Elephant and Dragon choose dialogue: Why the SCO reset matters for India, China and the Global South

By Atul Chandra

At the Shanghai Cooperation Organisation (SCO) summit in Tianjin on 1 September, Indian Prime Minister Narendra Modi and Chinese President Xi Jinping met and publicly framed the relationship as “partners, not rivals”.

Their readouts stressed dialogue on differences and cooperation on development – language that marks the clearest thaw since the 2020 Ladakh crisis.

Two moves gave the reset substance, not just optics.

First, India and China re-activated the special representatives dialogue on the boundary question in New Delhi on 19 August.

And second, they agreed to restart direct flights and expand people-to-people and business links after a five-year freeze.

These are communications channels that reduce miscalculation and restore some weight to a battered relationship.

This reset unfolded as Xi used the Tianjin summit to push a more assertive Global South agenda – including accelerating an SCO Development Bank –explicitly challenging single-power dominance and sanction-driven globalisation.

For India, which has long sought strategic autonomy, a functional India–China channel inside the SCO is not a capitulation; it is leverage.

After the 2020 Galwan clash, New Delhi tightened tech and investment restrictions on China, while both sides forward-deployed troops and cut normal political contact.

Through late 2024, however, working-level mechanisms (WMCC) and diplomatic engagements recovered modest momentum, including an October 2024 patrolling/disengagement understanding that lowered the temperature in parts of eastern Ladakh. Those steps – and talks between Indian National Security Adviser Ajit Doval and China’s Wang Yi since – made a top-level political meeting viable in 2025.

No one should romanticise the moment: structural problems remain – a $99.2bn trade imbalance, different readings of the Line of Actual Control (LAC), concerns over water projects in Tibet, and third-country entanglements.

But the policy choice before India and China is no longer escalation by default.

In Tianjin, both sides recommitted to managing the border without letting it define the whole relationship, and to expand economic ties more deliberately (including flights, visas and religious travel). That is an ideological and practical pivot from the 2020–22 freeze.

SCO – platform for Global South coordination

The SCO is no longer a narrow security club. By Beijing’s own data, China–SCO trade reached $512.4bn in 2024. The grouping now represents nearly half of humanity and roughly a quarter of global GDP – a scale impossible to ignore.

A proposed SCO development bank would add an instrument for infrastructure connectivity that is not indexed to International Monetary Fund or Asian Development Bank conditionalities and could complement the Brics New Development Bank – precisely  the kind of multipolar finance the Global South has argued for.

For India, this matters beyond symbolism. South Asia’s intra-regional trade is chronically low; regional capital for rail, energy and border trade infrastructure in the eastern subcontinent (India–Nepal–Bangladesh) and Himalayan corridors can raise productivity for Indian manufacturers and farmers alike.

The SCO platform makes it easier for New Delhi and Beijing to co-fund “small and beautiful” cross-border projects that derisk supply chains without securitising every kilometre of road.

Context matters. Washington’s new 50% tariff rates on most Indian imports – a punitive response to India’s discounted Russian oil purchases – arrived days before Tianjin.

That move, accompanied by contradictory rhetoric (from threats to boasts that India might cut tariffs to zero), underlines a familiar imperial privilege: partners are expected to align with US strategic preferences while absorbing trade shocks that undermine their own policy autonomy.

From New Delhi’s vantage point, this is not how collaboration looks. It resembles coercive policy conditionality. India and the US will keep negotiating — Commerce Minister Piyush Goyal has said as much. But the tariff episode reinforces a structural lesson: hedging is rational, and overreliance on any single bloc –Western or otherwise – exposes India’s industrial policy to external vetoes. The SCO–Brics lane gives India bargaining power it simply wouldn’t possess as a junior partner.

From a developmentalist perspective, India–China cooperation is not an ideological indulgence; it’s a growth strategy.

Consider three concrete channels:

Industrial upgrading: India’s path to moving up value chains in electronics, electic vehicles and capital goods cannot be built on asset-light assembly alone. Selective rules-of-origin-tight Chinese foreign direct investments or tech partnerships, when paired with local content and standards, can accelerate domestic supplier ecosystems.

This is exactly the value-addition challenge India has struggled with under the production-linked incentive. Pragmatic engagement, not blanket bans, delivered East Asia’s manufacturing rise. (This is a policy logic; the Tianjin mood makes it politically easier to execute.)

Trade facilitation and logistics: A serious reset – backed by SCO connectivity finance – can unclog border trading points, standardise phytosanitary rules, and reduce freight times on Bay of Bengal–Himalayan corridors. That pays dividends to Indian micro, small and medium enterprises as surely as it helps Chinese exporters.

Knowledge and people flows: Direct flights and eased visas revive university, think-tank and business exchanges that feed innovation (artificial intelligence, biotechnology, green technology). After years of demonisation – and mutual ignorance – structured contact is the cheapest confidence-building measure available.

Managing differences, not denying them

The LAC remains sensitive. That is precisely why redundant communications channels — corps-commander talks, the working-level mechanism on India-China border affairs, and special representatives-level dialogue – must keep running on schedule, insulated from media theatrics.

The October 2024 patrolling–disengagement understanding did not ‘solve’ the boundary, but it showed sequenced technical fixes are possible when politicians keep lines open. The Tianjin meeting reaffirmed that border issues should not define the totality of the relationship.

On trade, Modi reportedly pressed to narrow the deficit and expand market access; Xi emphasised de-securitising commerce and focusing on development. Neither side will get everything it wants, but both now acknowledge that managed interdependence is better than brittle decoupling that hurts growth and jobs.

The Tianjin SCO was bookended by China’s 80th-anniversary anti-fascist commemorations in Beijing on 3 September, with many world leaders attending.

Whatever one thinks of Beijing’s historical narrative, the symbolism is clear: regional security should be regionalised, and Asia will not cede agenda-setting to trans-Atlantic alliances.

US President Donald Trump did not attend this commemoration, despite earlier speculation, which underscores how Eurasian coordination increasingly proceeds on its own timetable.

For India, the peace dividend is internal: relief for the exchequer, oxygen for industrial policy, and room to address agrarian distress, urban employment and climate adaptation at home.

For China, it is external: a less securitised periphery that allows a focus on high-quality growth and technology goals.

For South Asia, easing India–China rivalry reduces coercive hedging pressures on Nepal, Bangladesh, Sri Lanka and Pakistan, and opens space for trade-led poverty reduction.

This is how Global South multilateralism becomes material – through cheaper credit, faster logistics and predictable rules – rather than a slogan.

Indian and the international media often swing between alarmist “China threat” frames and rosy “reset” headlines.

A class-conscious reading avoids both. It recognises how border nationalism can be used domestically to obscure distributional conflicts. It also recognises how corporate media ownership can amplify Western talking points that press India toward security-heavy alignments inimical to industrial deepening. In this view, dialogue with Beijing is not about sentimentality; it is about bargaining power for workers and producers in the Indian economy.

Strategic autonomy in practice

Tianjin does not end competition. It disciplines it.

India will – must – modernise and diversify supply chains, and press on market access.

China will protect its core interests and its ties with its neighbouring countries.

But between structured rivalry and unstructured hostility, only the former keeps peace, stability and development within reach.

The US tariff shock is a reminder that alignment is not insurance.

The SCO–Brics lane – with a potential SCO bank, revived border trade and flight links – offers India and China a way to institutionalise predictability while each pursues national priorities. That is multilateralism with teeth, not performative non-alignment.

To paraphrase an old metaphor, it is better for the elephant to dance with the dragon — warily, on rules the elephant helps set – than to serve as a junior partner in someone else’s orchestra.

The Tianjin summit and the Modi–Xi meeting reopened channels that can cool the border, restart the arteries of commerce and anchor multipolar institutions that the Global South has demanded for decades.

The task ahead is to turn those headlines into hard-edged policy: time-bound special representatives’ meetings, transparent aviation and visa timelines, a concrete SCO banking work plan, and a measurable roadmap on trade and investment that raises Indian value-addition while normalising ties.

Peace is not sentimental; it is planned. The elephant and the dragon have finally agreed to plan it together. – Globetrotter

Atul Chandra is a researcher at Tricontinental: Institute for Social Research. His areas of interest include geopolitics in Asia, left and progressive movements in the region, and struggles in the Global South.

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