Modi and Xi Reset Ties in Tianjin Summit: Trade, Flights, and Border Issues Take Center Stage

Leaders forge new path as economic giants clash and collaborate

Trade Wars and Truces

The Tianjin meeting marks a strategic pivot—both nations eyeing economic gains while navigating geopolitical tensions. Trade discussions dominated the agenda, with both sides pushing for market access concessions.

Sky Bridges and Border Lines

Flight routes get greenlit as border disputes take backseat—for now. The aviation breakthrough signals thawing relations, though military patrols continue along contested zones.

Diplomatic Chess Match

Xi hosts Modi in carefully choreographed display of cooperation. The handshake optics mask underlying tensions—like two hedge funds pretending to play nice while shorting each other's currencies.

India may benefit more than China from this new alignment

The imbalance in trade between the two countries remains massive. In the fiscal year ending March 2025, India exported $14.2 billion to China while importing $113.5 billion.

That gap gives India more to gain if trade flows improve. Analysts say this could create opportunities in manufacturing, energy tech, and capital inflows, three areas where China has scale and India has demand.

Jasmine Duan, senior investment strategist at RBC Wealth Management in Hong Kong, said, “Improved Sino-Indian relations may benefit the Indian stock market more significantly, as India is currently the one facing the 50% tariff hike. For Chinese stocks, the impact is likely to be indirect and marginal at best, making it difficult to drive a major market trend.”

Some fund managers are skeptical that anything real will come from this. Kunjal Gala, who manages $2.3 billion at Federated Hermes in London, said, “It’s too early to tell which sectors or industries will benefit, as no concrete policies have been announced.”

Gala warned that the effect on markets might be temporary unless actual trade reforms are put in place.

Still, others are paying attention to the broader shift. Pramod Gubbi, co-founder at Marcellus Investment Managers in Mumbai, said, “The decline in allocation to India in EM portfolios we have seen in recent months could be arrested or potentially reversed.”

He believes the effects of the tariffs may “get offset by this boost to Indian economic growth and eventual earnings recovery.”

Tax cuts and rate easing fuel more investor interest

Alongside the foreign policy reset, domestic economic support is also playing a role. Sanjay Malhotra, Governor of the Reserve Bank of India, confirmed that the central bank remains in a rate-cutting cycle. Since February, the RBI has lowered the benchmark rate by 100 basis points to stimulate sectors hit by tariffs and slowing demand.

In another action designed to support consumption, a panel of state and federal finance ministers approved cuts to goods and services tax on nearly 400 product categories. These items make up about 16% of India’s consumer-price basket. Following the announcement, shares in consumer-facing firms and carmakers moved higher.

Anna Wu, a cross-asset strategist at VanEck Associates in Sydney, tied the two developments together. “The warming of China-India ties can be a positive factor, while the tax cuts are also a structural tailwind for Indian equities,” she said.

Wu pointed out that India could benefit from forming a new economic axis with China and Russia in the face of Trump’s aggressive tariffs. “The China-Russia-India block is in formation now amid historic tariffs, and could help India to increase its resilience against US tariff aggression,” she said.

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