Modi-Xi Summit Signals Diplomatic Reset as India and China Seek Warmer Relations Amid Global Pressures

Indian Prime Minister Narendra Modi and Chinese President Xi Jinping held bilateral talks on August 31, 2025, marking a significant step toward normalizing relations between the world's two most populous nations after years of border tensions and strategic rivalry.

Meeting on the sidelines of the Shanghai Cooperation Organisation (SCO) summit in Tianjin, the leaders engaged in what both sides described as "fruitful" and "constructive" discussions that reflected a growing momentum in bilateral relations since their last encounter in Russia's Kazan in October 2024.

A Diplomatic Breakthrough Amid Global Realignments

The high-level engagement represents Modi's first visit to China in seven years and comes at a time of significant geopolitical shifts. The timing appears strategic, occurring just days after the United States imposed punitive 50% tariffs on Indian goods in response to New Delhi's continued purchases of Russian oil.

During the meeting, Modi emphasized that the "interests of 2.8 billion people of both countries are linked to India-China cooperation," adding that such collaboration would "pave the way for the welfare of the entire humanity". The Indian leader expressed commitment to "taking relations forward on the basis of mutual trust, respect, and sensitivity".

Xi Jinping reciprocated the positive sentiment, stating that "as long as both nations remain focused on being partners rather than rivals, and on creating opportunities for development instead of threats, China-India relations will prosper and advance steadily". The Chinese president emphasized that the border issue "should not overshadow the overall relationship" between the two nations.

Progress on Border Management

A key outcome of the discussions was the acknowledgment of significant progress in border stabilization. Modi noted that "after the disengagement on the border, an atmosphere of peace and stability has been created" along the contentious Line of Actual Control (LAC).

The leaders referenced the successful completion of disengagement at Depsang and Demchok friction points in October 2024, which ended a four-year military standoff that began with the deadly Galwan Valley clash in 2020. Both sides have since resumed coordinated patrolling in these areas, with Indian and Chinese troops conducting alternate weekly patrols under agreed protocols.

"An agreement has been reached between our Special Representatives regarding border management," Modi confirmed, highlighting the restoration of stability along the disputed Himalayan frontier.

Economic Cooperation and Practical Measures

The diplomatic thaw has translated into concrete economic and connectivity measures. Both countries have agreed to resume direct flights between India and China, which were suspended during the COVID-19 pandemic in 2020. Additionally, China has begun issuing tourist visas to Indian citizens after a five year suspension.

In a significant economic gesture, China has reportedly agreed to ease export restrictions on critical commodities including fertilizers, rare earth elements, and tunnel boring machines, materials essential for India's infrastructure development. The Chinese government has also reopened two pilgrimage sites in western Tibet for Indian visitors and resumed the Kailash Mansarovar Yatra after a five-year hiatus.

Despite these positive developments, the economic relationship remains imbalanced. India's trade deficit with China reached $99.21 billion in 2024-25, up from approximately $85 billion the previous year, making China India's largest source of trade deficit.

Strategic Autonomy in Action

The Modi-Xi meeting exemplifies India's policy of strategic autonomy, its approach to maintaining independent foreign policy choices while engaging with multiple global powers simultaneously. This strategy allows India to participate in diverse multilateral forums, including the US led Quad alliance and China Russia dominated organizations like BRICS and SCO.

Modi's presence at the SCO summit, alongside leaders from Russia, Iran, Pakistan, and Central Asian republics, demonstrates India's commitment to multi-alignment rather than exclusive partnerships. The approach reflects New Delhi's effort to position itself as a bridge between the Global North and South while avoiding rigid bloc politics.

Impact of US Trade Pressures

The warming India-China relations coincide with a significant deterioration in India-US ties following Trump's trade offensive. The 50% tariffs imposed on Indian exports -among the highest globally - threaten sectors including textiles, gems and jewelry, leather goods, and chemicals.

These tariffs could reduce Indian exports to the US from $86.5 billion to around $50 billion by 2026, according to the Global Trade Research Initiative. The economic pressure has prompted criticism from former US officials, with Jake Sullivan describing Trump's policies as putting the "US brand globally in the toilet" and potentially pushing "India closer to China".

Challenges and Limitations

Despite the positive momentum, significant challenges remain in the India-China relationship. Both nations continue to maintain approximately 50,000-60,000 troops each along their disputed border, and discussions on the next phases of de-escalation and de-induction of military forces are ongoing.

The fundamental territorial disputes, including China's control over Aksai Chin in the western sector and competing claims in the eastern sector, remain unresolved. Experts note that the "mistrust towards China is deeply rooted in India," and the partnership is unlikely to evolve into the same strategic depth as India's relationships with Russia or traditional Western allies.

Broader Implications for Regional Order

The SCO summit, described as the "largest in the organization's history," brought together leaders from more than 20 countries in what Chinese officials characterized as a demonstration of "South-South cooperation" and multipolarity.

For Beijing, the summit serves as an opportunity to position China as a "reliable and influential alternative" to US leadership, particularly as Washington engages in global trade disputes and reshapes its alliance structures. The presence of both Modi and Putin alongside Xi underscores the organization's role as a platform for nations seeking alternatives to Western-dominated institutions.

Looking Forward

The joint statement from both sides emphasized that "differences should not turn into disputes" and reaffirmed their commitment to being "development partners and not rivals". The leaders agreed that "stable relationship and cooperation between India and China" is necessary for "a multipolar world and a multipolar Asia befitting the trends of the 21st century".

While the Modi-Xi meeting represents a significant diplomatic milestone, analysts caution that one summit is unlikely to fundamentally alter the structural competition between Asia's two largest powers. However, the engagement clearly signals both nations' recognition that cooperation serves their mutual interests, particularly in an increasingly fragmented global order where traditional alliances face new pressures and uncertainties.

The success of this diplomatic reset will depend on both countries' ability to separate their economic and strategic interests from their border disputes while managing their respective relationships with the United States and other global powers in an era of intensifying geopolitical competition.