The Modi-Xi Meeting: A Turning Point for India-China Relations?
Suranjana Tewari, BBC Asia Business Correspondent
Indian Prime Minister Narendra Modi’s recent visit to China comes at a time of heightened tensions and economic vulnerabilities between major global powers. With tariffs on Indian goods soaring to 50%—a punitive measure from the Trump administration largely attributed to India’s purchases of Russian oil—both Modi and Chinese President Xi Jinping find themselves in a precarious situation. Their meeting could mark a crucial juncture in not just their bilateral relationship but in shaping global economic dynamics.
Context: The Current Economic Landscape
The recent imposition of hefty tariffs on exports such as diamonds and prawns has left India’s vibrant export sector in jeopardy. Experts warn that such tariffs could have long-lasting effects, denting India’s ambitious growth targets. Similarly, Xi is grappling with reviving a sluggish Chinese economy, making the imperative for cooperation increasingly apparent.
Past relations have been complicated by territorial disputes, mutual mistrust, and geopolitical tensions. Yet, the two leaders now appear poised for a possible reset. As analysts from Chatham House assert, the outcomes of this relationship will be significant not only for the involved parties but for the entire globe.
Potential Benefits of a Strengthened Relationship
India and China are not just two neighboring countries; they are economic powerhouses, with India projected to become the world’s third-largest economy by 2028, according to the International Monetary Fund (IMF). As these economies continue to grow—India’s expected to surpass 6%—the potential avenues for collaboration become more pronounced.
Qian Liu, from Wusawa Advisory, emphasizes the need for a shift in focus from the traditional U.S.-China rivalry to the actionable potential between China and India. Both nations have a lot to gain economically, particularly in sectors where they can complement each other, like technology and manufacturing.
Challenges on the Horizon
Despite these promising facets, the relationship remains fraught with difficulties. The unresolved territorial disputes have sparked violent confrontations, such as the clashes in Ladakh’s Galwan Valley in June 2020, marking the most elevated tensions between the two nations in 40 years. The reverberations have impacted various sectors, leading to the suspension of flights and stalled infrastructure projects.
As Antoine Levesques notes, fostering dialogue is essential for balancing expectations from external powers observing the India-China dynamic. Additional fault lines complicate the landscape—issues surrounding Tibet, the Dalai Lama, and water disputes related to Chinese hydroelectric projects remain unresolved and contentious.
India’s Changing Position
India’s global position has evolved. Prior alliances with the U.S. are being scrutinized as India reassesses its strategic interests. Modi’s participation in the Shanghai Cooperation Organisation (SCO)—which includes China, Iran, and Russia—could signal a pivot towards multipolarity, one that resonates with both India and China’s interests.
Though the SCO has historically not delivered on significant outcomes, the downturn in Indian-U.S. relations indicates a newfound utility in regional partnerships. China values the optics of a united Global South, especially amid economic uncertainty stemming from U.S. tariffs.
Future Investment and Cooperation
Despite the historical complexities, opportunities for economic collaboration abound. India relies heavily on China for raw materials and manufacturing components, making a quest for reduced import duties a priority. Analysts highlight the need for India to adapt its industrial policies to unlock its potential in a shifting supply chain landscape.
A partnership in high-tech manufacturing, especially in electronics, offers a promising pathway. As companies like Apple expand their manufacturing capabilities across Asia, India can present itself as a crucial player—offering new capabilities without directly competing with China.
Visas and Market Access: Low-Hanging Fruit
One straightforward area of cooperation could be the facilitation of faster visa approvals. Such an initiative could simplify market access for Chinese companies eager to penetrate India’s vast consumer base. With a shrinking market in the U.S. and saturation in ASEAN markets, appealing to 1.45 billion potential customers is an advantage China would not want to overlook.
Looking Ahead
While Modi’s meeting with Xi may not fundamentally alter the trajectory of India-China relations in one fell swoop, it does open up possibilities for easing tensions and signalling strategic autonomy to the West, notably the U.S.
Both nations stand at a crossroads, faced with the dual challenges of internal economic pressures and external geopolitical landscapes. The political maneuvering, alliances, and collaborations that materialize from this visit could shape not just their bilateral ties but also broader global economic relations in the years to come.