📰China and India, Explained

Today, we analyze the history and economic incentives driving China and India’s growing partnership, as well as the sustainability of any potential alliance.

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Macro

• SEBI might remove 0-DTE and weekly options according to a new paper. The BSE experienced a large sell-off on the research paper, since most of their revenue is based on market-making those options. Brokerages like Angel One and 5Paisa would also suffer, after option volumes have already dwindled since early this year.

Equities

• Indigo and Max Healthcare are replacing IndusInd and Hero Motor in the Nifty50. The quarterly update reflects the changing consumer demographics across India with the middle class boosting aviation shares by 35 percent and an aging population spending more on health. 

• Avendus explained that a mistaken ghost order caused the Clean Science trading blunder. Avendus then went into the market to repurchase the shares at close to selling price, but this resulted in a huge volatility spike with shares tumbling 9 percent on the error before spiking 17 percent due to rapid Avendus buys. 

• Huge energy companies are advocating for a 100-gigawatt nuclear push by 2047. Tata is jumping on the opportunity after the government amended rules earlier this year to allow for a private nuclear foundation and less liability clauses. There are only 9 gigawatts of nuclear energy right now. 

• OpenAI has started hiring for its first India-based office. So far, OpenAI has one Indian public policy employee but is hiring at least 3 sales associates. They want to ramp up partnerships in the country in its $1.2 billion (₹103.6 billion) IndiaAI mission.

Alts

• Moonfare, a German PE platform, is ready to access 401(k) funds. CEO of Moonfare US, Sanjay Gupta, is very bullish on the move, citing the ~$12 trillion (₹1 quadrillion) of potential dry powder available to global funds. 

• Indian conservation areas in Rajasthan are delaying $7 billion (₹604.1 billion) of solar projects. The issue is a continuation of India’s struggle to develop new energy projects. There are 13,000 sq kilometers of conservation land around which 10 gigawatts of energy are meant to be built. Rajasthan has seen 50 percent of energy projects be curtailed due to this. 

• Aamir Khan is partnering with Youtube to bring hits online. Khan launched his newest film on the site just 6 weeks after its theatrical run and is planning on releasing more films and shorts. He turned down a $14 million (₹1.3 billion) deal from global streamers. 

• Warburg-backed Avanse is mulling its US IPO after visa rules cut student count. Avanse provides education financing for students at 1,650 institutions in 50 countries, with 57 percent of that being in the US. Avanse wanted to raise $115 million (₹10 billion) but is finding US visa regulations troubling, given that student visas fell by 28 percent y-o-y to 80,000.

Policy

• Trade advisor Peter Navarro continues slamming Indian Russian oil purchases. Navarro directly said India is aligning itself with China and Russia while aiding the Ukrainian bloodshed. Jaishankar is perplexed, given that the US asked India to buy oil to stabilize energy markets. Only 40 percent of traders believe the 50 percent tariff will actually be implemented. 

• China made a jab at the US before the SCO with Indian inclusion. China said that the US is threatening world peace a week before the meeting. The SCO is meant to be an eastern counterpart to NATO.

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China and India, Explained

New 50 percent tariffs are imminent on August 27 due to 25 percent from reciprocal, revised tariffs, but another 25 percent due to Indian purchases of Russian oil and weapons. The fallout will not just impact the US and India, but will also nudge India and China toward a tentative rapprochement.

Beijing wasted little time seizing the moment. Speaking in Delhi on Thursday, Chinese Ambassador Xu Feihong blasted Washington as a “bully” that had long prospered under free trade but now wielded tariffs as “bargaining chips.” He added that China firmly opposes the moves against India. His comments capped a week in which Chinese Foreign Minister Wang Yi also visited Delhi, describing India and China as partners and urging both to act as “double engines” of Asian growth.

Thawing relations. Just four years ago, Chinese and Indian soldiers clashed in Ladakh’s Galwan Valley, leaving dozens dead and bilateral ties frozen. Since then, disengagement agreements, patrol arrangements, and military hotlines have helped cool the frontier. Thursday’s rhetoric suggests a willingness to expand cooperation beyond the border. Wang’s two-day Delhi trip, his first ministerial-level visit since 2020, set the tone with meetings across the spectrum, ranging from Jaishankar to National Security Advisor Ajit Doval. Stability at the Line of Actual Control was affirmed, pilgrimages to Tibet restored, and direct flights between the two countries are set to resume after a five-year hiatus.

Modi is now scheduled to visit China later this month for the Shanghai Cooperation Organisation (SCO) summit — his first trip to the country in more than seven years. Reports suggest a bilateral meeting with President Xi Jinping could take place on the sidelines, a signal of intent to reset the highest-level channels.

Tariffs as unintended diplomacy. That this thaw comes against the backdrop of U.S. tariffs is no coincidence. Trump’s administration has accused Delhi of aligning with Moscow and Beijing, while White House adviser Peter Navarro lambasted India as a Russian clearinghouse. The irony is that the squeeze is driving India toward precisely the alignment Washington fears.

Trump’s penalties have reminded Delhi of the perils of over-reliance on any single trade partner. For India, seeking to become the world’s third-largest economy by 2027, trade diversification is important. Beijing, meanwhile, is capitalizing on a free gift from the Trump administration. 

The limits of diplomacy. Still, no one is mistaking tactical cooperation for a strategic pivot. The fundamentals of mistrust remain. India’s trade deficit with China touched $99.2 billion (₹8.6 trillion) in FY25, reflecting structural imbalances. Delhi exports raw commodities, while Beijing supplies machinery and electronics, while China’s dam project on the Yarlung Tsangpo river in Tibet continues to fuel Indian water security concerns. And the “all-weather” China-Pakistan partnership, coupled with Beijing’s Belt and Road Initiative across South Asia, sits uneasily with India’s Indo-Pacific balancing strategies.

On the security front, India has just tested its Agni-5 ballistic missile capable of striking deep into Chinese territory, underscoring the unresolved trust deficit. There still has not been a significant demilitarization of the border, either. 

A few shared interests. Both sides recognize the economic benefits of resumed tourism, business travel, and reopened border trade markets. Counter-terrorism coordination remains a mutual priority, particularly as both face instability in their peripheries. In multilateral forums like BRICs and the SCO, India and China consistently advocate for reforms to global governance that better reflect developing-world perspectives.

Delhi’s invocation of a multipolar Asia aligns with Beijing’s preference for multipolarity as a counterweight to U.S. dominance. Xu’s call for WTO-centered multilateralism struck a similar chord. In this sense, the tariff shock may accelerate India-China convergence on rule-setting, even if competition persists on the ground.

The coming weeks will test whether this momentum is durable or merely circumstantial. Modi’s SCO trip, his first China visit in seven years, will be closely watched for signs of a bilateral thaw at the leadership level. But neither side is rushing into a reset: India remains wary of overdependence on Beijing, while China views Delhi’s Quad ties with suspicion.

See you Monday.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

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