Written by The Banking Post
Prime Minister Narendra Modi and Chinese President Xi Jinping have agreed to view each other as development partners rather than rivals, as the two Asian powers seek to reset ties strained by years of border tensions and widening trade gaps.
The leaders met on Sunday on the sidelines of the Shanghai Cooperation Organisation (SCO) summit in China, their first face-to-face encounter in seven years. The gathering also brought together Russian President Vladimir Putin and leaders from Iran, Pakistan, and Central Asian states in a show of Global South solidarity.
The meeting came just days after US President Donald Trump slapped 50% tariffs on Indian goods, citing New Delhi’s continued imports of discounted Russian oil. Analysts say the move has pushed India and China to align more closely against Western economic pressure.
Modi told Xi that India was committed to improving relations while addressing a ballooning bilateral trade deficit of $99.2 billion. He also underscored the importance of maintaining peace at the disputed Himalayan border, where a deadly 2020 clash left 20 Indian and four Chinese soldiers dead.
“An atmosphere of peace and stability has been created on the border,” Modi said, stressing that cooperation between India and China is vital for the 2.8 billion people of both nations.
Xi, for his part, said China and India should be seen as opportunities for each other’s growth, not threats. “We must not let the border issue define the overall relationship,” he said, according to Chinese state media.
Thaw in Relations
Indian Foreign Secretary Vikram Misri said the border situation had improved since last year’s patrolling agreement, moving towards “normalisation.” Direct flights between the two countries, suspended since 2020, are set to resume soon, Modi added.
China has also lifted export curbs on rare earths, fertilisers, and tunnel-boring machines, while recently allowing Indian pilgrims to visit Hindu and Buddhist sites in Tibet. Both sides have also ended reciprocal tourist visa restrictions.
Despite the thaw, irritants remain. India’s record-high trade deficit with China remains a key concern, while Beijing’s planned mega-dam in Tibet has sparked fears of reduced Brahmaputra River flows. New Delhi’s hosting of the Dalai Lama and China’s close ties with Pakistan also continue to weigh on ties.
Still, analysts see the talks as an important step. “There’s mixed political signalling, but also a clear sense of the need to stabilise the relationship in the face of wider geopolitical currents,” said Manoj Kewalramani, a Sino-Indian relations expert.
