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The first sign of the shift came in November last year, when Indian restrictions on visas for Chinese professionals in some industries were relaxed. That was followed by a softening of rhetoric on China from Narendra Modi, the prime minister. In an interview with Newsweek magazine published on April 10th, weeks before the Indian election, Mr Modi described relations with China as “important and significant” and expressed hope that border stability could be restored. His defence minister, Rajnath Singh, said in late April that border talks were “progressive and satisfactory” and “no fresh tension has come up”. Then in May a new Chinese ambassador, Xu Feihong, arrived in Delhi after a hiatus of 18 months in which China’s embassy there operated without one. Mr Xu has since been on a charm offensive, meeting several members of the political elite.
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One reason for the recalibration is the apparent success of a new mechanism for managing border tensions. It relies on “buffer zones” where both sides withdraw troops and cease all patrols. Through 21 rounds of talks between military commanders, the two sides have already established such zones at five of seven flashpoints and are discussing others, although their strategic importance makes them more contentious.
The other impetus for change is a recent surge of demand for Chinese technology in India, despite official efforts to reduce its economic dependence on its neighbour. After the clash in 2020, India’s government banned 320 Chinese apps, launched tax raids on Chinese companies and introduced new rules requiring government approval for any Chinese investment. Bilateral trade dropped, and Indian officials joined Western counterparts in trying to “de-risk” supply chains.
And yet India’s dependence on Chinese imports has only grown (see chart). In the 2023-24 financial year China edged past America to reclaim its position as India’s top trading partner. India’s imports from China increased to US$102bn (about 56% more than in 2020) out of a total US$118bn in bilateral trade. India’s trade deficit with China has risen by around 75% since 2020.
More strikingly, China was India’s biggest source of major industrial products in 2023, accounting for around 30% in categories such as electronics, machinery, cars, chemicals and textiles, according to a recent study by the Global Trade Research Initiative (gtri), a Delhi-based think-tank. The study found that India’s reliance on China was highest in imports of electronics, telecoms and electrical products, at 39%. Machinery was second, at 38%.
https://www.economist.com/asia/2024/07/1...-be-ending