Answer

The India-China bilateral relationship has been marked by border disputes, economic ties, and geopolitical competition. The Galwan clashes led to a sharp deterioration in ties, affecting trade, military cooperation, and diplomatic engagements. Despite bilateral trade reaching $136 billion in 2023, unresolved border tensions and strategic mistrust continue to hinder full-scale normalization

Restoration of India-China Bilateral Relations Post-Galwan Clashes (2020) Remains a Complex Process

• Unresolved Border Issues: Despite diplomatic talks, lack of clarity on troop disengagement and restoration of patrolling rights at critical points like Galwan and Depsang creates persistent tensions.
  For example: The October 2024 de-escalation agreement lacked transparency on whether China has withdrawn its troops to pre-2020 positions, raising concerns about India’s territorial integrity.
• Divergent Strategic Interests: India insists on restoring the status quo ante before normalizing ties, while China pushes for moving forward without addressing border violations.
• Lack of Verifiable Agreements: There is no clear mechanism to ensure compliance with past border agreements, leading to repeated violations and mistrust.
  For example: The 2020 standoff occurred despite previous agreements like the 1993 and 1996 border pacts, showing China’s tendency to ignore diplomatic commitments.
• India’s Geopolitical Calculations: India is cautious about engaging with China while strengthening its ties with the US, QUAD, and Indo-Pacific allies, creating a delicate balancing act.
  For example: India has expanded defense cooperation with the US under the Basic Exchange and Cooperation Agreement (BECA) while maintaining diplomatic channels with China.
• Absence of Transparent Communication: The Indian government’s guarded statements and reluctance to publicly discuss military disengagement status create uncertainty about actual progress.
  For example: The October 2024 Foreign Secretary briefing mentioned a “process of disengagement” but did not confirm full withdrawal of Chinese troops from key friction points.

Geopolitical Factors Influencing China’s Recent Push to Normalize Relations with India

• Trump’s Re-Election and US-China Tensions: With Donald Trump’s return in November 2024, China faces renewed US pressure, prompting a strategic shift to stabilize relations with India.
  For example: The 2025 India-China agreement came soon after Trump’s election victory, mirroring China’s past normalization efforts post-Tiananmen Square backlash in 1989.
• Economic Slowdown in China: China’s slowing economy and declining global trade necessitate stabilizing regional ties, including with India, to sustain its economic interests.
  For example: China’s 2024 GDP growth slowed to 4.5%, prompting its leadership to seek economic cooperation with India’s large consumer market for trade and investment.
• Strategic Diversion from Internal Issues: With rising domestic dissent, including discontent over youth unemployment and real estate crises, China seeks external diplomatic wins.
• Countering India’s Growing Global Influence: India’s rising role in BRICS, G20, and QUAD threatens China’s dominance, prompting Beijing to prevent India from aligning fully with the West.
  For example: China backed India’s 2023 G20 presidency but opposed India’s QUAD involvement, reflecting its attempts to shape India’s global stance.
• Concerns Over Regional Stability: Ongoing conflicts like Russia-Ukraine and Israel-Palestine have heightened global instability, making China wary of another potential conflict with India.
  For example: China faces Western scrutiny over its Taiwan stance and seeks to prevent a two-front diplomatic crisis by reducing tensions with India.

Economic Factors Influencing China’s Recent Push to Normalize Relations with India

• Declining Export Growth: China’s export-driven economy has faced setbacks due to weak global demand and trade restrictions, making India a potential alternative market.
  For example: In 2023, China’s exports declined by 4.6%, while India’s economy grew at 7.6%, making it an attractive trade partner for Chinese industries.
• Manufacturing Slowdown and Supply Chain Risks: China’s zero-COVID policy impact, coupled with Western supply chain diversification, has reduced foreign investments, forcing China to seek stable trade partners.
  For example: Apple and Samsung have shifted manufacturing to India under the Production-Linked Incentive (PLI) scheme, reducing China’s dominance in electronics production.
• Real Estate and Debt Crisis: China’s property sector crisis, led by Evergrande’s collapse, has triggered investor uncertainty, pushing Beijing to rebuild economic confidence through regional cooperation.
  For example In 2024, Evergrande’s liquidation worsened China’s financial instability, leading to an urgent need for stable trade ties, including with India.:
• US-China Trade War and Tariffs: Increasing US tariffs on Chinese goods have limited China’s access to Western markets, prompting a shift toward regional trade partnerships.
  For example: The US imposed 25% tariffs on Chinese tech exports, prompting China to increase investments in Indian startups and consumer markets.
• India’s Economic Rise and Market Potential: India’s growing middle class and digital economy offer China a huge consumer base, making normalized relations economically beneficial.
  For example: Chinese companies like Xiaomi and Vivo dominate India’s smartphone market, highlighting China’s dependence on Indian consumers despite geopolitical tensions.

Bridging the Himalayas through diplomacy and pragmatism is imperative for long-term regional stability. India must pursue a calibrated engagement, leveraging economic resilience, strategic alliances, and military preparedness, while ensuring territorial integrity. A rules-based order, reinforced by multilateral platforms, can foster trust-building mechanisms. Future ties hinge on mutual economic interests and strategic foresight, shaping a balanced, cooperative Asia.

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