Statement talks about restoring economic and trade relations with China despite military confrontation. Since restoration on the part of India is mentioned, it indicates that somewhere India is in need of a revival of the relations, which hints at our economic dependency on China. Therefore,assumption I is drawn. Also, the word re-engage suggests that India made a conscious call and stepped back from the trade relations due to serious national issues. Therefore, assumption II is drawn. Therefore, Both I or II can be definitely drawn.