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China views India-Taiwan ties with unease as trade, labour, and tech cooperation deepen—testing Beijing’s red lines amid a cautious thaw with New Delhi.

In August 2025, Chinese Foreign Minister Wang Yi visited India and conducted the 24th Special Representatives' Meeting on the Boundary Question between India and China. The two sides engaged in elaborate discussions on the border issue, marking a positive momentum in bilateral ties.

However, even though the talks concluded on a positive note, a brief public spat between China and India on the ‘Taiwan’ issue became the unexpected highlight of the meeting. The Chinese readout highlighted that India has quite evidently stated that "Taiwan is a part of China". However, later Indian officials quickly clarified that the country’s position vis-à-vis Taiwan remains unchanged and stressed that India will continue to promote economic, scientific and technological, and cultural cooperation with Taiwan. The incident resulted in public outrage in China. Nonetheless, it was quickly extinguished in honour of Prime Minister Narendra Modi’s first visit to China in 7 years and to ensure the success of the impending Shanghai Cooperation Organization (SCO) Summit.

There is a growing sentiment among the Chinese strategic community that India-Taiwan relations have made decent progress in the past few years, while maintaining the formal diplomatic red lines.

The Chinese side raising the Taiwan issue during a supposed “rapprochement” in China-India ties is not an isolated development. There is a growing sentiment among the Chinese strategic community that India-Taiwan relations have made decent progress in the past few years, while maintaining the formal diplomatic red lines. Various news reports in Chinese media highlight how the convergence of interests is bringing India and Taiwan together in multiple areas. For example, India-Taiwan trade has surged in the past two years, exceeding US$10 billion in the 2023–2024 fiscal year. Most of this growth is in high-value-added goods, such as electronic components and electromechanical equipment, with semiconductors being the key focus. Taiwanese companies are also increasing their investments in India, having invested nearly US$4.5 billion to date. Chinese scholars argue that India-Taiwan economic cooperation has, on the one hand, helped "Made in India" gradually enter the global supply chain, while on the other, improved Taiwan’s international recognition and broadened its operating space at the international level.

Beyond trade, the two sides have also begun to interact in terms of human resource cooperation. A labour agreement was signed earlier this year, with approximately 5,000 Indian workers preparing to work in Taiwan. Despite domestic backlash, the two sides remain committed to the agreement as it is beneficial to both — helping address Taiwan's labour shortage on one hand, and generating remittances for India on the other.

It is noted with concern how high-level exchanges between India and Taiwan have maintained pace, despite the positive trends in India-China bilateral ties over the past year. For example, in June 2024, PM Narendra Modi, in a social-media post, responded directly to Taiwanese President Lai Ching-te, who congratulated him on social media platform X for his third straight election victory, emphasising that he looks forward to closer ties between India and Taiwan in his third term. Again, in November 2024, during the Sino-Indian border talks, think tank exchanges between India and Taiwan continued at senior levels. Recently, amid the high-intensity India-Pakistan conflict of May 2025, Chinese newspapers were abuzz about India sending the ‘largest-ever’ official delegation, comprising government officials from at least four Indian states (Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka), to Taiwan, to discuss investment in the fields of electronics, electric vehicles (EVs), and artificial intelligence (AI). It was noted that this marked a new trend where the Indian central government is keeping a relatively low profile, and local governments are stepping up cooperation with Taiwan. This ‘state-level interaction’ model breaks through India's past conventional practices in handling Taiwan-related affairs.

Many in China believe that the intensification of security cooperation between India and Taiwan is only a matter of time.

Given these trends, many in China believe that the intensification of security cooperation between India and Taiwan is only a matter of time. The Chinese strategic community is particularly concerned about how Indian strategists have begun linking the developments in the Taiwan Strait directly to India’s national security. China notes that in the eyes of Indian strategists, the Taiwan Strait issue has shifted from being a ‘distant topic’ to a real factor with the potential to impact India's security environment. China also recognises that there is a strong constituency in India that believes New Delhi should ‘reciprocally support’ Taiwan and strengthen its defence in ‘retaliation’ for Beijing’s support to Pakistan. Some Chinese scholars argue that India’s current approach towards Taiwan mirrors how the United States (US) once played its ‘Taiwan card’ — beginning with visits by low-level officials to test the waters, followed by unofficial exchanges, and eventually progressing to arms sales and defence assistance.

In the Chinese assessment, India’s strategy on the Taiwan issue is to maintain an ambiguous diplomatic rhetoric — neither explicitly challenging the One-China Principle nor denying the increasingly close exchanges with Taipei — thereby attempting to ‘flexibly’ navigate the grey area while maximising economic gains and minimising political risks. However, for China, the challenge is how to respond to such a strategy as long as the red lines of ‘official recognition’ and ‘military alliance’ are not crossed. No doubt, China has several leverage points against India, including the border issue, economic dependency, clout in South Asia, and India’s internal security environment. However, facing a complex external environment, against the backdrop of the restructuring of the global supply chains and the ongoing Sino-US competition, many in China feel that the positive momentum in China-India ties should not be interrupted by what they term as "below-the-threshold provocations".

In the Chinese assessment, India’s strategy on the Taiwan issue is to maintain an ambiguous diplomatic rhetoric — neither explicitly challenging the One-China Principle nor denying the increasingly close exchanges with Taipei — thereby attempting to ‘flexibly’ navigate the grey area while maximising economic gains and minimising political risks.

Therefore, the Chinese strategy is to primarily target Taiwan in the propaganda realm. Beijing promotes the narrative that investing in India is unwise, suggesting that Indian infrastructure is lacking and the investment environment is unsuitable. It also threatens Taiwanese companies that have a strong presence in the Chinese mainland, warning them against making significant moves to India or risk facing backlash.

Overall, the growing closeness between New Delhi and Taipei, although within the diplomatic red lines, has sparked fresh debates in China about its two-front conundrum — a phenomenon often considered taboo in Chinese military thinking. Questions are being raised about what China needs to do differently, to not further exacerbate this two-front challenge.  After all, back in 2010, it was China's issuance of ‘stapled visas’ to Indian athletes from Arunachal Pradesh that forced India to re-examine the ‘One China’ principle, not reiterating it in the Sino-Indian joint statements ever since.

Antara Ghosal Singh (ORF Foundation)
21 October 2025

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