China tried diplomacy with Modi when Xi visited India and Modi visited Xi'an. The result was 2017 Doklam standoff and 2020 Galwan clashes barring the numerous other tussles and skirmishes in that period. Not to mention Modi swallowing the US Indo-Pacific strategy like a thirsty wh*re. If you listen to the Indian media (All of them are effectively under state control either directly or through Indian oligarch ownership) you'll know the rabid hatred that they have wrt China. This is besides the petty Indian mentality of them thinking of themselves as 'Aryans' and thus superior to the Chinese (Massive Lol). Add in the Indian elites caste based ingrained sense of superiority for ex: Jaishankar the Foreign Minister is Brahmin, the highest caste supposedly, is the architect of the idiotic confrontational Foreign policy that India has adopted against China. He wrote a book recently full of China bashing talking points and supposed grievances that go something like this "India is poor, third world and obnoxious coz...Chyna bad"China is really stubborn when it comes to negotiating about their territory. Mainly due to their experience in ww2 and Korean war.
They will not care if it sets back relations if it means keeping even small amounts of territory. This was how it worked in the SCS. Instead of even giving the smallest concessions, China just waits out until the other claimants get tired and need to reestablish ties in order to keep their economies running.
Russia is the only case of China putting territory on the table, and that is probably due to the twin factors of Russia being a potential highly useful junior partner and that Russia has enough nukes to do MAD with China.
For better or worse, its unlikely that China will give India anything.
Personally I think flexibility is better because the areas are non-inhabited anyways, China should trade land to India in exchange for keeping India permanently in the Russian military reliance purgatory, until India is reformed enough to properly join SCO as a military ally. It is a maximum geopolitical yield deal for China in exchange for territory that has no resources, no population.
You can also add the stupidity of their beloved fatso Amit Shah the Home Minister yelling in their parliament that he intends to wrest back control of Aksai Chin from China (Big LOL). All these actions and the Indian habit of boastfulness, use of undiplomatic language and openly threatening remarks against a Major superpower would be reason enough for a country like the US to invade, destroy and even occupy it for years and years while their soldiers sexually assualt the local women and a US friendly puppet regime is brought to power. Instead China has always encouraged engagement and diplomacy to resolve issues with India even after serious provocations like Galwan clash. The Indians seem to think of it as a weakness and look to exploit more from China. So it's not a question of few kms of "uninhabited territory" but infact the legitimacy, territorial integrity and above all sovereignty of China which I believe China should NEVER compromise on, either with lesser irritating, filthy, third world swamp of a power like India or a schemey superpower in decline with a vast array of vassals like the US.