New Delhi: A diplomatic letter from the Chinese president, Xi Jinping, to the president, Droupadi Murmu, has sparked competing interpretations about the nature of India-China rapprochement, with Beijing attempting to downplay what sources describe as strategic outreach prompted by escalating US trade tensions. The comparative interpretations gathered steamed after an August 28 Bloomberg story [archived link] seemingly credited the letter for triggering a geopolitical realignment.
The controversy centres on Xi’s March 2025 communication to his Indian counterpart, which has become emblematic of the broader recalibration in India-China relations after years of military standoffs and economic decoupling.
The catalyst for this diplomatic shift appears to be the decision of the United States president, Donald Trump, to impose punitive 50% tariffs on Indian exports to his country, ostensibly targeting New Delhi’s continued energy trade with Russia. The move has been interpreted in Indian policy circles as a strategic miscalculation that undermines Washington’s long-term objective of positioning India as a counterweight to Chinese influence in Asia.
Industry analysts estimate that sustained US tariffs could eliminate approximately 60% of India’s American-bound exports, potentially shaving one percentage point off the country’s GDP growth. This economic pressure has coincided with renewed Indian interest in diversifying trade partnerships, particularly with China.
The timing of Trump’s tariff announcement proved particularly damaging to US-India relations. Coming after what New Delhi perceived as patronizing American intervention in India-Pakistan border clashes in May 2025, the trade measures reinforced growing Indian scepticism about Washington’s reliability as a strategic partner.
The Xi Letter
Xi’s communication to Murmu, rather than directly to the prime minister, Narendra Modi, has generated significant diplomatic speculation. The unusual but correct protocol choice suggests Beijing’s cautious approach to testing Indian receptiveness to renewed engagement after the 2020 Galwan valley confrontation that killed 20 Indian soldiers.
Sources familiar with the correspondence indicate that Xi’s message served dual purposes: it cautioned against Indian policies potentially harmful to Chinese interests while proposing specific mechanisms for dialogue, including the designation of a provincial official as Beijing’s primary liaison for normalization efforts.
China’s clarification
The Chinese ambassador to India, Xu Feihong, subsequently sought to reframe the letter [archived link] as a routine commemorative gesture marking the 75th anniversary of diplomatic relations between the two countries. His clarification on social media emphasized ceremonial aspects while avoiding references to strategic content, describing the communication as celebrating the “dragon-elephant cooperative pas de deux” between ancient civilizations.
However, this official narrative contrasts sharply with diplomatic sources who describe substantive discussions about border troop deployments, trade facilitation measures, and high-level visit protocols.
Engagement gathers momentum
Despite official denials of strategic significance, India-China engagement has accelerated markedly since mid-2025. The national security advisor, Ajit Doval, conducted two visits to China, while the external affairs minister S Jaishankar’s July 2025 Beijing trip marked the first foreign minister-level visit in five years.
These diplomatic contacts have yielded tangible results in economic cooperation. Chinese urea exports to India have resumed, visa restrictions have been relaxed, and direct flights between major cities have restarted. Corporate partnerships have also expanded, with the Adani Group partnering with Chinese electric vehicle manufacturer BYD, while Reliance Industries and JSW Steel have announced joint ventures with Chinese firms.
The normalization process has extended to military affairs, with both sides reportedly discussing confidence-building measures along the disputed border. While comprehensive troop withdrawals remain elusive, local commanders have established new communication protocols to prevent escalation.
The recent visit by the Chinese foreign minister, Wang Yi, in New Delhi for the special representatives’ talks with Doval for resolving the border issues between the two countries followed by his meeting with Modi was probably the most conspicuous sign of thaw between the two countries. Wang’s visit paved the way for the prime minister to visit China’s Tianjin for the Shanghai Cooperation Organization summit, which will be held on August 31 and September 1.
Economics driving rapprochement
The renewed engagement reflects compelling economic logic for both nations. China faces deflationary pressures, industrial overcapacity, and shrinking access to Western markets, making India’s demographic dividend and infrastructure requirements increasingly attractive. For India, Chinese investment and technology transfer remain crucial for reviving manufacturing competitiveness under the Make in India initiative.
Trade statistics underscore this interdependence. Despite political tensions, China remains India’s largest trading partner, with bilateral trade exceeding $125 billion in 2024. Indian pharmaceutical and information technology services continue to find ready markets in China, while Chinese infrastructure expertise remains unmatched for India’s development needs.
The approaching September 1 SCO summit in Tianjin presents an opportunity for Modi and Xi to formalize this pragmatic partnership. While comprehensive treaties remain unlikely given domestic political sensitivities in both countries, incremental agreements on specific sectors appear feasible.
Narratives and calculations
The divergent interpretations of Xi’s letter reflect broader strategic communications objectives. Beijing seeks to portray the rapprochement as a natural evolution of civilizational ties rather than a response to external pressure, thereby maintaining strategic autonomy narratives crucial to Chinese domestic legitimacy.
Conversely, Indian officials have remained deliberately ambiguous about the normalization process, balancing domestic nationalism with economic pragmatism. The Modi government’s approach reflects awareness that overly enthusiastic engagement with China could provide political ammunition to opposition parties while potentially alarming other Quad partners.
This calculated ambiguity extends to military cooperation, where both sides have avoided publicity around border management improvements to prevent domestic backlash. Recent agreements on patrol protocols and communication mechanisms have been implemented quietly, without the fanfare that accompanied previous confidence-building measures.
Regional implications
The India-China thaw represents a potential inflection point in Asian geopolitics, with implications extending far beyond bilateral relations. For Washington, the development underscores risks inherent in treating partners transactionally rather than strategically, particularly when such treatment drives them toward competitors.
The normalization process also challenges prevailing assumptions about the Indo-Pacific strategic architecture. If sustained, improved India-China relations could complicate alliance frameworks predicated on containing Chinese influence, particularly if economic integration proceeds faster than political reconciliation.
Regional powers including Japan, Australia, and Southeast Asian nations are closely monitoring these developments, given their implications for supply chain security and strategic partnerships. The prospect of reduced India-China tensions could reshape calculations about regional security arrangements and economic cooperation mechanisms.
Pragmatism over partnership
Despite warming diplomatic rhetoric, fundamental strategic differences between India and China remain unresolved. Border demarcation disputes, competition for influence in South Asia and the Indian Ocean, and divergent approaches to global governance continue to limit partnership potential.
The current rapprochement appears driven more by immediate economic necessities than by strategic convergence. Both countries recognize the costs of sustained confrontation while acknowledging that complete alignment remains unrealistic given their regional ambitions and alliance commitments.
This pragmatic approach may prove more durable than previous attempts at comprehensive partnership, as it avoids unrealistic expectations while creating space for incremental cooperation in mutually beneficial areas. The focus on economic engagement and military de-escalation, rather than strategic alignment, reflects mature recognition of both opportunities and constraints.
The success of this limited engagement model could provide a template for other regional powers navigating similar tensions between economic interdependence and strategic competition. As global trade patterns continue evolving, the India-China experience may offer insights into managing great power relations in an increasingly multipolar world.
Whether this diplomatic warming survives potential changes in US policy or domestic political pressures in either country remains to be seen. For now, both New Delhi and Beijing appear committed to exploring the boundaries of pragmatic cooperation while managing the inevitable tensions that accompany such efforts.
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