Geopolitics Aside, India, China Keep Economic Engines Moving

The five-day China International Import Expo (CIIE), which began in Shanghai on 5 November, has brought together 25 Indian companies. And the early signs are encouraging: the exporters say they are seeing a healthy demand for their products.

Even China’s state-owned Global Times has taken note. It described the improving business sentiment among Indian exporters as a reflection of the “deep complementarity” between the two economies.

There is a larger story here.

Despite geopolitical tensions and a complicated bilateral relationship, commercial ties between India and China continue to deepen. Trade between the two countries is growing, and Indian businesses appear willing to tap into the opportunities that the Chinese market offers.

However, 25 companies participating in the world-renowned Shanghai trade fair is a small number for India, which needs to bridge the vast trade gap. A larger number of companies ought to take proactive steps to increase shipments to China.

Bilateral Trade Continues To Grow

Bilateral trade between India and China jumped about 18.3% in 2025-26 to touch US$ 151 billion, of which exports from New Delhi was less than US$ 20 billion.

For New Delhi, the widening trade deficit between India and China has often become a cause for concern.

However, the problem of a yawning trade deficit with China is not unique to India. A large number of countries, including the US, Germany, and France face a similar issue.

“India needs to focus less on the quantum of imports from China. We need to understand that most of the imports comprise raw materials which in turn help in domestic manufacturing and are therefore essential for the growth of the economy and employment generation,” Rahul Ahluwalia, Founder Director, Foundation for Economic Development (FED), told The Secretariat.

Earlier this year in March, the government amended Press Note 3. Under this piece of regulation all foreign direct investment (FDI) emanating from countries with which India shares a land border required a government nod. The revision ensures relaxed investment norms and companies with non-controlling beneficial ownership are allowed to invest up to 10% through the automatic route.

China’s investments in India have remained low.

Between 2000 and 2025, the cumulative FDI equity inflows touched US$ 2.51 billion. “While Chinese investment increased slightly in 2025, annual inflows remain well below historical levels, reflecting the continued moderation in direct investment activity over recent years,” India Briefing said in its analysis.

India-China Ties

This year, Chinese President Xi Jinping’s visit to New Delhi to attend the BRICS summit was closely watched. The visit of the Chinese Premier, the first after the Galwan clash, was closely monitored by the world community.  

Since 2020, when ties between the two neighbours nosedived following the Galwan incident, both New Delhi and Beijing have worked towards normalising relations.

During the 25th Round of Talks between the Special Representatives (SR) of China and India held in August in Beijing, both sides reaffirmed their commitment to “maintain peace and tranquillity in the border areas and create an atmosphere for healthy and steady development of bilateral relations”.

Discussions were held between Ajit Doval, National Security Advisor, and Wang Yi, senior Chinese diplomat and Member of the Political Bureau of the CPC Central Committee. The two reviewed the boundary issues.  

Government sources added that while the two countries have initiated trust building measures, “a lot of work needs to go in”.