India’s Prime Minister Narendra Modi arrived in China on Sunday as both nations face mounting economic headwinds from US tariffs, opening the door to what could be a rare moment of alignment between Asia’s two largest economies.
Tariffs squeeze India and China
Since Wednesday, US President Donald Trump has imposed punitive tariffs of 50% on Indian goods such as diamonds and prawns, citing Delhi’s continued purchases of Russian oil. Economists warn the move could dent India’s thriving export sector and slow its ambitious growth targets.
China, meanwhile, is grappling with its own slowdown as US tariffs weigh heavily on its manufacturing base. For President Xi Jinping, Modi’s visit offers a potential chance to recalibrate ties with India, despite years of mistrust and unresolved border disputes.
“Put simply, what happens in this relationship matters to the rest of the world,” wrote Chietigj Bajpaee and Yu Jie of Chatham House. “Modi’s China visit marks a potential turning point.”
The weight of the world’s two biggest populations
India is now the world’s fifth-largest economy, with growth expected to remain above 6% annually. Its $4 trillion economy and $5 trillion stock market put it on track to become the third-largest by 2028, according to the IMF. China, the world’s second-largest economy, remains a critical global growth driver.
Qian Liu, CEO of Wusawa Advisory, argues the time has come to focus more on the India-China dynamic: “While the world has traditionally focused on US-China relations, the second- and soon-to-be third-largest economies working together would reshape global trade.”
Yet deep-rooted tensions persist. The 2020 Galwan Valley clashes in Ladakh left dozens dead and froze bilateral projects, while India responded by banning more than 200 Chinese apps, including TikTok. Disputes over Tibet, water rights, and China’s ties with Pakistan remain flashpoints.
Small wins, limited expectations
Analysts expect modest progress during Modi’s trip. Direct flights between the two countries will resume, and there may be relaxations on visas and investment barriers. But deeper industrial integration faces hurdles.
“India’s strict industrial policies have limited its ability to capitalize on supply chain shifts out of China,” says Priyanka Kishore, founder of Asia Decoded. “Still, there’s space for cooperation in electronics manufacturing, where India could complement rather than compete with China.”
Kishore also notes that China, facing shrinking US demand, would welcome broader access to India’s 1.45 billion consumers: “Beijing has already flooded ASEAN markets. Market access in India would be the next frontier.”
Regional alliances and the multipolar push
Modi’s trip comes under the umbrella of the Shanghai Cooperation Organisation (SCO), a grouping that includes China, India, Russia, Pakistan, and Iran. Long dismissed as symbolic, the SCO is regaining relevance as India recalibrates after Washington’s tariff shock.
China, for its part, values the optics of Global South solidarity as Trump threatens further levies on BRICS nations. Modi also stopped in Japan en route to Beijing, signaling Delhi’s intent to position itself within broader Asian alliances.
“Asean and Japan would welcome closer India-China cooperation,” says Kishore. “It helps supply chain resilience and supports the idea of ‘Make in Asia for Asia’.”
Outlook: cautious reset
Despite tentative gestures, analysts caution against expecting a breakthrough. Decades of mistrust, compounded by security rivalries, will not vanish overnight. Still, Modi’s presence in China underscores a shifting strategy: a signal to Washington that India has options beyond the US.
As Bajpaee and Yu of Chatham House put it: “By leveraging China’s manufacturing strength, India’s services, and Russia’s resources, these nations could reduce their reliance on the United States and begin reshaping global trade flows.”
