Navigating Trade Turbulence: India and China Explore Economic Recovery

Mon Sep 15 2025 14:53:51 GMT+0300 (Eastern European Summer Time)

In the aftermath of Trump's tariffs, India and China seek to redefine their economic relationships and strengthen ties amidst growing tensions with the US.

India's Prime Minister Modi recently visited China as both nations face adverse impacts from US tariffs. With a combined focus on economic collaboration, Modi and Xi Jinping aim to reset their contentious relationship following a backdrop of trade conflicts and border disputes. Both leaders are exploring ways to enhance bilateral trade, particularly in manufacturing and technology, while contending with existing territorial issues and the decreasing influence of the US in their strategies.

India's Prime Minister Narendra Modi lands in China this weekend with the sting of Donald Trump's US tariffs still top of mind.

Since Wednesday, tariffs on Indian goods bound for the US, such as diamonds and shrimp, now stand at 50% – which the US president argues is punishment for Delhi's continued purchase of Russian oil.

Experts indicate that these levies threaten lasting damage to India's vibrant export sector and ambitious growth targets.

China's Xi Jinping is also attempting to revive a sluggish economy under the cloud of US trade tariffs. With an aim to rejuvenate relations, Modi and Xi may be seeking a reset that both nations need amid their historically complex relationship marked by mistrust and territorial disputes.

Chietigj Bajpaee and Yu Jie of Chatham House suggest that the relationship between these two populous nations carries global implications, emphasizing, Put simply, what happens in this relationship matters to the rest of the world. They believe Modi's visit signals a potential turning point, as India is not the bulwark against China that the West anticipated.

Challenges Ahead: Despite the hopes for cooperation, the relationship has significant hurdles, including unresolved territorial disputes and economic rivalry. Violence erupted in Ladakh's Galwan Valley in 2020, compounding the economic fallout as direct flights were canceled and investments halted.

Future Prospects: With India's growth expected to soar and its economy projected to rank third by 2028, both countries may soon recognize their mutual dependency in manufacturing and trade. Continued discussions about resuming direct flights, relaxed visa policies, and collaborative economic initiatives could mark the beginning of a positive shift.

However, while Modi's trip represents an opportunity for re-engagement, experts suggest that any substantial change will require ongoing dialogue and efforts to address both nations' concerns on various fronts, from trade to regional stability.