The India-China border has been quiet since the 2023-24 disengagement deals, but neither side has stood down and Beijing is still pressing its claims. A miscalculation would reach metals markets and Indo-Pacific trade routes.
Jump to our call ↓Two disputed territories, one fragile truce
There are now two disputed territories between India and China: first, the most famous is the Himalayan frontier along the Line of Actual Control (LAC); most recently, Arunachal Pradesh, an Indian state in the northeast.
The LAC, the de facto border between India and China, is in a fragile, informal truce following disengagement agreements in 2023-2024. Recent years have seen a significant decline in direct military clashes. Neither Indian nor Chinese troops engaged in conflict with clubs or stones, as they did in the 2020 Galwan Valley incident, which resulted in casualties for both sides. To maintain the status quo, both nations are avoiding escalation, but it has been confirmed that over the past few years, Beijing has encroached up to 1,200 square miles of Indian territory.
It is important to note that there is no true resolution of that dispute: troops remain fully deployed and combat-ready on both sides. The construction of roads, tunnels, airfields and fibre-optic networks has continued on an aggressive scale by both sides, signalling long-term preparedness for conflict. India views this as low-level instability but places a greater priority on economic recovery than on provocations.
As a result of tensions with the incoming Trump administration over Pakistan-related diplomacy, Delhi's strategy is deliberate de-escalation. To avoid repeating the supply chain disruptions caused by the 2020-2022 freeze, trade and investment relations with China have modestly warmed.
2012
Beijing issues stapled visas and maps claiming Arunachal Pradesh
2020
Galwan Valley clash, casualties on both sides
2023-24
Disengagement agreements, a fragile informal truce
Nov 2025
Arunachal-born Indian detained 18 hours in Shanghai
2026
Our call: the status quo persists
Arunachal Pradesh and the passport tactic
On the second dispute, Arunachal Pradesh, Beijing's recent claims are dismissed as posturing rather than imminent threats, but still, China is inclined to make a point.
For proof, in November 2025, Chinese immigration officials detained and delayed an Indian national originally from Arunachal Pradesh at Shanghai Pudong International Airport for over 18 hours during a transit from London to Japan. The officials explicitly challenged the validity of her Indian passport because her birthplace was listed as Arunachal Pradesh, which they considered Chinese territory ("South Tibet" or "Zangnan"). People were harassed, including mockery and pressure to apply for Chinese passports. India issued a strong diplomatic demarche to China, calling the detention "ludicrous" and reaffirming Arunachal Pradesh as an integral part of India.
1,200sq mi
of Indian territory Beijing has encroached on in recent years
18hours
an Arunachal-born Indian national was held at Shanghai Pudong
60years
how long India says these disputes have run, with no concessions expected
The event echoes China's historical tactic of using passports and official maps to assert claims over disputed territories. This practice sparked international friction in 2012 when Beijing began issuing "stapled visas" to residents of Arunachal Pradesh and Jammu & Kashmir and printed maps that incorporated the regions as Chinese territory.
Accompanied by official statements reiterating "South Tibet" claims, this was seen in New Delhi as routine sabre-rattling to assert sovereignty without military action. India maintains that these are 60-year-old disputes with no concessions expected, as no immediate pressure exists.
The call
We do not anticipate any significant military escalation in 2026, given both nations' commitment to bolstering economic stability. In the current calculus, trade dependency, especially India's dependence on Chinese imports, trumps territorial gains.
The risk to it
Nonetheless, China, emboldened by its trade deal with the U.S. and the deteriorating relations between Indian PM Modi and U.S. President Trump, could decide to continue taking more Indian territory along the LAC.
“Trade dependency, especially India’s dependence on Chinese imports, trumps territorial gains.”
What this means
The border remains a status quo risk. No major flashpoint is anticipated, but any miscalculation could spike commodity volatility, metals for infrastructure especially, and affect Indo-Pacific trade routes. Meanwhile the infrastructure arms race on both sides will indirectly create tailwinds for Asia's construction and technology sectors.
First published in the GlobalStrat Geopolitical Newsletter, 7 December 2025.