India's relationship with China is a complex balancing act of cooperation, competition, and confrontation, especially amidst the disruptions caused by the assertive policies of former U.S. President Donald Trump. While fundamental tensions remain, India navigates this dynamic relationship with a focus on its strategic autonomy and economic interests.

Cooperation in Multilateral Forums

Despite ongoing border tensions, India and China continue to engage in multilateral forums such as the Shanghai Cooperation Organisation (SCO) and BRICS. Indian Prime Minister Narendra Modi is attending the SCO summit in Tianjin, China, where he is expected to meet with Chinese President Xi Jinping. This meeting, the first in seven years, signals a potential push to stabilize bilateral ties. These platforms allow India to showcase its vision of a multipolar world and pursue strategic autonomy, balancing relations with various geopolitical players without formal alliances. India believes that participating in both Western and China-led forums enhances its outreach to the Global South.

Competition and Border Tensions

The border dispute remains a significant point of contention between India and China. Although both sides agreed to de-escalate the conflict during meetings in July 2024, border talks have remained stalled. There is a high chance of minor skirmishes in border regions like Ladakh, Arunachal Pradesh, and Sikkim. Despite these tensions, a wider military escalation is unlikely as neither country appears intent on engaging in a full-fledged war. The Line of Actual Control (LAC) remains heavily militarized, and while a border agreement was reached in late 2024, the underlying fault lines remain. India has refused to normalize relations unless China vacates occupied areas in disputed regions.

Economic Engagement and Trade Imbalance

China is India's second-largest trading partner. However, the trade relationship is characterized by a significant trade deficit, which widened to $99.2 billion in FY2024-25. India's imports from China include essential goods such as pharmaceuticals, electronics, and machinery. This dependence raises concerns about potential leverage Beijing could exert during political tensions. Despite these concerns, India relies on China to achieve its economic growth targets. Efforts are underway to reduce this dependence and promote domestic manufacturing. Recently, China lifted export restrictions on fertilizers, rare earth magnets and tunnel boring machines, which is expected to benefit India's mining, construction and EV manufacturing sectors.

India's Strategic Balancing Act

India's foreign policy approach involves strategic multi-alignment, rooted in multipolarity and regional engagement. New Delhi has opted for measured engagement with Beijing rather than overt hostility, even as boundary disputes have intensified. This approach is driven by a desire to avoid being co-opted by any singular geopolitical axis. India's participation in the SCO summit and its efforts to improve ties with China reflect this strategic assertion.

The recent announcement of a 50 percent tariff on Indian goods by the Trump administration has further complicated the situation, unsettling India's trust in the United States as a reliable Indo-Pacific partner. This has prompted India to find its own balance between Washington and Beijing. Some analysts suggest that China sees the trade war as an opportunity to ease India away from U.S.-led political and military blocs like the QUAD. However, India's foreign policy remains anchored in diversification, not solely on American expectations.

Looking Ahead

The India-China relationship in 2025 is marked by a pragmatic recalibration rather than a grand strategic shift. Both countries are taking steps to restore ties, including resuming border trade and direct flights. However, deep-seated mistrust and security concerns persist. The ongoing border dispute, China's close ties with Pakistan, and India's growing defense cooperation with the U.S. continue to shape the dynamics between the two nations. As India and China commemorate the 75th anniversary of their diplomatic relations, the challenge lies in finding the right way for these two major countries to coexist peacefully and cooperate for mutual benefit. The path forward requires sustained dialogue, confidence-building measures, and a commitment to managing expectations in an increasingly complex global order.