China and India discuss resuming border trade after 5 year pause

India and China are holding talks on restarting border trade in locally produced goods after more than five years, in what officials describe as a cautious but notable step toward repairing strained bilateral relations. 

Senior Indian government sources in New Delhi, who requested anonymity due to the sensitive nature of the discussions, said both nations have proposed reopening designated trading points along their 3,488-kilometer disputed Himalayan frontier.
Beijing’s Ministry of Foreign Affairs confirmed Thursday that it is “ready to enhance communication and coordination with India” on the matter, emphasizing that cross-border trade has historically been a lifeline for communities in remote border regions of both countries. For over three decades, such trade allowed residents to exchange goods like spices, carpets, wooden furniture, cattle fodder, pottery, medicinal herbs, electrical equipment, and wool.
The economic scale of this trade has been modest — valued at just $3.16 million in the 2017-18 fiscal year, according to India’s latest available data — but its symbolic and social importance has been far greater, fostering people-to-people contact in one of the world’s most geopolitically sensitive regions.
All three official trade corridors were closed in 2020 during the COVID-19 pandemic, a move that coincided with a steep deterioration in relations after deadly clashes in the Galwan Valley left 20 Indian soldiers and at least four Chinese troops dead. The incident marked the worst military confrontation between the two Asian powers in over four decades.
The discussions over reopening trade come as part of a broader, cautious normalization of ties. Last year, both sides took incremental steps to defuse border tensions, including troop disengagement in certain flashpoint areas. Plans are also underway to resume direct passenger flights between the two countries as early as next month, while Beijing has eased restrictions on fertilizer exports to India — a critical move for India’s agricultural sector.
Indian Prime Minister Narendra Modi is expected to visit China in August for the first time in seven years to attend the Shanghai Cooperation Organisation (SCO) summit, where he is also scheduled to hold bilateral talks with Chinese President Xi Jinping. The meeting could serve as a high-profile signal of improving ties, even as both nations remain wary over unresolved territorial disputes.
This gradual rapprochement is unfolding against the backdrop of worsening trade relations between India and the United States. Washington, under President Donald Trump, has recently imposed a steep 50% tariff on Indian exports — far higher than the rates applied to other Asian economies — putting additional pressure on New Delhi to diversify its trade partnerships.