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September 2025 Polity & Governance International Relations Economics (Macroeco
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India-China Relations
Posted 04 Oct 2025 Updated 08 Oct 2025
5 min read
Article Summary
Why in the News?
Indian Prime Minister and Chinese President met on theStart
Quick side-lines of the
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SCO Summit 2025 in Tianjin, China.
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It was his first visit to China since
2018.
Also, recently, the 24th round of
the Special Representatives' (SRs)
Dialogue between the two
countries was held.
It was co-chaired by the Chinese
Foreign Minister along with
India's National Security Advisor.
PM visit and SRs Dialogue show
renewed engagement between India and China .
Challenges in India-China Relations
Unsettled Borders: Along the 3,488-kilometer Line of Actual Control
(LAC) , the lack of mutual agreement between the two countries has led
to multiple clashes.
The recent clashes include the Doklam standoff in 2017 and the
Galwan Valley clash in 2020 .
Trade imbalance: India's trade deficit with China rose to USD 99 billion
(2024-25) against USD 85 billion ( 2023-24 ).
In August 2025, China overtook the US to become India's largest
trading partner.
China-led Trilateral Nexus: Recently, China launched two trilateral
initiatives in India's immediate neighbourhood—one with Bangladesh
and Pakistan, and another with Pakistan and Afghanistan.
China-Pakistan Economic Corridor (CPEC) passes through Pakistan-
occupied Kashmir (PoK), violating India's sovereignty.
China's Assertiveness: Particularly in South Asia, through strategies
like String of Pearls, presence in the Maldives, Sri Lanka, etc., create
insecurities in Indo-Pacific.
India, meanwhile, is strengthening ties withQuick Start
like-minded nations
through platforms like the Quad (India, US, Japan, Australia) , seen
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a counter to China's assertiveness.
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Waterpower: E.g., Construction of Dam over Brahmaputra River
(Yarlung Zangbo), China can use water as a geo-strategic weapon
against India.
Renewed Engagement between India and China
through 24th round of SRs Dialogue:
Consensus on Border Management:
Seek a fair, reasonable and mutually acceptable framework for
settlement in line with the 2005 Agreement on Political Parameters
and Guiding Principles .
Setting up an Expert Group and working group, under the Working
Mechanism for Consultation and Coordination.
Use existing diplomatic and military-level mechanisms to manage
tensions and initiate discussions on de-escalation.
Strengthening Economic and Trade Ties: Both countries underlined the
need to proceed from a political and strategic direction to expand
bilateral trade and investment ties and reduce the trade deficit.
Trade through Lipulekh Pass (Uttarakhand), Shipki La Pass
(Himachal Pradesh) and Nathu La Pass (Sikkim) will be reopened.
Dialogue mechanisms : Both sides pledged to restart suspended
bilateral dialogues, including the High-level Mechanism on People-to-
People Exchanges in 2026.
Both countries reaffirmed that they are development partners and
not rivals .
75 years of ties : India and China will hold commemorative events
throughout 2025 to mark 75 years since the establishment of diplomatic
relations with renewed calls to revive Dragon-Elephant ties .
Pursuit of Strategic Autonomy: Both countries will ensure that their
relation shall not be seen through a third country's lens .
Other: Agreement on resuming direct flights, India's Kailash
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Mansarovar Yatra will be expanded in scale from 2026, both sides
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agreed to share hydrological data during emergencies etc.
Significance for India from Renewed Engagement
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Trade: E.g. China is a major source of Active Pharmaceutical
Ingredients (APIs ) for India's pharmaceutical industry.
Investment: Economic Survey 2023-2024 recommended attracting
"Chinese investment" to boost Indian manufacturing.
NITI Aayog recently proposed easing additional scrutiny on Chinese
enterprises.
Access to Critical Resources for India: China accounts for 70% of global
rare earth ore extraction and 90% of rare earth ore processing.
India also relies on China for solar modules & cells, essential for its
renewable energy goals .
Global Influence: As major Asian powers, stable India–China ties enable
constructive roles in global governance and amplify their influence
through joint efforts in multilateral forums like BRICS and SCO.
Cooperation between India and China can offer a counterweight to
Western influence in international affairs, pushing for reforms in
institutions like the WTO, IMF, and UN.
Countering Global Challenges: Stable India–China relations facilitate
collaboration on global challenges like climate change, public health,
and energy security .
Regional Peace and Stability: Reduces the risk of conflict along the
disputed border and contributes to broader stability across South Asia
and the Indo-Pacific region.
Boosting India-Russia-China Triangle : They can expand investment
opportunities and explore ways to withstand US sanctions and tariffs .
Conclusion
Strengthening dialogue through platforms like BRICS and SCO, coupled
with cooperation in trade, water management, and cultural exchanges,
can gradually rebuild trust. In that endeavour, both countries must be
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guided by the three mutual – mutual respect, mutual sensitivity and
mutual interest. 2/11
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