The timing of the dialogue is critical
With Washington’s protectionist stance casting a long shadow over supply chains, experts believe New Delhi and Beijing are deliberately exploring common ground. Speaking to ET Now, China market analyst Shaun Rein said, “China has rolled out the red carpet for Prime Minister Modi, signalling respect and seriousness in rebuilding ties. In contrast, European leaders have been received with far less pomp, underlining where Beijing sees its priorities.”
A red carpet for Modi
When Modi landed in China, he was welcomed with elaborate cultural displays, a marked departure from the lukewarm receptions extended to Western leaders. Chinese state media amplified visuals of Modi and Xi Jinping together, presenting the narrative of “the elephant and the dragon” as partners rather than rivals.
Rein told ET Now, “The Chinese Communist Party is signalling to its people and to India that it wants strong bilateral relations. At a time when the United States is working to contain both China and India—just as it curbed Japan in the 1980s—it is important for New Delhi to recognize the opportunity.”
Trade deficit and new opportunities
India’s $99 billion trade deficit with China remains a sticking point. However, Chinese officials have indicated they are ready to open their domestic markets further to Indian exports, particularly in magnets, batteries, and other industrial goods.
Rein told ET Now he expects concrete trade deals to be announced within the next three to six months. “You’re going to see more magnets and batteries from India being bought by China, and hopefully, more people-to-people exchanges with direct flights and visas. If Chinese firms like Huawei, Xiaomi, and Nio are allowed to invest, it will create jobs in India while helping Chinese companies become global players.”
Global supply chains in transition
The US-China trade war has already redirected flows. China, once heavily dependent on US imports, has increasingly diversified—sourcing soybeans from Brazil, beef from Australia, and oil from Canada. As a result, America’s leverage has weakened, with tariffs reduced from 140% to 30% in some categories.
Rein explained to ET Now, “China has de-risked the US. Exports to America have fallen from 17% in 2017 to 14% today, while Southeast Asia now accounts for 18%. But Beijing still needs new markets, and India is the most logical choice.”
A multipolar world emerging
Rein told ET Now that the global order is shifting away from a US-dominated framework to a more multipolar balance, with China, India, and the US all holding influence. “The water issue, Ladakh—none of these disputes are insurmountable. With pragmatic diplomacy, trade can expand and deficits can narrow,” he said.
Even if Washington softens tariffs on India, Rein believes New Delhi must maintain a balanced strategy. Speaking to ET Now, he argued: “The US foreign policy establishment has historically resisted the rise of Asian powers. India’s best path to becoming a global economic superpower is through pragmatic cooperation—not just with Washington, but also with Beijing.”
Looking ahead
For now, optimism is running high. Modi’s warm reception and Xi’s overtures suggest a willingness to reset ties after years of tension. As tariff battles with the US continue to reshape trade flows, the SCO summit may well be remembered as the moment when the elephant and the dragon chose cooperation over confrontation.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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