India and China at a Strategic Crossroads: Why the Economic Dialogue Can't Wait

For four years, India and China have treated economic statecraft as a residue of the 2020 Galwan fallout — managed, minimal, and subordinate to the border file. That posture is no longer tenable. Writing in The Indian Express on 29 June 2026, policy analyst Sanjaya Baru argues that New Delhi must reopen a structured strategic economic dialogue with Beijing, and the argument lands because the cost of non-engagement has become visible in the data, in the supply chains, and in the diplomatic calendar.

The case is not sentimental. It is arithmetic. India's imports from China have continued to climb through the political freeze, hitting record highs in recent fiscal years even as official rhetoric has hardened. Indian industry — pharmaceuticals, electronics, EVs, chemicals — depends on Chinese intermediates, and the longer the dialogue is deferred, the more dependent India becomes without the leverage a formal channel provides. The choice is not between engagement and self-reliance; it is between engagement on terms set by New Delhi and drift on terms set by nobody.

What Baru actually proposes

Baru's recommendation is granular. He calls for a structured ministerial dialogue — at the level of the foreign minister and a counterpart with economic portfolio — covering tariffs, market access, currency settlement, and supply-chain resilience. He is not asking for a return to the pre-2020 status quo. He frames the dialogue as a tool for managing asymmetry, not denying it. India's deficit with China, which Baru flags as the central economic vulnerability, is the kind of problem that gets worse, not better, without a channel to negotiate over it. Tariffs imposed unilaterally by one side invite retaliation from the other; a bilateral forum at least allows both sides to table grievances before they metastasise.

The political objection is obvious. Galwan casts a long shadow, and any Indian government that reopens the economic track before resolving the border file will be accused of trading sovereignty for trade. Baru's counter is that the two tracks need not collapse into one. Engagement on economic terms, conducted with eyes open about the strategic contest, is not capitulation. It is what every other major Asian economy — Japan, South Korea, the ASEAN bloc — has done for decades.

The counter-narrative, and why it falters

The dominant Indian strategic commentary line since 2020 has been that China cannot be trusted at the table until the Line of Actual Control is settled. The line has rhetorical force. It also has a structural problem: the LAC has not been settled in four years of disengagement, and there is no serious analyst who believes it will be settled by silence. Meanwhile, Beijing has continued to deepen economic relationships across India's neighbourhood — Sri Lanka, the Maldives, Nepal, Bangladesh — without any Indian counter-channel of comparable seriousness.

A second objection is domestic political risk. Coalition arithmetic in Delhi is unforgiving, and any move toward Beijing is read as softness. That reading is not unreasonable. But the alternative — a continuing freeze while Chinese intermediate goods flow across the border anyway — is not strength. It is the diplomatic equivalent of unplugging the meter while the electricity bill compounds.

The structural frame, in plain terms

What is happening between the two countries is a textbook case of asymmetric interdependence, where the smaller partner has more to lose from rupture than the larger one, and the larger partner has more to lose from a hostile neighbourhood. India's structural response has been to hedge: the Quad, the IPEF, the trade-pillar talks with the EU, the domestic manufacturing push under the production-linked incentive scheme. None of those reduce the immediate dependence on Chinese inputs. They supplement it. A serious economic dialogue with Beijing sits alongside that hedging, not in opposition to it. Refusing the dialogue does not strengthen the hedge; it leaves the hedge unsupervised on one side.

The Chinese side, for its part, has its own incentives to talk. Beijing's post-pandemic growth model is export-dependent in a way that makes a 1.4-billion-person consumer market — even one with tariffs — strategically valuable. The window is not infinite. Both sides have reasons to engage now that they will not have in five years, when supply chains have re-allocated and the political mood on both sides has hardened further.

Stakes, and what remains unresolved

If a dialogue opens, India gains a venue to push for non-tariff barrier reduction, currency-settlement arrangements that reduce dollar dependency, and a calibrated de-escalation of import dependence in critical sectors. If it does not open, the deficit widens, the leverage narrows, and the relationship is left to the border commanders and the occasional BRICS communique. Neither outcome resolves the underlying rivalry. Only the first one gives India a chair.

What the sources do not specify is the precise Chinese appetite for a formal economic dialogue under the current security climate. Beijing has not publicly responded to Baru's proposal. Beijing's own commentary in recent months has emphasised stability in the LAC and mutual respect for core interests — language that does not foreclose dialogue, but also does not commit to one. The Indian political space for the move will depend, in turn, on the trajectory of the border file, on coalition arithmetic, and on whether a sequenced package can be sold as protecting sovereignty rather than trading it. Those are live questions. They are not reasons to wait. They are reasons to design the dialogue well.

This publication frames the India-China reset as an economic-statecraft story rather than a border-security story — both because Baru makes the economic case strongest, and because the economic file is the one most amenable to dialogue, even when the strategic contest continues.

Wire provenance

This editorial synthesis draws on the following public wire/social posts:

• https://en.wikipedia.org/wiki/India%E2%80%93China_relations