When Foxconn recalled hundreds of Chinese engineers from a factory in India last month, reportedly under Beijing’s instructions to limit technology transfer, it underscored the tense relationship between China and India. Both nations are facing tariffs from the United States, which could influence them to consider cooperation despite their rivalry. This complex dynamic will be tested at the upcoming Shanghai Cooperation Organisation summit in Tianjin, where Indian Prime Minister Narendra Modi will meet Chinese President Xi Jinping, his first visit in seven years since the 2020 Galwan Valley clashes soured ties.
While some experts doubt this summit will mark a major shift towards friendship, it signals potential for dialogue. Indian officials have hinted at bilateral meetings, and China’s Foreign Minister Wang Yi called for Delhi and Beijing to see each other as partners rather than threats. Despite this, skepticism remains. India’s trade deficit with China soared to over $99 billion in 2025, up from $85 billion, with imports reaching an all-time high of $113.45 billion. India’s surplus with the U.S. is significantly smaller at about $45.8 billion, highlighting its economic imbalance.
China’s close military ties with Pakistan also fuel Indian concerns. Reports show China supplied two-thirds of Pakistan’s arms exports between 2020 and 2024, further complicating diplomatic relations. Experts agree that the SCO summit is unlikely to resolve deep-seated disputes, but Modi’s presence suggests a willingness to explore common ground.
Economically, India is positioning itself as a manufacturing alternative to China by diversifying supply chains. India recently surpassed China as the top smartphone supplier to the U.S., with Chinese exports dropping sharply. However, India faces challenges in fully capitalizing on this shift due to trade barriers and its own limited domestic capacity to produce key raw materials and intermediate goods, a key theme for its goal to be a “China Plus One” manufacturing hub.
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In summary, while political and economic tensions persist, both countries are navigating a landscape where mutual benefits and longstanding issues coexist. The Tianjin summit could serve as an important step in managing these complex relations, amid ongoing strategic and economic shifts in Asia.
