Ahead of SCO Summit 2025, India and China revive confidence-building measures with border trade, flight resumption

Prime Minister Narendra Modi landed in Tianjin on August 30, 2025, to participate in the Shanghai Cooperation Organisation Summit (SCO) scheduled for August 31-September 1. This is PM Modi's first visit in 7 years. Upon arrival, Modi received a warm welcome from the Indian diaspora living in China, while a Chinese artist performed Classical Indian music and dance.

India and China historically had troubled relations, with territorial disputes including the Line of Actual Control (LAC), Aksai Chin, which is claimed by India but China controls it and Arunachal Pradesh, which is part of India but China makes a claim of it. There had been military standoffs and border skirmishes like the Galwan Valley standoff of 2020, which soured the relationship even more. Moreover, India alleged that during the 4-day-long scuffle with Pakistan, China provided operational and technical assistance, an accusation which had been denied by Beijing. New Delhi also frowns upon, Beijing's closeness to its rival at Islamabad via the Belt and Road Initiative (BRI). Even though China is India's largest trade partner, India runs a huge trade deficit with China, appx. $100 billion in 2024-25, which puts India in a weaker situation. Despite this, there is a mass mobilisation in the country against Chinese products and restricted Chinese apps and investment. This had created significant friction between the two nations. India wants to rival Chinese influence in South Asia.

But with the recent 50 per cent tariff on India by the US and the Indian Prime Minister visiting China almost after 7 years, speculations about the two giant economies growing closer will alarm Washington.

Is there a shift in India-China relations

There had been a notable shift between India and China relations. Both nations are pragmatic in their approach towards each other. India and China, in October 2024, agreed to establish a Border Patrol agreement, which reinstated patrols and eased tension in key zones like Depsang and Demchok. In June 2025, India and China agreed on a four-point formula during bilateral talks, disengagement, demarcation, working-level mechanisms and de-escalation.

In August 2025, first time after the COVID-19 lockdown, India and China opened direct flight routes. Both nations agreed to resume border trade after 5 years via the mountain passes Lipulekh Pass in Uttarakhand, Shipki La in Himachal Pradesh and Nathu La in Sikkim, though Nepal objected to it. The Kailash Mansarovar Yatra also resumed after 5 years. As India-US relations face challenges, India-China relations found a catalyst for rapprochement.
Despite tensions, India-China bilateral trade was highest in 2024-25. China wants India to be part of the multipolar world, one that is not dominated by the Western neo-liberal agenda, by being an active part of BRICS and SCO. But India is finding it hard to balance between the West and the Global South. Despite the positive signals, China views its relationship with India as a strategic rivalry, with the border dispute as its core issue. It is also wary about India's growing defence cooperation with the US. Analysts believe both nations remain committed to the idea of trade and cooperation, but internal security and border security will likely remain a bone of contention.