Faced with significant trade barriers from the United States, China is once again actively seeking closer ties with India. The steep 245% tariffs imposed by Washington have made a quick resolution unlikely, pushing Beijing to explore alternative economic partnerships, and India presents a compelling option. Notably, Chinese companies appear more amenable to Indian regulations, signaling a willingness to operate within New Delhi’s terms. These firms are reportedly eager to establish a presence in India and engage in business ventures, even if it means taking a secondary role in joint projects – all to gain access to the Indian market.
symbolic tug-of-war between two figures representing India and China, with goods flowing in both directions
Evidence suggests a growing acceptance of these conditions among Chinese businesses. Major players like air conditioner manufacturer Shanghai Highly Group and electronics giant Haier are reportedly open to adhering to India’s rules. The urgency stems from the potential loss of the American market, making India a crucial alternative. Delaying entry could also allow competitors from South Korea, Japan, and Europe to solidify their positions in the lucrative Indian market, adding to the pressure on Chinese firms. Beijing is actively supporting this shift in focus.
China has expressed its readiness to work with India on a strategic and long-term basis, guided by the leaders of both nations. Marking the 75th anniversary of diplomatic relations, Beijing aims to build greater strategic trust, enhance cooperation across various sectors, improve communication on key global issues, jointly ensure peace along their shared border, and foster a healthy and stable progression of their overall relationship. This desire for improved ties is evident in China’s approach to visas. This year has seen a significant acceleration in visa processing for Indians, with over 85,000 already issued. The Chinese embassy is actively encouraging more Indian visitors by simplifying the application process, removing the need for appointments and biometrics for short trips, and promising swift approvals. This initiative is part of a broader effort to project a more open and welcoming image of China to Indians.
A message directly conveyed by President Xi Jinping in a recent letter to his Indian counterpart, where he spoke of a “dragon-elephant tango” symbolizing collaboration.
However, India remains circumspect. Commerce Minister Piyush Goyal has consistently articulated India’s stance, emphasizing that the nation is not actively encouraging Chinese investment and will prioritize trusted partners, particularly those from Europe and North America, who adhere to established rules and offer reciprocal opportunities. This cautious approach was highlighted in the rejection of a proposal from BYD, the world’s leading electric vehicle seller, to establish a manufacturing plant in India. Goyal has made it clear that Chinese companies must operate within India’s regulations, which include a firm stance against dumping and underhanded dealings.
This concern over unfair trade practices is well-founded. Trade data reveals a widening imbalance, with India’s trade deficit with China exceeding $99 billion in 2024-25. The influx of Chinese imports, especially in electronics and consumer goods, continues to rise. The US tariffs could exacerbate this issue, potentially leading to even greater dumping of Chinese goods in India, posing a significant threat to the Indian economy and influencing trade negotiations with the United States.
To illustrate, while Donald Trump’s trade war specifically targeted China, his imposition of tariffs on other US trading partners was partly intended to prevent China from circumventing these barriers by routing goods through other countries. India must therefore exercise caution to avoid inadvertently being seen as facilitating China’s efforts to evade US tariffs, a misstep that could damage relations with Washington. Consequently, the Indian government is establishing a dedicated unit to monitor cheap imports and prevent such rerouting. The primary objective of this agency is to safeguard domestic industries and ensure that Indian businesses do not unintentionally aid China in bypassing US tariffs.
