On August 30, 2025, Prime Minister Narendra Modi made a historic visit to Tianjin, his first trip to China in seven years, to attend the 25th Shanghai Cooperation Organisation (SCO) Summit from August 31 to September 1. This visit amid rising US tariffs on Indian exports marked a critical moment for India-China relations. The US imposed a 50% tariff on Indian goods, citing India’s continued purchase of Russian oil, which strained India-US ties and led New Delhi to pursue new global alliances. Modi’s meetings with Chinese President Xi Jinping and Russian President Vladimir Putin on the sidelines of the SCO Summit highlighted India’s strategic shift to balance economic pressure and geopolitical ambitions.
Context of the Visit: A Thaw Amid Tensions
The background of Modi’s visit involved a complex web of geopolitical and economic challenges. India-China relations had been tense since the 2020 Galwan Valley clash, which resulted in the deaths of 20 Indian soldiers and at least four Chinese troops, halting diplomatic and economic ties. India responded by banning several Chinese apps, including TikTok, and increasing scrutiny on Chinese investments. However, recent events, such as the October 2024 meeting between Modi and Xi at the BRICS Summit in Kazan, Russia, indicated a cautious easing. Agreements to reduce border tensions and resume the Kailash Mansarovar pilgrimage demonstrated a mutual interest in stabilising relations. The SCO Summit, hosted by China, offered a multilateral platform to build on this momentum, with discussions on counterterrorism, regional security, and trade. Modi’s visit, his first since 2018, came at a time when India faced economic fallout from US tariffs, making engagement with China a strategic move.
US Tariffs: A Catalyst for India’s Pivot
The US decision to impose a 50% tariff on Indian exports, effective August 27, 2025, significantly changed India’s strategic calculations. The tariffs, which doubled from an initial 25% levy, targeted approximately $60.2 billion of India’s $86.5 billion annual exports to the US, India’s largest trade partner, affecting labour-intensive sectors such as textiles, gems, jewellery, and shrimp. The US justified this move as a response to India’s ongoing purchase of Russian oil, which Washington claimed indirectly funded Russia’s war in Ukraine. US trade adviser Peter Navarro called India an “oil money laundromat for the Kremlin,” increasing tensions.
The US decision to impose a 50% tariff on Indian exports significantly changed India’s strategic calculations. The tariffs, which doubled from an initial 25% levy, targeted approximately $60.2 billion of India’s $86.5 billion annual exports to the US, India’s largest trade partner, affecting labour-intensive sectors such as textiles, gems, jewellery, and shrimp
Indian officials and analysts, including Michael Kugelman, noted that the tariffs ‘shattered’ trust in the US, prompting India to look for alternative markets and partners. Prime Minister Modi responded strongly, emphasising self-reliance and protecting Indian farmers and small businesses, while the government launched efforts to diversify exports to 40 countries, including the UK and South Korea. The tariffs, labelled ‘economic blackmail’ by opposition leader Rahul Gandhi, unintentionally sped up India’s outreach to China, with Modi’s visit seen as a move to hedge against Western pressure.
Economic Imperatives: Balancing Trade and Trust
Modi’s bilateral meeting with Xi Jinping on August 31 heavily focused on economic cooperation, especially addressing India’s $99.2 billion trade deficit with China for the fiscal year ending March 2025. China, India’s second-largest trading partner after the US, with bilateral trade totalling $118 billion, emerged as a crucial market for India to lessen the economic impact of US tariffs. India sought greater access to Chinese markets for its goods and services, particularly in pharmaceuticals and agriculture, while China aimed to leverage India’s 1.4 billion consumer base to counter its domestic slowdown and US trade restrictions. Discussions included cooperation in rare earths, fertilisers, and tunnel boring machines, with India easing some restrictions on Chinese investments. Both leaders recognised the role of their economies in stabilising global trade and agreed to develop a political and strategic direction to expand bilateral trade and investment ties, aiming to reduce the trade deficit through increased policy transparency and predictability.
Nonetheless, challenges remained, including India’s caution about over-reliance on Chinese technology and recent incidents such as the recall of Chinese engineers by Foxconn from an Indian factory, reportedly at Beijing’s request. These events highlighted the fragility of economic trust, requiring careful management to ensure mutual benefits without sacrificing India’s strategic independence.
Geopolitical Manoeuvring: The SCO and Strategic Autonomy
The SCO Summit, attended by leaders from Russia, Pakistan, Iran, and Central Asian nations, provided India with a platform to strengthen its role in a multipolar world. Modi’s meetings with Xi and Putin highlighted India’s dedication to strategic autonomy, a key element of its foreign policy. The US tariffs and provocative rhetoric, such as President Trump’s claim that India’s economy is ‘dead’, strained India-US relations, prompting New Delhi to deepen ties with non-Western powers. The Russia-India-China (RIC) trilateral framework, first proposed in the 1990s, experienced a resurgence, with Moscow pushing for discussions during the summit. However, India’s dealings with China were complicated by Beijing’s close ties with Pakistan, which supplies 81% of Pakistan’s arms imports and supported Islamabad during recent India-Pakistan tensions.
India’s participation in the SCO, while boosting its regional influence, navigated these rivalries and China’s dominant role within the group. Modi outlined India’s approach to SCO cooperation based on three pillars: Security, Connectivity, and Opportunity, stressing peace, security, and stability for prosperity. The summit declaration condemned terrorist activities, including the recent Pahalgam attack, and called for combating terrorism without double standards. Modi’s visit signalled a practical approach to balancing relations with major powers while countering perceptions of alignment with the US-led Quad framework.
Analyst Manoj Kewalramani says both India and China aimed for a ‘new equilibrium’, recognising that a complete resolution of disputes may be out of reach, but ongoing dialogue was necessary. India’s cautious approach, balancing security concerns with economic priorities, influenced how these talks developed
Border Dynamics: A Persistent Challenge
The unresolved border dispute along the Line of Actual Control (LAC) remained a major obstacle in India-China relations. The 2020 Galwan clash and subsequent standoffs led to heavy troop deployments, with both countries maintaining tens of thousands of soldiers along the Himalayan border. The October 2024 agreement to reduce tensions and resume patrols in contested areas showed progress, but Chinese infrastructure development and historic mistrust continued to create challenges. During the visit, Modi and Xi acknowledged successful disengagement from the previous year and the maintenance of peace and tranquillity, positively appraising the outcomes of the 24th round of Special Representatives talks held in New Delhi shortly before the summit. They agreed to accelerate implementation and commit to a fair, reasonable, and mutually acceptable resolution of boundary issues, emphasising that peace on the borders is essential for smooth bilateral development. Three new border-related mechanisms were established to further reduce tensions and restore peace in sensitive areas. Analyst Manoj Kewalramani says both countries aimed for a ‘new equilibrium’, recognising that a complete solution may be out of reach, but ongoing dialogue was necessary. India’s cautious approach, balancing security concerns with economic priorities, influenced how these talks developed.
Cultural and Symbolic Gestures: Building Bridges
Modi’s visit was marked by symbolic gestures aimed at building goodwill. The Indian diaspora in Tianjin warmly welcomed the Prime Minister, and performances by Chinese artists trained in Indian classical music and dance forms like Bharatanatyam and Kathak showcased cultural ties. These exchanges reflected the idea of “the dragon and the elephant dancing together,” as described by China’s Global Times. Both leaders agreed to resume direct flights between India and China, with technical talks ongoing for implementation in the coming weeks, alongside relaxed visa restrictions for tourists and businesses, the resumption of tourist visas for Chinese citizens, and the Kailash Mansarovar Yatra. These steps indicated a commitment to people-to-people connections. The success of Modi’s visit hinged on tangible results, such as trade agreements and border management protocols, rather than just symbolic actions. China’s promises to supply critical resources and India’s interest in easing restrictions on Chinese businesses led to a more balanced partnership, provided trust was maintained.
Modi’s talks with Xi Jinping focused on economic cooperation, especially addressing India’s $99.2 billion trade deficit. China has emerged as a crucial market to lessen the impact of US tariffs. India seeks greater access to Chinese markets for its goods and services, and China aims to leverage India’s 1.4 billion consumer base to counter its domestic slowdown and US trade restrictions
Future Prospects: A Delicate Balancing Act
The long-term effects of Modi’s visit depend on whether India and China can maintain their détente momentum. The US tariffs, impacting 70% of India’s exports to its largest market, highlighted the need for economic diversification, with China presenting both opportunities and risks. For India, closer ties with China helped offset the economic impact of the US policies, but they must be balanced against security concerns and the danger of over-reliance. For China, India’s market is a crucial outlet for its surplus products, especially electric vehicles and solar panels, amid global trade barriers. Potential Chinese investment in India’s electric vehicle industry and increased market access for Chinese firms were highlighted as areas for growth.
However, India’s goal to become a manufacturing hub and an alternative to China in global supply chains, along with its partnerships with the US and Japan, could lead to competitive tensions. The SCO Summit, while a forum for cooperation, also underscored China’s influence and the presence of Pakistan, complicating India’s strategic calculations. Modi’s focus on “stable, predictable, and amicable” ties, as stated in his interview with The Yomiuri Shimbun, reflected a pragmatic vision for a multipolar Asia, but achieving this will require addressing structural issues like trade imbalances and border disputes. Opportunities in startups, innovation, youth initiatives, and cultural exchange were spotlighted, alongside support for regional connectivity projects like Chabahar Port and the International North-South Transport Corridor (INSTC).
The Indian diaspora in Tianjin warmly welcomed Prime Minister Modi, and performances by Chinese artists trained in Indian classical music and dance forms, such as Bharatanatyam and Kathak, showcased cultural ties. These exchanges reflected the idea of “the dragon and the elephant dancing together,” as described by China’s Global Times
Conclusion: A Step Towards Stability or a Temporary Truce?
Prime Minister Modi’s visit marked a crucial point for India-China relations, driven by US tariffs and changing global dynamics. The visit provided an opportunity to restore economic and diplomatic ties strained by the 2020 border clash, though it did not resolve all deep-rooted problems. Modi described the engagements as ‘productive’, with both sides agreeing that India and China are development partners, not rivals, and emphasising mutual respect, interests, and sensitivity.
India’s goal of strategic independence, economic strength, and regional influence shaped how it engaged with China, while Beijing used India’s market to offset its own economic challenges. The US tariff dispute, while a setback, encouraged India to diversify its partnerships, with Modi’s meetings in Tianjin signalling a broader adjustment. The future of India-China relations depends on ongoing dialogue, mutual respect, and the capacity to manage competing interests in a turbulent global environment. As two of the world’s most powerful nations, their ability to cooperate could promote regional and global stability, but mistrust and external pressures will test the durability of this engagement.
The writer is Special Advisor for South Asia at Parley Policy Initiative, Republic of Korea. He is a regular commentator on the issues of Water Security and Transboundary River issues in South Asia. The views expressed are of the writer and do not necessarily reflect the views of Raksha Anirveda
