China, India in Talks to Resume Border Trade 5 Years After Deadly Clashes

United States (US) President Donald Trump’s escalating trade war has prompted many countries to seek new trade partnerships, with the relationship between China and India being a notable example.

The world’s two most populous countries, which have been embroiled in a long-running border dispute, have found common cause amid US tariffs that have jeopardized parts of their economy.

According to a report in Bloomberg, Beijing and Delhi have opened talks to resume local trade in the Chinese-Indian borderlands.

That trade was halted in 2020 following border skirmishes between Chinese and Indian troops that resulted in the deaths of 20 Indian soldiers and an estimated 35-40 Chinese soldiers.

The conflict is part of long-running tensions over control of the border region in the Himalayas.

The local trade in the region is relatively small, worth some $3.16 million in 2017-18, according to Bloomberg, and involved goods such as spices, furniture, carpets, medicinal plants, and pottery.

However, the resumption of these trade relationships may have more symbolic than financial value.

Direct Flights Between China and India

It’s the latest in a series of moves to thaw the frosty relationship between the two countries, and follows recent reports that direct airline flights between China and India could resume as soon as next month.

Flights were suspended in 2020 due to the COVID-19 pandemic and the border clashes. Since then, travelers between the two countries have had to take connecting flights via Hong Kong, Singapore, or other hubs.

An official announcement could come at the Shanghai Cooperation Organisation (SCO) summit in China at the end of August.

Some airlines in India have told the media that they stand ready to launch routes to China.

“Direct flights can foster practical cooperation through economic and cultural exchanges, giving new impetus to stability and development in Asia,” stated the Global Times, a subsidiary of the People’s Daily, the official voice of the Chinese Communist Party.

Indian Prime Minister Narendra Modi announced earlier this month that he will travel to China for the SCO summit, marking the first trip to China by an Indian leader in seven years.

Also Read: Donald Trump Says India to Be Hit with Large New Tariffs Over Russian Oil Purchases

Trump Tariff Wars

The growing ties come amid heightened tensions with the US, which announced earlier this month that it plans to double the tariff rate on Indian imports, from 25% to 50%, by August 27 unless India stops importing Russian oil.

Notably, President Donald Trump hasn’t taken similar steps against China, despite that country also being a major importer of Russian oil.

The Trump administration recently delayed by 90 days a planned tariff hike on China to allow trade talks to continue.

Without the delay, the US’s default tariff rate on Chinese goods, which currently stands at 30%, would have spiked back up to 145%, the rate the Trump administration put into place last spring. China at that time retaliated with a 125% tariff rate on US goods.

Also Read: US, China Extend Tariff Truce by 90 Days, Staving Off Surge in Duties

How the Tensions are Impacting Asia

The tensions between the US on one side and China and India on the other are reshaping the geopolitics of Asia.

India, which had long maintained neutrality between the West and its adversaries like Russia and China, had been growing closer to the US – until the tariff war exploded.

Now it appears to be edging closer to China, a development that could create a new era of economic and political cooperation on the continent.

However, the flipside of that is likely to be a weakened US influence in the region and a reduction of economic opportunities for US businesses.

“Trump’s economic coercion risks alienating a vast, still-growing market that US firms see as central to their future growth. India remains the world’s fastest-growing major economy, and as many other economies stagnate and populations shrink, it stands out as a rising giant,” a recent opinion column in The Hill stated.

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