China Seeks Stronger Economic Ties with India Amid U.S. Tariffs

China/ IndiaApril 22, 2025 – Beijing is intensifying efforts to bolster economic relations with India as U.S. tariffs, reaching up to 245%, disrupt Chinese trade prospects. With negotiations with the U.S. at a standstill, China is pivoting to India as a critical market and manufacturing hub, prompting Chinese firms to align with New Delhi’s stringent regulations.

Chinese Companies Adapt to Indian Rules

Facing the potential loss of the American market, Chinese companies like Shanghai Highly Group (air conditioners) and Haier (electronics) are increasingly open to India’s terms. Reports indicate these firms are willing to take minority stakes in joint ventures and comply with local regulations to secure a foothold in India’s burgeoning market. This shift is driven by the need to counter competition from South Korean, Japanese, and European companies vying for the same market share.

The urgency stems from a strategic need to diversify trade partners. China’s trade ministry has emphasized a “strategic and long-term perspective” to enhance mutual trust and cooperation with India. Marking the 75th anniversary of diplomatic relations, Beijing aims to deepen exchanges, coordinate on international affairs, and maintain peace along the China-India border.

Visa Reforms Signal Openness

As part of its outreach, China is streamlining visa processes for Indian citizens. In 2025, the Chinese embassy has issued over 85,000 visas to Indians, simplifying applications by eliminating appointment requirements and biometrics for short trips. This move, backed by President Xi Jinping’s vision of a “dragon-elephant tango,” reflects China’s intent to project a more open and friendly image to Indians.

India’s Cautious Stance

Despite China’s overtures, India remains wary. Commerce Minister Piyush Goyal has reiterated that Chinese investments are not encouraged, prioritizing “trusted partners” from Europe and North America who adhere to fair trade practices. India’s rejection of a proposed BYD electric vehicle factory underscores this stance, with Goyal emphasizing that Chinese firms must abide by India’s rules, avoiding practices like dumping or backdoor deals.

India’s trade deficit with China, exceeding $99 billion in 2024-25, fuels concerns about rising Chinese imports, particularly in electronics and consumer goods. With U.S. tariffs prompting Chinese firms to redirect goods, India fears becoming a dumping ground. To counter this, New Delhi is establishing a watch unit to monitor cheap imports and prevent China from rerouting goods to dodge U.S. tariffs, which could strain India-U.S. relations.

Geopolitical Implications

India’s cautious approach aligns with broader geopolitical considerations. Experts suggest that U.S. tariffs on all trade partners, including India, aim to close loopholes that allow China to reroute goods through third countries. New Delhi is keen to avoid perceptions of aiding China, which could jeopardize ties with Washington.

As Prime Minister Narendra Modi balances economic growth with national interests, India continues to prioritize territorial integrity and sovereignty, particularly in light of historical tensions with China. While Beijing pushes for closer ties, New Delhi’s measured response reflects a commitment to protecting local industries and maintaining strategic autonomy.

China’s proactive measures signal a desire to reset relations with India, but New Delhi’s guarded optimism suggests that any partnership will be on India’s terms. As global trade dynamics shift, India’s watch unit and stringent policies will play a critical role in safeguarding its economic interests while navigating complex international relationships.