Prime Minister Narendra Modi and the Chinese Premier Xi Jinping shared a close relationship until 2020. Their friendship was exemplified by their eighteen one-on-one meetings between 2014 and 2019, including two retreats in Wuhan and Mamallapuram. 

Relations, however, soured between the two nations in 2020 following border clashes between Indian and Chinese troops. China reportedly seized 1,000 square kilometers of Indian territory, a claim that New Delhi has vehemently denied. 

These deadly clashes led to a major geopolitical shift in the region, intensifying military deployments along their contested Himalayan border and affecting bilateral relations. This resulted in China increasing military support to Pakistan and India, tightening restrictions on Chinese investments while enhancing its defense alliances with the United States and its allies. 

A recent agreement to revert to the pre-2020 status quo was signed when Prime Minister Modi met with the President of the People’s Republic of China at the 16th BRICS Summit in Kazan. This was the first encounter between the two leaders since 2020 who committed to sustaining “stable, predictable, and amicable” relations.

This easing of tensions marks a significant shift in priorities towards economic cooperation, driven by India’s need for Chinese technology and investment to boost its manufacturing sector and China’s need for market access amid economic slowdowns and trade barriers. The development also affects regional military balance and opens up the potential for substantial economic integration between India and China, influencing their global roles and interactions with other major powers, especially the United States. The situation, however, remains sensitive to risks of renewed conflicts, but it also offers a chance for reconciliation and collaboration within Asia.

As per Bloomberg News, India opted for reconciliation under corporate pressure, acknowledging that its rigid approach towards China was hurting Indian businesses and hindering Modi’s objective to boost high-end manufacturing, including semiconductors. India’s chief economic advisor, V. Anantha Nageswaran, has highlighted the necessity of engaging Chinese companies to fulfil its manufacturing aspirations. He suggested that India could join China’s supply chain or encourage foreign direct investment (FDI) from China to increase its global exports. At the same time, national security advisors recommended a more accommodating stance towards Chinese investments that do not pose immediate security threats.

This truce deal, driven mainly by diplomats rather than military leaders, aims to restore the pre-2020 border status and build trust, with further disengagement depending on that trust. While the truce suggests a potential shift in the economic and geopolitical situation in the region, marked by an agreement to resolve the border standoff through revised patrolling rights, skepticism remains about Beijing’s reliability.

Foreign Minister Subrahmanyam Jaishankar and India’s Chief of Army General Upendra Dwivedi expressed differing views on the immediate and future implications of the agreement. Jaishankar highlighted a completed troop disengagement, while Dwivedi emphasized trust-building as a precursor to further steps.

Since China’s 2020 incursion along the Line of Actual Control (LAC) and the Galwan clashes, mistrust has lingered despite disengagement at critical points. Although trade has stayed solid, other areas, like investment and travel, were impacted, and it is uncertain if these ties will fully recover.

Despite these positive developments, the border agreement does not resolve the underlying territorial disputes. India must ensure that the next steps in the border resolution are handled transparently to build trust. Although China claims its troops remain on their side, many in India believe Chinese forces have taken more territory and restricted Indian patrolling and local access in Eastern Ladakh. The lack of clear communication with Parliament and restricted media access to these areas has fuelled concerns. To avoid mistakes seen following the 2017 Doklam standoff, cautious progress is essential. Both nations should also reconsider whether the existing 1993 and 2013 border agreements are sufficient or if a new framework is needed for managing border tensions.

The recent border resolution and leadership meeting mark a promising step forward. Both leaders have compelling reasons to maintain peace – Prime Minister Modi aims to demonstrate a balanced foreign policy and address domestic concerns about military preparedness, while President Xi seeks access to India’s market amid economic strains. This evolving scenario suggests a cautious yet hopeful outlook for future diplomacy. However, given China’s past track record, India must remain vigilant. Trust in Beijing’s intentions should not be assumed, and this fundamental lesson cannot be ignored.

• By Hari Jaisingh