The Indicator from Planet Money Are China and India BFFs now?
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Oct 30, 2025 
Milen Vaishnav, Director of the South Asia Program at the Carnegie Endowment, dives into the complicated relationship between India and China. He explores how recent trade tensions with the U.S. might be nudging India closer to China. The conversation highlights potential economic collaboration, as well as the historical roots of their territorial disputes. Despite signs of thawing relations, Milen cautions that this newfound cooperation could be more of a strategic convenience than a lasting bond.
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Galwan Valley Clash Escalated Tensions
- In June 2020, violent hand-to-hand clashes in the Galwan Valley killed at least 20 Indian soldiers and four Chinese soldiers.
- The incident prompted bans on Chinese apps, suspended flights, and a severe chill in bilateral ties.
Complementary Economic Strengths
- China dominates manufacturing and refined rare earths while India offers the world's largest population and growing economy.
- Combined cooperation could form a powerful economic bloc influencing global rules and supply chains.
China Can Shift Manufacturing To India
- As China ages and shifts away from labor-heavy manufacturing, Chinese firms could invest in Indian factories and transfer know-how.
- This would help India industrialize while giving China alternative locations for less competitive industries.