India-China ties: Is peace possible between the two Asian giants?

Recent developments suggest a thaw in India-China relations following Prime Minister Narendra Modi’s meeting with President Xi Jinping at the 16th Brics Summit at Kazan on October 23, 2024. In recent months, Defence Minister Rajnath Singh, National Security Adviser Ajit Doval, and External Affairs Minister S Jaishankar have visited China in the context of the Shanghai Cooperation Organisation (SCO). This provided an opportunity to exchange views with Chinese leaders on a range of issues.

Relations are clearly on the mend after a long hiatus following the bloodletting at Galwan in the summer of 2020. Sustained engagement at various levels—political, diplomatic, and military—has paved the way for a gradual normalisation of ties. The agreement in October last year on resuming patrolling and grazing activities in eastern Ladakh was a positive step. De-escalation, though, remains to be achieved and may take time, given the complexity of deployment on both sides.

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The resumption of the Kailash Mansarovar Yatra, after a gap of five years, advances the cause of normalisation. So does the decision in the latest round of the Working Mechanism for Consultation and Coordination (WMCC) to resume tourist visas for Chinese nationals. Hopefully, this will enhance mutual confidence and facilitate the early resolution of other outstanding issues such as the resumption of direct flights, the mutual stationing of journalists, hydrological data, and, issues surrounding trade and investment. China’ unilateral action to build the world’s largest dam - the Medog Hydropower Station - to harness the waters of the Yarlung Tsangpo (Brahmaputra), just before it enters Arunachal Pradesh, has sparked off concern in India and added a new issue.

Even after Galwan, bilateral trade has remained high, with India facing a trade deficit of $99.2 billion in 2024-2025. Chinese investments in India, on the other hand, have shrunk steadily after new guidelines were issued in Press Note 3 of April 2020, just before the Galwan faceoff, which stipulated that “an entity of a country, which shares a land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route”.

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According to the Ministry of Commerce of China, Chinese investments in India in the year 2023 were $60.37 million, and cumulative Chinese investments in India were $3.2 billion till 2023 (since 2015). According to DPIIT data, China’s cumulative foreign direct investment into India till March 2025 (since April 2000) was $2.5 billion. This is nowhere near the $20 billion that China had committed to invest in India in 2014 in the industrial and infrastructure sectors. The reasons for this are many, including security concerns, the Chinese “model” of using their own labour, visa issues and charges of violation of economic laws.

Initial statements from China after the 22 April killings in Pahalgam were disappointing. China avoided outright condemnation of the terrorist attack on innocent tourists and instead called for a “fair and just investigation”, understanding of Pakistan’s “legitimate security concerns”, and, pledged support for Pakistan in “safeguarding its sovereignty and security interests". China also reportedly supplied PL-15 air-to-air missiles to Pakistan and helped the latter in scrubbing out any reference in the UN Security Council statement to the now US-proscribed proxy of LeT, The Resistance Front (TRF), the terrorist group that had taken responsibility for the attack.

Even as recently as June 2025, the SCO Defence Ministers forum held in Qingdao failed to finalise a consensus document essentially because of the reluctance on the part of China and Pakistan to admit any language condemning the Pahalgam attack.

Defence Minister Rajnath Singh was obliged to take a firm stand on the non-inclusion of such language. For the SCO, it is a matter of great irony that Pakistan and China should take such a stand given that the ‘three evils’ identified as common threats by the regional grouping are terrorism, extremism, and separatism.

It augurs well that Prime Minister Narendra Modi’s participation and personal diplomacy in the 17th Brics Summit in Brazil ensured that the Joint Declaration extensively covers a number of India’s priorities, including multilateral reforms, global governance, the interests of the Global South, and climate change, as well as cross-border terrorism. It contained unambiguous language to the effect that “we [Brics nations] condemn in the strongest terms the terrorist attack in Jammu and Kashmir on April 22, 2025, during which 26 people were killed and many more injured. We reaffirm our commitment to combating terrorism in all its forms and manifestations, including the cross-border movement of terrorists, terrorism financing, and safe havens.”

This proves that India’s position on ‘zero tolerance for terrorism’ and rejection of safe havens and double standards in countering terrorism was accommodated in the outcome document. More relevantly, the language indirectly served to highlight the absence of similar language in the SCO process.

It is the first time that any Brics joint statement or declaration has specifically condemned any terrorist attack in Jammu and Kashmir. This vindicates Modi’s proactive stance on combatting terrorism as well as his decision to send All Party delegations by way of outreach to countries across the world to sensitise global opinion about Pakistan-sponsored terrorism and Operation Sindoor.

There is clearly a link between India’s proactive policies to combat terrorism and the language contained in outcome documents at multilateral fora. Even after the horrendous terrorist attacks on Mumbai in 2008, the then Bric Countries’ Leaders Joint Statement had failed to make any mention of it. The document had merely made a passing reference to opposition to “terrorism in all its forms and manifestations”.

In fact, even though India suffered a number of terrorist attacks since the establishment of Brics, it was only at the Brics Leaders Declaration of September 2017 that Pakistan-based terrorist organisations such as the Lashkar-e-Taiba (LeT) and Jaish-e-Mohammad (JeM) finally found mention in a statement. Clearly, the Modi government’s “zero tolerance for terrorism” is having an effect in multilateral groupings, especially where Pakistan does not have room to engage in subterfuge and obfuscation, as in the SCO.

The fact that China went along with the consensus language at the 17th Brics Summit suggests that Beijing understands that resisting references to the Pahalgam terrorist attack at Pakistan’s behest would only erode its credibility on the question of global cooperation in combatting terrorism. By joining the consensus at the Brics Summit, China has sent a positive signal to India, although this may not change the situation in the SCO.

Today, it is incumbent for neighbours such as India and China to forge a convergence on a common threat such as terrorism. After all, the Xinjiang region in China has been plagued by radicalisation and terrorism for years, with links to Pakistan as well.

Another aspect where one hopes for some change in China’s outlook is at the UN, where it has been blocking the listing of Pakistan-based terrorists under the UNSC 1267 ISIL and Al-Qaeda Sanctions Committee. Now that the US has sanctioned TRF, there is a good chance that this Pakistan-based affiliate of the LeT will also be listed by the UN committee without hindrance by China. If this happens, it would add to the forward momentum in India-China relations.

The boundary question remains at the core of differences between the two Asian giants. In recent years, border tensions have been characterised by a degree of regularity of occurrence, with shorter yet intense cycles of confrontation. Each downturn has eroded mutual trust and confidence, be it the Doklam stand-off or the Galwan fracas, reinforcing negative perceptions.

Rebuilding trust is a task that is in for the long haul. It was only in 1976 that ambassadorial ties were restored, a full fifteen years after the Indian envoy was recalled in 1961 in the run-up to the war the following year. It took a few more years before official-level talks on the boundary dispute commenced in the 1980s. They were moments of hope. Subsequent developments did not fully live up to the expectations and sentiments expressed in the meeting between then Prime Minister Rajiv Gandhi and senior Chinese leader Deng Xiaoping during the former’s visit to Beijing in 1988. Deng’s words to the effect that China and India must both develop for a real Asian Century to emerge need to be revisited today.

China needs to address Indian concerns about the adverse balance of trade and lack of reciprocal market access, which have less to do with structural differences between the two economies and are more the result of tariff, non-tariff, and technical barriers to trade imposed by Beijing. In fact, there are new concerns over the growing list of trade restrictions placed by China on the export of rare earth magnets for electric vehicles (EVs), wind turbines, and electronics, besides tunnel boring machines and certain high-value fertilisers to India.

Now is the time to build on the positive developments by systematically addressing the remaining issues. Beijing also needs to revisit its frame of reference for India. The revolutionary Communist Party of China (CPC) viewed India through a jaundiced ideological lens. This gave rise to prejudice in its dealings with India after the latter’s independence as well. Mahatma Gandhi’s teachings of peace and non-violence could not have been more different from Mao Zedong’s advocacy of violent “class struggle”. China’s disregard of its heritage of Taoism, Buddhism, and Confucianism may also have played a role in creating a disconnect between two civilisational neighbours.

The negative perceptions are mutual, and they persist. Chinese assessments smack of deep-rooted suspicion about India being in cahoots with the US to contain China’s rise. India looks upon the Sino-Pakistan tandem, clearly on exhibit during Operation Sindoor, with deep concern. In India, there is strong public opinion that even as China constantly seeks reaffirmation of a “One China policy”, it has failed to show similar sensitivity for India’s territorial integrity. The China-Pakistan Economic Corridor (CPEC), one of the main planks of the Belt and Road Initiative (BRI), passes through Pakistan-occupied Kashmir (PoK) and blatantly disregards India’s sovereignty.

Yet, the thaw is real and calls for sustained efforts to keep relations on a forward-looking track. At the same time, the two sides must move forward with realistic expectations to forge a stable and cooperative relationship. It is, in the final analysis, a goal worth pursuing.

The author, a former ambassador and China specialist, is the Director General of the Manohar Parrikar Institute for Defence Studies and Analyses. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.