What’s Next for China-India Relations?

2024 was a year of change in relations between Beijing and New Delhi. After years of frozen relations, China and India reached an agreement to complete military disengagement along their disputed border and began to return their troubled relationship to normalcy. With a new year dawning, the big questions facing the China-India relationship are whether this thaw will continue and how far it will go.

To answer these questions, it is important to understand the thaw of 2024 and why it took place. The relationship between the two Asian giants froze in 2020 following deadly clashes along the disputed Sino-Indian border that provoked a huge military standoff, attempts at economic coercion by both sides, and fierce nationalist passions. While the origins of the 2020 crisis remain disputed, it is very likely that China’s resentment of the growing India-U.S. relationship played an important role in stoking it. The 2020 crisis shook the relations between Delhi and Beijing to their core and, ironically, served to push India even closer to the United States. While the last two years witnessed a gradual stabilization of the situation on the border with partial disengagement in some areas and increasing official contacts, the standoff on the border persisted and, consequently, there was no resumption of normal relations.

The 2024 thaw came against this background. In October the two sides reached an agreement to complete disengagement along their disputed border, create buffer zones, and make patrolling arrangements in contested areas, finally breaking their four-year impasse. The agreement was followed by the first formal meeting between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi since 2019, at the BRICS summit in Kazan, Russia, later that month.

In December, China and India resumed their Special Representative talks on the territorial dispute, which had not convened in five years, and allegedly discussed a return to their 2005 agreement, a landmark in the effort to resolve the dispute.

Importantly, this thaw is a process. It started before October 2024 with stabilization on the border and diplomatic moves such as the May 2024 appointment of a Chinese ambassador to India after a gap of 18 months. The process is not yet completed but, if it runs its full course, it might turn the thaw in China-India relations into a reset.

Three factors explain last year’s thaw. First, for both China and India the political costs and military risks of their frozen, antagonistic relationship had become unsustainably high. Ultimately, India’s attempt to force a complete return to a pre-2020 status quo, and China’s attempt to restore relations without any concessions on the border standoff, created an impasse that hurt both countries. 

Second, there was substantial economic pressure to thaw relations. In the midst of U.S.-imposed constraints on Chinese trade and investment abroad and economic difficulties at home Beijing had recognized fast-developing India as an important potential market. On the other side of the Himalayas, India’s electronics manufacturing has been highly dependent on Chinese electronic components and its pharmaceutical industry has relied heavily on Chinese imports. This dependence and the large potential for bilateral trade and investment prompted the Indian business community to push the Modi government to reengage Beijing. 

Finally, the accelerating China-U.S. competition created conditions that favored better relations between the two sides. Beijing realized that it had overplayed its hand in trying to pressure Delhi on the border and, contrary to its plans, had pushed India too close to the United States, a development that Beijing needed to offset. For its part, the conflict with China had made India lean on the U.S. more than it wished, limiting its room for international maneuver and undermining its vaunted strategic autonomy. 

Against this background, the crucial question is whether this thaw will continue in 2025.  Barring a black swan event, the answer is a definitive “yes.”

The principal reason is that the thaw, being a process, has a long way to go. China and India might have achieved disengagement along their disputed border but the de-escalation and de-induction of troops are yet to take place. After all, massive amounts of personnel and equipment are still facing each other across the disputed border. Politically and economically, the rebuilding of relations is just beginning. For instance, direct flights between the two countries have still not resumed. 

At a deeper level, the factors that led to the thaw in the first place will push for its continuation in 2025. The economic driver of the thaw is likely to grow amid economic slowdowns in both China and India, international trade uncertainties, and growing bilateral trade, while the challenges that the China-U.S. competition produce are likely to reinforce the need for better relations. While tensions have eased, both China and India still need to bring down the unacceptably high costs and risks of their rivalry.

Beyond all this, the thaw is likely to grow and deepen in 2025 because it offers an opportunity to achieve substantive progress in China-India relations. Both sides were shaken by how far tensions on the border escalated and realized the need to better manage relations. Moreover, major tensions offer opportunities, to be seized or missed, to reexamine relations, rethink policies objectionable to the other side, and make a renewed push for substantive progress. For instance, the 1986-1987 Sumdorong Chu standoff opened the way for a substantial improvement in relations and key agreements. 2025, which will mark the 75th anniversary of the establishment of relations and will offer a chance for Modi to visit Xi during China’s hosting of the 2025 SCO leaders’ summit, will be particularly suitable for making progress. There is room for signing agreements, especially on managing the territorial dispute and making progress toward its resolution.

Nevertheless, all is not rosy for the restoration of normalcy in China-India relations in the new year. 2025 presents uncertainties for the China-India thaw that might limit and even halt its progress. Regular, destabilizing South Asia tensions, at hotspots like Bhutan, are likely to emerge again, as they reflect the ongoing regional competition between Beijing and Delhi. Beyond this, there are three major uncertainties that might constrain and slow the progress of the thaw.

First, the second Trump administration in the United States is an unpredictable factor that poses many difficult but crucial questions. Will Trump follow through with his threats to impose brutal tariffs on Beijing and Delhi? How aggressive a policy toward China will the new U.S. administration adopt? In what ways will it affect trade between China and India? How will Delhi, stuck between its partnership with Washington and thaw with Beijing, react to an escalation of China-U.S. tensions? How far will the new Trump administration go in pressuring strategically autonomous India to align itself with the United States against China?

Second, the long-dormant but highly sensitive “Tibet issue” is another source of uncertainty in China-India relations. 2025 might present surprises that could reenergize the “Tibet issue” and shake bilateral relations. The Dalai Lama has promised to announce his succession plan after his 90th birthday in July, and his reincarnation might come unexpectedly at any time in the coming year. Both might produce unrest in Tibet, strain Sino-Indian relations, and launch the final race to define the future of the “Tibet issue” and the institution of the Dalai Lama.

Finally, the post-2020 mistrust of both policymakers in Delhi and the Indian public toward China raises questions about the progress of the thaw. For India, the 2020 escalation was a shock that made Delhi apprehensive of China and deeply cynical of Chinese commitments, as Beijing seemed again to violate previous agreements. Therefore, Delhi is likely to proceed cautiously in negotiations on the border, bear in mind the possibility of domestic backlash, and demand concrete, actionable guarantees from China. 

Importantly, India will continue to condition further improvement of relations on concrete progress on the border. This approach can be seen in the differences between the Chinese and Indian statements following the Special Representatives talks in December. The Chinese version mentioned a “six-point consensus,” which included a return to the 2005 agreement. The Indian statement omitted any such language, with Delhi publicly distancing itself from such a “six-point consensus.”

In conclusion, 2024 was an important year in China-India relations that saw the long-awaited thaw between the two countries. The breakthrough agreement in October gave momentum for an engagement process that is likely to carry through. As the larger strategic and economic picture is mostly favorable for the thaw, it is very likely it will continue in 2025. Nevertheless, there are major uncertainties that threaten the progress of the thaw, most notably the coming Trump presidency. 

But even if the thaw succeeds and produces a reset in China-India relations, as looks increasingly probable, such a reset might be weak and short lived. After all, Beijing and Delhi have tried to reset their relations after crises many times, only to be mired in tensions again. It is only by addressing the underlying geostrategic, economic, and military causes of their tensions, especially of their territorial dispute, that a true reset can be achieved. However, this is a tall order.