Trump-Xi meet in Busan sparks debate about ‘G2’ reset: Read why it is a tactical pause and not a long-term alliance between China and US
On Thursday (30th October), President Trump and President Xi met in Busan and announced an agreement to reduce tariffs on goods related to fentanyl from 20% to 10%, loosen restrictions on rare earths, and resume China’s purchases of US soybeans.
This was interpreted by many observers as evidence that Beijing and Washington could still negotiate ‘big power bargains’ over everyone else. However, the lesson is more complex for Indian strategists. In order to create room for their actual competition in technology, maritime influence, and global rule-making, both sides trade tactical concessions on tariffs, commodities, or enforcement at the so-called G2.
The Busan talks may initially appear to be a G2 reset, with the two superpowers calming markets and stabilising trade. However, none of the fundamental issues were settled, as evidenced by Taiwan, China’s covert support of Russia, South China Sea tensions, and restrictions on AI chips. What Indian analysts have long suspected is confirmed by the Busan deal.
Beijing and Washington can handle brief tactical pauses, but not a long-term strategic alliance. Their rivalry simply moves into more technical domains that directly impact nations like India when the high-level tensions subside. Therefore, a thaw between the United States and China should not be interpreted as a safer regional environment. Limited compromises can strengthen their hold on long-term power dynamics.
The visible layer: Tariffs, showy détente and a hidden hardening
The story appears simple at first glance. While Beijing needed relief on rare earths after its export restrictions on October 9 had unsettled markets, the U.S. president wanted to see tangible progress on drug control and farm exports. Prior to the APEC meetings, both parties sought to reassure investors. For this reason, the Busan meeting resulted in a deal on soybeans and tariff reductions.
However, Washington’s regulatory apparatus continued to tighten behind the handshake. The Congressional Research Service published a list of new export control measures in September 2025. The use of Huawei’s Ascend AI chips was formally treated as an export-control concern. 42 more Chinese entities were added to the U.S. Entity List.
The previous, more lenient “AI diffusion” rule was eliminated and, crucially for South Korea and Taiwan, Chinese-based Samsung and SK Hynix factories lost their “Validated End User” privileges. China’s soybean purchases and tariff cooperation were essentially accepted by the United States, but restrictions on what really counts, China’s access to cutting edge computing power, semiconductor tools, and American technical know how were not loosened.
This is the most important lesson for India. The tech dispute will not be resolved by a cordial photo op between Beijing and Washington. Delhi should anticipate that Beijing will use its own leverage, such as controls over rare earths, to resist U.S. technology restrictions on China.
This competitive environment will be the setting for India’s “China plus one” manufacturing initiatives, its incentives linked to electronics production, and its aspirations to become a center for chip packaging and ATMP (Assembly, Testing, Marking, and Packaging). To benefit, India must be perceived as a trusted partner who adheres to US technology controls.
The Maritime layer: South china sea pressure and Indian Ocean implications
Since 2016, 2025 has been one of the South China Sea’s most tense and active years. Chinese coast guard ships attacked Philippine boats with water cannons and rammed them on October 12. Prior to the Busan summit, Washington had hinted at planning a “show of force” with allies to reiterate its treaty obligations to Manila, and the U.S. State Department denounced these actions as dangerous.
The seventh joint maritime exercises between the United States and the Philippines in June 2025 had already demonstrated Manila’s refusal to back down. This escalation is significant for India. Washington seeks a reliable, non-aligned, and militarily capable ally to secure the western half of the Indo-Pacific whenever tensions between the United States and China escalate east of the Malacca Strait. Naturally, India is the target of that obligation.
However, Delhi faces additional risks as a result of this. The United States will expect India to maintain stability in the Indian Ocean and stop Chinese “grey-zone” activities there, such as survey ships using fictitious AIS signals, PLAN support vessels staying close to island territories, or civilian-looking ships carrying out covert underwater mapping, if it gets involved in a South China Sea conflict.
Concurrently, China’s trade with Africa and the Gulf will keep growing, employing more alternative networks for payment, insurance, and shipping that are intended to evade American regulation. India will thus face an increasing challenge in maritime surveillance.
In an increasingly crowded and opaque ocean space, the Navy and Coast Guard will have to make a careful distinction between suspicious, dual-use operations and typical Chinese commercial movements. In this sense, the consequences of the rivalry between the United States and China increase India’s maritime burden even when India is not directly involved in the conflict.
The Invisible Layer: Standards, Data, and Parallel Rails
The competition for standards, data, and digital infrastructure is the least talked about but possibly most significant aspect of the current rivalry between the United States and China. The most recent export restrictions imposed by Washington go beyond restricting China’s access to expensive chips. They now focus on cloud services, training support, and the transfer of AI model weights, which could help Chinese businesses get around hardware limitations.
China is reacting in two ways. In order to prevent sanctions from shutting down Huawei’s system, it is first attempting to get its own AI accelerators and digital platforms widely adopted among Belt and Road partners. Second, it is subtly promoting its algorithmic standards and content policies to encourage friendly nations to adopt Chinese-style digital regulations by default. Chinese companies are testing alternative systems for payments, insurance, and vessel tracking (AIS) in order to maintain strategic trade without depending on American frameworks, as U.S. financial and shipping regulations tighten.
For India, this has major ramifications. India’s digital economy is at a critical juncture. It depends on inexpensive Chinese hardware and smartphones to maintain widespread and inexpensive digital access, but it also needs U.S. cloud services, investment, and cutting-edge chips to power its expanding AI and startup sectors. India’s technology costs will increase if it aligns too closely with U.S. regulations, making it more difficult to maintain its inclusive digital model. However, it runs the risk of being subject to U.S. secondary sanctions if it leans too much toward Chinese systems, a problem it has already faced when purchasing Russian oil. Diversifying suppliers, maintaining thorough documentation, and retaining sovereign control over its data continue to be India’s best course of action since 2014. Staying open to both sides, adhering to all regulations, and preventing Beijing or Washington from defining India’s digital standards are the basic strategies.
Why the G2 still can’t make india optional
The Busan meeting also made clear why Beijing and Washington cannot afford to overlook India. India is crucial to the United States in a number of ways. In order to prevent China from opening a second front while American forces are occupied in the South China Sea, India must maintain the Himalayan line.
Additionally, since 2023, U.S. officials and think tanks have been pushing for India to be a reliable destination for international supply chains that are leaving China. Beyond that, Washington values India’s voice in the Global South. India’s statement that “you can work with both sides” is more palatable to many governments in Africa, the Gulf, and Southeast Asia than a direct, hard-line message from Washington.
Though for different reasons, China also regards India as essential. India must maintain stable trade relations with one of the biggest markets in the world, keep organizations like the SCO and BRICS operational, and stop a formal anti-China naval coalition from forming in the Indian Ocean.
India has a special place to operate because of this mutual reliance. A truly multipolar world necessitates a multipolar Asia, as External Affairs Minister S. Jaishankar has stated time and time again since 2024. This means that India and China must manage their relationship, even if it is polarizing. In a nutshell, his message to Washington and Beijing is clear that Asia’s future cannot be decided solely on India’s head.
Modi Doctrine in a G2 world: Interest first, Coalition by issue
The foreign policy of the Modi government exhibits a distinct and consistent pattern when viewed from 2014 to 2025. India continued to purchase oil during the conflict with Russia, but it adhered closely to the price cap regulations. It protected shipping lanes in the Red Sea without completely embracing the Western narrative. India maintained open diplomatic relations with China while maintaining a firm stance along the Line of Actual Control. Protecting national interests first, meticulously documenting every action, and joining coalitions selectively, issue by issue, are the clear guiding principles.
The U.S.-China dynamic is a good fit for the same strategy. When India develops its own capabilities, it will accept American defense and technology partnerships. In order to support Indian manufacturing and consumer welfare, it will maintain economic ties with China. Because Global South nations can voice concerns about Western overreach in the BRICS and SCO forums, it will continue to be active there. Above all, India consistently claims that decisions are made in Delhi and are not influenced by other places.
In 2025, this strategy has become more valuable due to its predictability and transparency. Washington is aware that sanctions evasion is not concentrated in India. Beijing is aware that India is not attempting to militarily encircle China. ASEAN nations can observe that India takes part in Indo-Pacific projects without importing every conflict between the United States and China. This clarity makes India a reliable and stable partner at a time when U.S.-China relations are becoming more transactional, with tariffs falling one day and new AI controls rising the next.
The Under the Radar risks India must track
India must consider three subtle but serious risks in its strategic thinking.
First, Indian cloud service providers or researchers utilizing U.S.-based platforms may face enforcement issues if U.S. export controls extend beyond hardware to include service-level limitations on AI training for Chinese entities, as suggested by the Congressional Research Service report from September 2025. Delhi must get ready by establishing independent capacity or negotiating exemptions.
Second, more vessels with unclear ownership, cargo, or purpose may be seen in the Indian Ocean as Chinese shipping becomes more covert to evade American surveillance. The Indian Navy would have to perform more AIS data analysis and on-sea inspections to ensure maritime security, which would increase surveillance costs.
Third, India may need to firmly defend the global expansion of UPI, the RBI’s rupee-trade initiatives, and its data localization policies if Washington and Beijing eventually reach an agreement on payment systems or data exchanges, say, on Chinese fintech oversight or data-transfer regulations. These ought to be portrayed as crucial elements of India’s strategic autonomy rather than as protectionist policies.
What India should do next
India should have a simple plan for the years 2025–2027. Through the Quad, cooperative maritime awareness programs, and defense production initiatives, it should continue to have close interoperability with Western partners. This guarantees that India’s interests are taken into consideration whenever Washington interacts with Beijing.
India should maintain open trade channels with China at the same time, but with stringent security and documentation requirements. This keeps inexpensive Chinese hardware accessible to Indian manufacturers and consumers without sacrificing security.
India must bolster its own capabilities at home by developing secure AI training facilities, increasing the Navy’s lift and intelligence-surveillance-reconnaissance (ISR) capabilities, and advancing semiconductor assembly and testing (ATMP). By taking these actions, India will be better equipped to withstand any unexpected disruptions in the U.S.-China relationship. Lastly, India should keep spearheading the Global South narrative that states don’t need to take sides. In today’s divisive world, many partners in Africa, ASEAN, the Gulf, and Latin America find this balanced approach credible and comforting.
Conclusion
From Delhi’s point of view, the Busan agreement does not indicate that China and the United States will soon co-rule the world. Instead, it demonstrates that both powers are primarily focused on resolving their own immediate issues, leaving others to deal with the consequences.
Although rare earth exports have resumed, tariffs have been loosened, and cooperation on fentanyl has been promised, South China Sea tensions have increased, U.S. AI controls have grown, and China is still testing its presence in dual-use maritime zones.
Rejecting an either-or option has been India’s most consistent response in this situation, which is consistent with the Modi government’s strategy. India is establishing itself as the third major force in a game that was previously dominated by two by strengthening its technological and defense cooperation with the United States, maintaining a cautious but functional relationship with China, and gradually increasing its own economic and naval power.
In 2025, neither the United States nor China will be able to make long-term decisions about Asia or technology without first asking, “What will India do?” That is already a major accomplishment for a nation that prioritizes strategic autonomy.
News