CNBC explores the shifting dynamics between India and China ahead of a key meeting between PM Narendra Modi and President Xi Jinping. Set to take place during the SCO summit, the talks unfold as Xi hosts global leaders in Tianjin including Russia’s Vladimir Putin, spotlighting Asia’s growing influence on world affairs.

Delhi

India and China have recently resumed diplomatic engagement after a five-year hiatus, marked by meetings between leaders Narendra Modi and Xi Jinping. This follows a period of strained relations, including a military clash on the Himalayan border and suspended flights and visas. Both countries have acknowledged that prolonged military standoffs are unsustainable and have begun reopening some channels of communication.

Despite these efforts, significant issues persist, including border disputes, trade imbalances, and regional security concerns, particularly relating to Pakistan. Economic ties remain strong, with India heavily reliant on Chinese imports, but the relationship is marked by contradictions and strategic caution. While there is a tactical easing of tensions and the potential resumption of people-to-people exchanges, analysts note that deeper challenges remain unresolved.

Will Modi-Xi meet shift India-China ties?

So let's take a look at how the relationship between India and China has evolved in the last couple of years. After a five-year break, India and China are speaking again. The ice began to thaw with the Xi Jinping and Narendra Modi meeting in October last year. And since then, senior leaders of the neighboring countries have met multiple times. Indian defense and foreign ministers have visited China, while China's foreign minister has returned the visit in recent weeks. Relations hit rock bottom in 2020 after a military clash on the Himalayan border resulted in casualties on both sides. Flights and visas were suspended for years. But efforts are being made to reopen some channels. Both India and China realized a couple of years ago that this five-year, you know, face-off that they had with tens of thousands of troops deployed on the border just wasn't sustainable militarily, economically, diplomatically. Still, all fault lines remain, trade, Tibet, borders and regional security, especially given China's close ties and India's strained relationship with Pakistan. And alongside this, a lopsided economic relationship. India has a $99 billion trade deficit with China, but alarm bells haven't been sounded publicly. That's because made in India still depends on made in China. From iPhone components to pharmaceutical ingredients that help reinforce India's status as the pharmacy of the world, China is crucial for India's economy. However, the contradictions run deep. India wants Chinese investment and technology transfers, but China won't easily compromise its manufacturing edge. Beijing is seeking unity with India to promote its multilateral vision and challenge the U.S.-led order, while New Delhi is guarding its strategic autonomy. Meanwhile, India, like China, is increasingly at odds with the Trump administration, a casualty of U.S. negotiations with Russia over the war in Ukraine, and a target of additional tariffs. Both sides have a vested interest in restoring normalcy. Both sides now have complex relationships with the United States. That was not the case last year, when India's relationship with Trump before he came back into power was very, very solid. The reset between the world's two most populous countries is still fragile. In what Xi Jinping has described as a dragon-elephant tango, these small steps come with big stakes. So it is a complicated tango, and we see a tactical easing of tensions between the two countries. We might start to see some people-to-people exchanges being resumed, flights and visas. But analysts say those are the low-hanging fruits, and the countries are still looking at a longer list of complex and deeply entrenched challenges, from the Pakistan issue to the unresolved border dispute.

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