington independently pursue their bilateral engagements with Beijing.
As the world’s most populous countries and the second and soon-to-be third largest economies, China–India relations carry significant implications for the future of the Indo-Pacific and the global order — a fact often overlooked amid preoccupation with conflicts in the Middle East and Europe.
Beijing and New Delhi have chosen to shelve areas of disagreement for the time being as they navigate more turbulent geopolitical waters. But without resolving their fundamental grievances, this remains a tactical accommodation rather than a strategic reset to the bilateral relationship. Limited re-engagement has yet to translate into lasting reconciliation.
Republished from East Asia Forum
Chietigj Bajpaee
Dr Chietigj Bajpaee is senior research fellow for South Asia in the Asia-Pacific Programme at Chatham House. Prior to joining Chatham House, he was the political risk adviser for Asia at the Norwegian energy company Equinor (formerly Statoil).