India and China Search for Economic Cooperation Amidst US Tariff Challenges

India's Prime Minister Narendra Modi landed in China with the pressing issue of Donald Trump's tariffs on Indian goods looming large. With tariffs on key exports like diamonds and prawns now at 50%, experts warn of a detrimental impact on India's export sector and economic growth targets.

China's President Xi Jinping is facing a parallel scenario, as the Chinese economy struggles under the weight of similar US tariffs. This backdrop sets the stage for a potential reset in relations between the two populous nations, historically fraught with mistrust due to territorial disputes.

Experts from Chatham House underscore the global importance of India and China's relationship, indicating a mutual need to work together amidst external pressures, particularly from the United States.

What Would a Stronger Relationship Mean?

As the fifth largest economy, India's growth is projected to remain above 6%, indicating significant potential as it seeks to elevate its position in the global economy. Meanwhile, China's status as the second largest economy presents a unique opportunity for collaboration.

However, unresolved territorial disputes complicate the relationship, as showcased by the hostilities in Ladakh's Galwan Valley in 2020. Past economic fallout has hindered direct flights, visa processes, and increased barriers to investment.

India's Position Has Changed

Through Modi's attendance at the Shanghai Cooperation Organisation (SCO) and his diplomatic overtures to Beijing, India appears poised to recalibrate its strategy amidst changing geopolitical dynamics. Critically, India’s relations with the US are evolving, prompting a reassessment of its partnerships.

How Can China and India Cooperate Economically?

To counterbalance US tariffs, India's reliance on Chinese manufacturing capabilities provides a foundation for potential collaboration. There is a mutual recognition of the need for improved policies, particularly in electronics manufacturing, and addressing trade barriers.

Despite the complexities and historical animosities, Modi's visit signals a willingness to explore economic options, potentially sending a message to Washington about India's diverse diplomatic avenues.