Why India remains stuck in China's trade shadow

Summary: Despite tariffs and geopolitical tensions, China’s export dominance continues to expand, widening India’s trade deficit and deepening its economic dependence. India faces a structural vulnerability as critical imports overwhelmingly come from China, while its own exports remain under-leveraged. China has announced a $1 trillion trade surplus with the rest of the world, the first time a country has reached such a milestone. It has come regardless of US President Donald Trump’s tariff war with the country dubbed the ‘factory of the world’. China’s exporters likely scaled the tariff walls by taking alternative routes to reach American consumers via other countries. Official figures released by China for the 11 months from January to November 2025 show that the country exported goods worth more than $3.6 trillion and imported goods worth about $2.6 trillion. Chinese exports to the US reduced 29 per cent after the imposition of the Trump tariffs, the data shows. That implies that the country more than made up for that by exporting more to other countries. India has long been at the receiving end of this flood of Chinese exports. The data for 2024-25 shows that China’s exports to India increased to $113.5 billion, while imports from India to China reduced to just $14.3 billion, widening India’s trade deficit with China to nearly $100 billion. My colleagues at ICRIER have published a study on India and China’s economic relationship. It helps us understand this deep trade imbalance, w

This article was originally published on January 01, 2026.