How’s the China-India economic relationship changed 2 years on from the deadly Galwan Valley border clash?

China is keen to de-link the Galwan Valley border crisis from the rest of the relationship, but India is eager to find a solution before normal ties can resume

China’s exports to India grew to US$27.1 billion in the first quarter of 2022, but India is concerned by its ballooning trade deficit with its neighbour

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Beijing wants the border issue to not affect other aspects of its relationship with New Delhi, but for India, tensions at the border can no longer be reconciled with a normal relationship. Photo: AFP/CCTV

Published: 8:00pm, 25 Jun 2022

China and India’s relationship has long tread the line between competition and cooperation, but following the deadly Galwan Valley border clash in June 2020 which left 24 soldiers dead, observers said the latter is increasingly waning.

Beijing is keen for the border issue not to affect other aspects of its relationship with New Delhi, but for India, normal ties cannot be resumed until a solution is found.

Amid heightened security concerns, India has carried out a strategy dubbed by some as so-called economic coercion.

It has kept Huawei Technologies Co. out of 5G trials, outlawed more than 270 Chinese apps, causing technology companies to withdraw from the country, and a report in March 2021 said that India had denied clearance to investments worth US$1.63 billion from China.

India also joined the US-led Indo Pacific Economic Framework (IPEF), which aims to counter China’s influence in the region.

Trade may be seen as an arena untouched by the strained bilateral relationship, but it reveals deep wounds in the power balance, which tilts increasingly towards China at a time of significant distrust between the two countries.