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 China has indicated a willingness to address India’s rising concerns over a ballooning trade deficit that is projected to touch a record $100 billion in the financial year 2024–25. This development comes as China seeks to offset its economic challenges amid intensifying trade friction with the United States. People familiar with the situation have said that Beijing has informally conveyed its openness to increasing imports from India by reducing tariff and non-tariff barriers, in what appears to be an effort to ease tensions and improve economic cooperation with New Delhi.

Although no formal negotiations have been initiated, these overtures from China mark a shift in tone as it grapples with a turbulent global trade environment. The move follows a new wave of retaliatory U.S. tariffs on Chinese products, which are reported to be as high as 145%. In contrast, India remains cautious about engaging in bilateral trade talks without clear commitments and reciprocity. Indian policymakers worry that easing restrictions could further flood the domestic market with Chinese goods, many of which already enter the country through third-party nations linked to India by free trade agreements.

In recent comments, China’s ambassador Xu Feihong emphasized mutual economic interests and suggested that China is prepared to buy more Indian goods and attract investments from Indian companies. Speaking ahead of the latest wave of U.S. tariffs, Xu stressed that India-China relations were at a critical juncture and advocated for a fair, transparent trade environment that would encourage cooperation. He expressed optimism about importing more Indian products suitable for the Chinese market and called on Indian businesses to seek opportunities in China.

Despite these signals, Indian officials remain skeptical. According to experts familiar with the matter, India’s concerns are rooted in structural imbalances. While China has dominated global trade through a vast export surplus and competitive pricing driven by internal subsidies, India has struggled to access Chinese markets due to opaque regulatory systems and non-tariff barriers. The massive trade imbalance has been flagged repeatedly by Indian authorities as a core issue in bilateral economic ties.

Data from the Directorate General of Commercial Intelligence and Statistics highlights the growing disparity. India’s trade deficit with China stood at $48.65 billion in 2019–20 and briefly declined during the pandemic to $44 billion in 2020–21. However, the trend reversed quickly, reaching $73.31 billion in 2021–22, $83.2 billion in 2022–23, and $85.08 billion in 2023–24. By February 2025, India had already imported goods worth $103.78 billion from China in the ongoing fiscal year, compared to just $12.74 billion in exports. This left a staggering trade deficit of over $91 billion within the first 11 months alone, with projections suggesting it could exceed the $100 billion mark by year-end.

India’s trade concerns are not only about volume but also predictability. Officials say that consistent and transparent trade frameworks are essential for building trust. Currently, political strains, including a long-standing military standoff at the Line of Actual Control since 2020, have complicated economic engagement. In the wake of the border tensions, India tightened scrutiny on Chinese investments, banned several apps, and slowed visa approvals for Chinese business professionals. Although disengagement talks and confidence-building measures have resumed, India’s position remains measured, especially regarding sensitive economic sectors.

India has long pressed for access to the Chinese market in sectors such as pharmaceuticals, information technology, and agricultural products. However, despite repeated assurances from Beijing, progress has been limited. Non-tariff hurdles and regulatory opacity continue to hinder Indian exporters. For instance, while India imports a wide range of products from China including electronics, telecom equipment, chemicals, plastic raw materials, and industrial machinery, its own exports are primarily limited to basic materials like iron ore, marine goods, petroleum products, and some chemicals.

A major worry for Indian industry is the indirect entry of Chinese goods through nations that are part of India’s free trade agreements, particularly Southeast Asian countries. This practice, commonly known as trade routing, allows Chinese manufacturers to sidestep direct import restrictions and benefit from lower duties under existing trade deals.

In this context, any unilateral move to relax import controls without meaningful concessions from China could exacerbate the trade imbalance. The Indian government has, therefore, emphasized that any progress on trade liberalization must follow the principle of reciprocity and national interest. It is also applying what it terms “national security filters” to evaluate foreign investments, a move aimed at safeguarding strategic sectors from undue external influence.

For now, the prospect of an improved trade relationship hinges on China’s willingness to implement practical steps that genuinely facilitate Indian exports. Reducing bureaucratic red tape, aligning technical standards, and offering market access in competitive sectors are some of the expectations India has set. Until then, the economic dialogue between the two Asian giants remains cautious, shaped as much by strategic calculations as by commercial considerations.