5 min readMar 31, 2025 11:49 AM IST
First published on: Mar 31, 2025 at 11:49 AM IST
There’s been an uptick in engagement between India and China at the government level over the past week. On March 25, the 33rd meeting of the Working Mechanism for Consultation & Coordination on India-China Border Affairs (WMCC) was held in Beijing. The MEA readout said that the two sides “explored various measures and proposals to give effect to the decisions taken” during the Special Representatives’ meeting in December last year “to advance effective border management”. Also discussed was the “early resumption of cross-border cooperation and exchanges, including on trans-border rivers and Kailash-Mansarovar Yatra.”
This was followed by a foreign ministerial-level consultation. The meeting discussed the resumption of direct flights, the interaction of media and think tanks, and the celebration of the 75th anniversary of the establishment of diplomatic relations, along with modalities to resume the Kailash Manasarovar Yatra. Along with resuming government-level engagement, a report in this newspaper suggests a potential deepening of economic cooperation between the two countries. Some of the issues on the table are easing restrictions on Chinese investments along with visa restrictions for Chinese personnel, lifting some tariff and non-tariff barriers on imports, permitting some Chinese apps, and resumption of direct flights.
There is clearly an incentive for both sides to explore greater cooperation to mitigate the disruptive impacts of the changes in US policies following Donald Trump’s return to power. Mutual hostility, however, narrows the options both countries can exercise.
For instance, from Beijing’s perspective, access to the Indian market is useful to alleviate some of the pressures following restrictive American and European trade policies. Despite all the talk about boosting domestic consumption, China’s economic policy remains focussed on supply-side stimulus in order to pursue industrial upgradation and sustain production and employment. On the other hand, for Indian manufacturing, access to Chinese intermediate and capital goods is critical. Likewise, in certain sectors, such as railways and urban transport, access to skilled Chinese personnel is important. In other words, there are some synergies that are evident.
There are, however, significant divergences between the two sides on a whole range of issues, starting from the state of affairs at the boundary, the matter of India attracting Chinese investment and reciprocal access for key Indian goods and services to the Chinese market.
First, both sides continue to view each other as competitors rather than partners. In fact, there is little to suggest that either is fundamentally rethinking this perspective. For instance, External Affairs Minister S Jaishankar underscored this, arguing that although there is an effort to “rebuild” the relationship “step-by-step”, “there will be issues” between the two sides for the foreseeable future”. Likewise, Chinese restrictions on the travel of some skilled personnel to India and equipment like tunnel boring machines are indicative of a zero-sum mindset. It’s also interesting to note that even Chinese scholars like Mao Keji, who are arguing for closer India-China economic cooperation are skeptical of a “fundamental improvement” in the relationship.
Second, while trade with China remains important for India, there are clear security and economic concerns that will inhibit its expansion. This means that any easing will be difficult, slow and very limited. From an Indian perspective, the concerns are particularly around certain technologies and connected products, along with worries about cheap Chinese goods hollowing India’s manufacturing potential. For instance, in February, the Ministry of Defense cancelled three contracts for the procurement of 400 drones, owing to concerns over the presence of Chinese components and electronics. In contrast, the Chinese government’s emphasis on supporting domestic enterprises and boosting self-reliance will continue to hinder key Indian goods and services. Take the example of the pharma sector. Indian pharma products have historically faced regulatory and market access barriers in China. This is likely to persist, particularly with a new plan issued by the State Council in January seeking to expand the innovation, creativity and global competitiveness of the Chinese pharmaceutical industry.
Finally, while there has clearly been a rethink in India about easing up on Chinese investments, one must not assume that the money will flow any time soon. Even before the issuance of Press Note 3 in April 2020 (introducing the requirement of prior government approval in case of any FDI from entities of countries that share land borders with India), there wasn’t a flood of Chinese investment looking to enter the Indian market. In other words, Chinese investors anyway had a limited appetite for the Indian market even when scrutiny was virtually non-existent. It is unlikely that after five years of restrictive policies and observing law-enforcement actions against Chinese firms, this appetite would have been whetted. More importantly, there is evidence to suggest that Chinese analysts and thinkers increasingly view the expansion of Indian manufacturing as a strategic and security challenge. It is, therefore, best for expectations to be tempered.
The writer is chairperson, Indo-Pacific Studies Programme, Takshashila Institution
The 33rd meeting of the Working Mechanism for Consultation & Coordination on India-China Border Affairs (WMCC) was held in Beijing. (X/@China_Amb_India) 
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