New Delhi/Beijing – August 1, 2025:
India and China, Asia’s two largest economies, are showing tentative signs of rekindling practical cooperation in specific sectors, despite ongoing political tensions and unresolved border disputes. Recent developments in trade and technology policy signal a cautious but deliberate move toward what experts are calling a "managed rivalry" model of engagement.
Economic Crosswinds, Strategic Cooperation
Bilateral trade between India and China surpassed $127.7 billion in the 2024–25 fiscal year, reaffirming China’s position as India’s largest trading partner. While India continues to rely heavily on Chinese imports—ranging from consumer electronics to green tech components—it has also begun recalibrating its policies to allow limited Chinese investment in strategic manufacturing sectors such as semiconductors and electric vehicles.
“The two countries are not aiming for full normalization, but they recognize the value in cooperating selectively,” says Dr. Ramesh Prasad, senior fellow at the Indian Council for Strategic Affairs. “Economic pragmatism is gradually finding space amid geopolitical friction.”
Shared Stakes in Technology and Climate
China’s global lead in AI, manufacturing, and batteries aligns with India’s push for rapid industrialization and tech modernization. Industry insiders report growing interest in co-development ventures, especially in green energy, smart infrastructure, and biomedical R&D.
Additionally, both nations are engaging more actively in multilateral platforms such as BRICS and the Shanghai Cooperation Organisation, coupling economic interests with shared calls to reform global institutions, particularly the United Nations and World Trade Organization.
“On climate change and supply chain resilience, they are beginning to recognize mutual benefit despite broader rivalry,” said Prof. Liu Zemin of Peking University’s Institute of South Asian Studies.
Challenges Linger
Yet serious challenges continue to hamper deeper collaboration. Tensions over the Line of Actual Control (LAC) remain unresolved, with military negotiations making slow progress. Nationalist sentiment in both countries, amplified by past standoff episodes, continues to weigh on public opinion and diplomatic flexibility.
India’s policies remain especially guarded on the investment front. Despite slight easing in manufacturing, Chinese companies still face significant scrutiny in sectors such as telecom, ports, and fintech.
The asymmetric nature of the relationship further complicates matters. India is more dependent on Chinese supply chains than vice versa, raising concerns in New Delhi about strategic vulnerability.
Outlook: Pragmatic Engagement Ahead
While a comprehensive partnership appears out of reach, analysts believe a selective, outcomes-driven relationship is possible. Key areas such as green technology, pharmaceuticals, and infrastructure financing may provide low-risk, high-reward pathways for collaboration.
Government officials on both sides suggest diplomatic channels remain open, with track-two dialogues between academics and former officials helping to stabilize narratives.
As global protectionism grows and traditional alliances face pressure, India and China may find value in cooperation without convergence—a formula that allows collaboration in global governance and sustainable development, even as political trust remains elusive.