Xi in Delhi: A Handshake, a Reset — or China’s Next Strategic Move
Xi in Delhi: A Handshake, a Reset — or China’s Next Strategic Move
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| Narendra Modi & Xi Jinping Handshakes |
Xi’s return to India after seven years was more than a diplomatic visit. It came at a time when India-China relations are showing signs of stabilisation, while deep disagreements over trade, the border, technology, water security and China’s growing influence continue to shape the relationship.
Xi Returns to India After Seven Years
Modi and Xi held bilateral talks on the sidelines of the BRICS Summit, discussing economic ties, connectivity, trade and the broader direction of India-China relations. Both sides have signalled that differences should be managed through dialogue and that peace and stability along the border are essential for improving bilateral relations.
That sounds like a reset. But is it really one?
India has repeatedly emphasised that peace along the Line of Actual Control cannot be separated from the broader relationship. China, meanwhile, has also shown interest in restoring economic engagement with India.
The reality is therefore more complicated: engagement is returning, but strategic trust has not.
BRICS Is Getting Bigger — and More Complicated
BRICS is no longer the small grouping of Brazil, Russia, India, China and South Africa that existed for much of its history. The expanded bloc now includes countries such as Egypt, Ethiopia, Iran, the United Arab Emirates and Indonesia, alongside additional partner countries.
Its growing membership gives BRICS greater economic and political weight. But expansion also creates a fundamental problem: these countries do not always agree.
India wants BRICS to remain a platform for the Global South and a mechanism for greater representation in global institutions. At the same time, New Delhi does not want BRICS to become an explicitly anti-Western alliance.
China and Russia have generally pushed more strongly for alternatives to the US-dominated global economic and financial system.
The result is a delicate balancing act for India.
De-Dollarisation, But No Common BRICS Currency
One of the biggest subjects surrounding BRICS has been the future of the US dollar. The bloc has increasingly discussed greater use of national currencies, alternative payment mechanisms and financial cooperation.
But there is an important distinction between reducing dependence on the dollar and creating a single BRICS currency.
India has made its position clear: it does not support the creation of a common BRICS currency at this stage. Instead, New Delhi has backed greater use of local currencies and payment systems for bilateral trade.
This approach allows India to support financial diversification without handing disproportionate monetary influence to any single BRICS member.
The Pahalgam Attack and Operation Sindoor
The New Delhi Declaration also addressed terrorism. BRICS leaders condemned the Pahalgam terror attack and called for zero tolerance towards terrorism, accountability and action against terrorist safe havens.
However, the declaration did not name Pakistan or explicitly endorse India’s Operation Sindoor.
This illustrates the limits of BRICS consensus. Even when members agree on the principle of fighting terrorism, geopolitical rivalries can prevent them from agreeing on specific countries or military actions.
China’s Economic Weight Is the Bigger Problem for India
The most uncomfortable part of India-China relations is not diplomacy. It is dependency.
India-China bilateral trade reached record levels, but the trade balance remains heavily tilted towards China. During FY2025–26, India exported around $19.47 billion worth of goods to China while importing approximately $131.63 billion. That produced a trade deficit of about $112.16 billion.
This creates a strategic vulnerability.
India may have political disagreements with Beijing, but Indian industries still rely heavily on Chinese manufacturing for electronics, components, machinery, chemicals, batteries and several other critical inputs.
What Happens If China Switches Off the Supply Chain?
This is the question India cannot afford to ignore.
China accounts for an exceptionally large share of Indian imports across numerous electronics-related product categories. Dependence is also significant in areas such as pharmaceutical intermediates, batteries, solar equipment and critical industrial components.
The answer is not necessarily to stop trading with China.
The smarter objective is to ensure that China cannot easily turn economic dependence into strategic leverage.
India therefore needs deeper domestic capabilities in semiconductors, batteries, pharmaceutical APIs, electronics, industrial machinery, critical-mineral processing and defence manufacturing.
Strategic autonomy does not mean producing everything domestically. It means having enough alternatives that a geopolitical crisis does not bring critical industries to a halt.
The Border Problem Has Not Disappeared
The 2020 Galwan clash fundamentally changed the India-China relationship. Twenty Indian soldiers and at least four Chinese soldiers were killed in the confrontation.
The subsequent disengagement process, particularly the arrangements reached in 2024, helped reduce immediate tensions at several friction points.
But the larger territorial dispute remains unresolved.
And while diplomats discuss stabilisation, China continues to develop infrastructure across the Tibetan side of the frontier.
China’s Border Villages: Civilian Development or Strategic Infrastructure?
Indian military officials have highlighted the construction of hundreds of Chinese xiaokang, or “moderately prosperous”, border villages along the Line of Actual Control.
According to statements by Indian Army officials, China has constructed around 628 such villages, with a particularly large concentration in areas facing Arunachal Pradesh.
Beijing describes these projects as civilian development and border-area infrastructure.
From India’s perspective, however, roads, settlements, communications infrastructure and logistical networks close to a disputed border can also have strategic and military utility.
The important point is not whether every village is a military installation. It is that infrastructure changes the strategic geography of the frontier.
Operation Sindoor Exposed Another Dimension
The India-Pakistan conflict during Operation Sindoor also highlighted the wider strategic environment surrounding India.
Indian military officials have publicly assessed that China provided significant support to Pakistan during the confrontation. Chinese-origin fighter aircraft, missiles, air-defence systems, drones and satellite-based intelligence capabilities were among the systems discussed in Indian assessments and subsequent strategic analyses.
These claims should be understood as assessments rather than as proof that every reported Chinese capability was directly used in every engagement.
Nevertheless, the larger strategic reality is clear: China remains Pakistan’s most important major-power defence partner, creating an additional security challenge for India.
Tibet Is Another Strategic Pressure Point
The India-China border is not simply a line on a map. Geography gives China control over the Tibetan plateau, while India sits downstream of several major Himalayan river systems.
This makes Tibet important not only from a military perspective but also from the standpoint of water security and infrastructure.
The Medog Dam Question
China’s planned hydropower project in the Medog region of Tibet has attracted particular attention in India.
The proposed project on the Yarlung Tsangpo River is expected to have a capacity of around 60 GW, potentially making it the world's largest hydropower facility if completed as planned.
The project has generated concerns in India because the Yarlung Tsangpo eventually enters India as the Brahmaputra.
The central concern is not simply the existence of a dam. It is the combination of upstream control, limited transparency and the strategic importance of the river system.
China has maintained that the project will not cause significant downstream harm. India, however, has legitimate reasons to monitor the project closely and demand greater transparency.
The dam should not automatically be described as a “water weapon”. But ignoring its strategic implications would also be a mistake.
So, Is Xi's Visit a Genuine Reset?
Perhaps — but only partially.
India and China have strong reasons to avoid another military crisis. Both countries benefit economically from greater stability, while prolonged confrontation consumes resources and limits diplomatic options.
But cooperation does not erase competition.
China can be an important trading partner and simultaneously remain India's principal long-term strategic competitor.
These two realities can exist at the same time.
India's Answer: Engage China, But Don't Depend on China
India does not need to choose between permanent confrontation and blind cooperation.
The practical strategy is somewhere in between.
- Keep diplomatic channels open.
- Maintain dialogue over the border.
- Expand trade where it benefits India.
- Reduce excessive dependence on Chinese supply chains.
- Build domestic semiconductor and electronics capacity.
- Strengthen pharmaceutical and critical-chemical manufacturing.
- Develop battery and critical-mineral capabilities.
- Increase defence-industrial self-reliance.
- Strengthen infrastructure along the Himalayan frontier.
- Demand greater transparency over upstream river projects.
This is what strategic autonomy should actually mean.
The Bigger BRICS Question
BRICS can give India a powerful platform to represent the Global South and push for reforms in global institutions.
But India must also ensure that BRICS does not become an instrument of Chinese economic dominance.
China possesses enormous economic scale, manufacturing capacity and financial influence inside the grouping. India therefore needs to participate actively while protecting its own strategic interests.
Xi Came to Delhi. But What Does China Actually Need?
The symbolism of Xi Jinping standing beside Narendra Modi in New Delhi is powerful. It shows that both sides understand the importance of keeping the relationship under control.
But photographs cannot resolve a border dispute.
Handshakes cannot eliminate trade imbalances.
And diplomatic declarations cannot remove supply-chain vulnerabilities overnight.
India should therefore welcome dialogue with Beijing without confusing dialogue with trust.
The long-term goal should be simple: India should be able to trade with China without depending on China, compete with China without fearing China, and negotiate with China without being strategically vulnerable to China.
If that happens, future Chinese visits to New Delhi will not be about India needing China. They will be about two major powers recognising that they need to deal with each other on equal strategic terms.
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