India and China: strategic thawing between American pressure and economic pragmatism

Traduzione di Elena Ciullo

China’s unexpected opening to India marks a significant shift in the Indo-Pacific geopolitical landscape. After years of diplomatic fall out and tensions along the Effective Control Line, Beijing has decided to remove restrictions on a wide range of exports to New Delhi, particularly fertilisers, rare earths, magnets and tunnel boring machines. A decision that was announced during the visit of the Chinese Foreign Minister Wang Yi in New Delhi and immediately took on political as well as economic significance, marking an unexpected thawing between the two Asian giants.

The most urgent issue was that of DAP fertilizers, essential for the agricultural season of Rabi. The Chinese embargo had drastically reduced availability on the Indian market, leading to higher prices and strong concern among farmers. With the green light from Beijing, the first shipments of DAP are already on the move, enabling the filling of a gap that risked compromising crops and food price stability.

Rare earths and magnets, which are essential for the electronics, automotive and renewable energy industries, also suffered a severe blow. The suspension of supplies had caused delays in the production of electric motors, turbines and hi-tech equipment. The removal of restrictions solves a crucial crux for Indian manufacturing, which aims to strengthen its global competitiveness in the technology sector.

Finally, the reopening involves tunnel drilling machines (TBM), essential for the construction of metros, motorways and major urban works. The Chinese blockade had paralysed several infrastructure projects, especially in rapidly developing cities where demand for mobility is growing. With the return of exports, strategic shipyards will be able to recover more quickly. It is not just an economic issue: infrastructure is at the heart of the Indian government’s modernization strategy, and its stall was likely to result in a stop on growth and political discontent.

Why now?
The decision of Beijing is not a random one. On the one hand, the trade freeze also penalized Chinese producers, who have one of the largest and fastest growing markets in India. On the other hand, the geopolitical context has led both sides to reconsider: in recent months, the second Trump administration has imposed duties of up to 50% on Indian exports to the US, affecting key sectors such as textiles and pharmaceuticals. This has weakened the position of New Delhi, pushing it to seek alternative manoeuvre margin. China, in turn, took the opportunity to present itself as a reliable partner at a time of common external pressure.

The decisive signal came on 19 August 2025, when the Indian prime minister Narendra Modi met Wang Yi in New Delhi. "Partners, not rivals," said the Chinese minister, speaking of shared growth and win-win cooperation. The meeting was not only symbolic: it coincided with the suspension of a delicate bilateral dialogue between the US and India on tariffs, postponed indefinitely, and showed India’s willingness to diversify its diplomatic options. It is the bilateral agreement that confirms the scope of the rapprochement, which goes beyond the simple removal of trade restrictions: India and China have decided to resume cross-border trade through three key points - Lipulekh, Shipki La and Nathu La – direct flights, extend religious pilgrimages to Tibet and even start an institutionalized dialogue mechanism with an official table scheduled for 2026.

The test will be the Shanghai Cooperation Organisation (SCO) summit in Tianjin at the end of the month, where Modi will meet Xi Jinping for the first time in seven years. There we will see whether this détente will remain a tactical episode or herald a more structured transformation of bilateral relations.

For now, pragmatism seems to prevail: the combination of American pressure and overlapping economic interests has created a space for cooperation that was unthinkable just a few months ago. And while the future of this new course remains uncertain, the political situation is clear: India and China have decided to reopen a strategic channel that could help redraw the balance of power in the Indo-Pacific, in an increasingly fluid and competitive global context.

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