Rebuilding India-China Relations: Diplomacy, Dialogue, and Economic Realignment

Recent developments in India-China relations suggest a careful but deliberate attempt at stabilisation, after years of deep strain following the 2020 border crisis. The appointment of Vikram Doraiswami as India’s new Ambassador to China, positive signalling from Beijing, and evolving economic policy choices in New Delhi together reflect a pragmatic recalibration.

Illustration by The Geostrata

This is shaped by both geopolitical and economic compulsions. This emerging approach also resonates with recent remarks by Chinese Ambassador Xu Feihong, who described India and China as “neighbours that cannot be moved apart” and emphasised the need to become “good neighbourly friends and partners” to realise the “Dragon-Elephant Tango”, highlighting a shared interest in rebuilding cooperation despite past tensions.

DIPLOMATIC SIGNALLING THROUGH AMBASSADORIAL APPOINTMENT

The appointment of Vikram Doraiswami, a seasoned diplomat with prior experience in China and fluency in Mandarin, signals India’s intent to bring professionalism and strategic clarity to a sensitive bilateral relationship. His background as a “China hand” makes him particularly suited to manage a complex phase of cautious re-engagement.

In return, Beijing’s welcoming response reinforces this reading. By emphasising the role of diplomats as “important bridges” and expressing hope for improved ties, Beijing has conveyed a measured openness to stabilisation. This comes at a time when both sides are attempting to move beyond the prolonged shadow of the Galwan crisis, with disengagement progressing in several friction points since 2024, though broader de-escalation remains a work in progress.

Importantly, recent Chinese statements, including those by Foreign Minister Wang Yi, have emphasised that India-China relations are “on the right track” and that both sides share more “interests than differences.” Similarly, Chinese diplomatic outreach through youth dialogues and cultural engagement reflects a broader attempt to rebuild trust at multiple levels, not just at the political or military level.

BRICS AND THE LOGIC OF STRATEGIC CONVERGENCE

Parallel to bilateral signalling, China has also emphasised cooperation with India within BRICS and the Global South framework. By stating that both countries should see each other as “development opportunities,” Beijing is attempting to frame the relationship in cooperative, rather than adversarial, terms, at least in multilateral settings.

This is particularly relevant as India prepares to host the upcoming BRICS Summit. For New Delhi, BRICS remains a platform to advance Global South priorities and maintain strategic autonomy. For China, it is a mechanism to project unity among emerging powers and counterbalance Western influence, while simultaneously managing bilateral tensions.

There is also emerging space for issue-based convergence. China’s 15th Five-Year Plan (2026-2030) highlights sectors such as the digital economy, green energy, advanced manufacturing, and artificial intelligence.

These are areas where India is also investing heavily through initiatives like Digital India, renewable energy expansion, and PLI schemes. This creates limited but real opportunities for functional cooperation, particularly in non-sensitive sectors such as climate action, global supply chain stability, and development financing within BRICS institutions.

However, this convergence is best understood as practical and gradual, with both countries choosing to build cooperation step by step while continuing to address broader differences through sustained dialogue and engagement.

ECONOMIC PRAGMATISM: A 'GRADED OPENING' TO CHINA

The most significant shift is visible in India’s evolving economic approach towards China. After years of restrictions under Press Note 3 (2020), India is now considering a “graded” and reciprocal opening to Chinese investments, particularly in non-sensitive manufacturing sectors.

This shift is strongly influenced by the recommendations of the Rajiv Gauba Committee, which examined the impact of restrictive policies on investment flows and industrial growth. The committee recommended a calibrated easing of restrictions, especially where Chinese investments could support domestic manufacturing, enhance export competitiveness, and integrate India more effectively into global supply chains.

Similarly, the Economic Survey 2023-24 argued for a pragmatic approach, suggesting that attracting Chinese investment, particularly in manufacturing, could strengthen India’s export capacity and improve participation in global value chains. The Survey recognised that complete disengagement from China is neither practical nor economically efficient, especially in sectors deeply integrated with Chinese supply chains.

Reflecting these recommendations, recent policy measures include faster approvals for select investments, limited joint ventures in electronics manufacturing, and a structured approach to easing restrictions, while retaining safeguards in strategic sectors such as semiconductors. The GoI has introduced a 60-day clearance window for investment proposals from countries like China in selected sectors.

At the same time, economic engagement remains shaped by structural asymmetry. Bilateral trade has crossed $150 billion, but India continues to face a massive trade deficit exceeding $100 billion, highlighting continued dependence on Chinese imports, particularly in intermediate goods and industrial inputs.

VISA REFORMS AND IMPACT ON THE DOMESTIC INDUSTRY

A key operational bottleneck in recent years has been the restriction on Chinese technical personnel, which has significantly disrupted manufacturing activities. To address this, the Indian government has streamlined visa processes for Chinese technicians under the Prior Reference Category (PRC).

Under the new Standard Operating Procedure (SOP), approvals for skilled Chinese technicians, required for installation, commissioning, maintenance, and training, are being fast-tracked, particularly for projects under the Production Linked Incentive (PLI) scheme.

This reform has had a direct and important impact on India’s manufacturing ecosystem, especially Micro, Small, and Medium Enterprises (MSMEs).

Many MSMEs rely on imported Chinese machinery and components but lack the in-house technical expertise to operationalise them. Earlier delays in visa approvals led to stalled production, idle capacity, and rising costs. The easing of visa norms has therefore helped restore operational efficiency and revive production cycles, particularly in sectors like electronics and light manufacturing.

However, it also underscores India’s continued technological and operational dependence on Chinese inputs, raising important long-term questions about domestic capability building.

CHINA'S 15TH FYP AND EXPANDING STRATEGIC CONTEXT

China’s 15th Five-Year Plan provides an important backdrop to these developments. The plan prioritises technological self-reliance, advanced manufacturing, AI expansion, and supply chain security, alongside stronger risk-monitoring systems and resource security.

At the same time, it acknowledges global uncertainty and calls for selective international cooperation, particularly in energy, resources, and emerging technologies. This creates an opportunity: when China seeks self-reliance, it also recognises the need for stable external partnerships, including with countries like India.

This opens space for pragmatic convergence, especially in areas such as climate change, global supply chain resilience, and multilateral economic governance.

THE LARGER STRATEGIC CONTEXT

These developments are unfolding against a backdrop of global uncertainty, rising protectionism, supply chain disruptions, and geopolitical tensions. In such an environment, both India and China have incentives to avoid escalation and maintain a stable working relationship.

For China, stabilising ties with India allows it to focus on its broader strategic competition with the United States. For India, it ensures a more predictable external environment while balancing multiple partnerships.

CONCLUSION

The appointment of Vikram Doraiswami, renewed engagement within BRICS, and India’s calibrated economic opening towards China together indicate a measured reset in bilateral relations. Rather than a full reconciliation, the relationship is evolving towards “managed competition with selective cooperation”, where both countries seek to stabilise ties, expand economic engagement where beneficial, and carefully manage areas of disagreement.

However, this engagement remains asymmetrical and fragile, shaped by structural dependencies, unresolved border tensions, and competing strategic visions. The key challenge for India will be to ensure that pragmatism does not translate into strategic concession, and that engagement remains aligned with long-term national interests.

In an increasingly uncertain global order, the future of India-China relations will depend not just on cooperation but on the ability to balance engagement with caution, and opportunity with strategic clarity.

The author is a policy professional in international relations and trade policy, He was associated with the Ministry of External Affairs (Policy Planning & Research Division) and the Ministry of Heavy Industries, Government of India. He has experience in trade policy, strategic affairs, and bilateral engagements, particularly in the context of FTAs and geopolitical analysis, and has contributed to policy briefs, international negotiations, and intergovernmental coordination across key regions. He was also selected as a PhD candidate in Nuclear Diplomacy at the University of Sydney. The views expressed are personal.

The views and opinions expressed in this article are solely those of the author(s) and do not necessarily reflect the views of the organisation. This applies irrespective of the methods or tools used in the creation of the content.

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BY NICHOLE BALLAWAR 

Former Member

Policy Planning & Research Division 

Ministry of External Affairs, India

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