In 2025, bilateral trade between India and China reached a historic high, marking a significant milestone in the economic relationship between the two nations. According to the Chinese Ambassador to India, Xu Feihong, trade soared to USD 155.6 billion, reflecting a growth of over 12% compared to the previous year. This development signals a positive trajectory in bilateral ties, especially after a period of military stand-off.
Speaking at the Chinese New Year Reception in New Delhi, Ambassador Xu highlighted that the relationship has evolved from a "reset" to a "new level of improvement" following the meeting between Prime Minister Narendra Modi and President Xi Jinping in Tianjin last August. He emphasized the considerable potential for economic and trade cooperation between the two countries, noting that India's exports to China grew by 9.7% in 2025.
The ambassador also shared insights into China's domestic economy, stating that its GDP has exceeded 140 trillion yuan (approximately USD 20 trillion), with a growth rate of 5% and a contribution of over 30% to global economic growth.
Beyond trade, Ambassador Xu underscored the restoration of normalcy in travel and religious exchanges. China has resumed the pilgrimage for Indian devotees to the sacred mountain and holy lake in the Xizang Autonomous Region, with nearly 20,000 Indians participating last year. Furthermore, India has resumed issuing tourist visas to Chinese citizens, and direct flights between the Chinese mainland and India have been restored, facilitating smoother people-to-people exchanges.
Despite the positive momentum, the India-China relationship has historically been complex, characterized by both cooperation and competition. While China has been India's largest trading partner, a significant trade deficit favoring China persists. Border disputes and military conflicts have also cast shadows on the relationship, although both countries have successfully rebuilt diplomatic and economic ties since the late 1980s.
In 2025, there were signs of easing tensions, with China easing export curbs on critical goods for India, including urea shipments, rare earths, fertilizers, and tunnel-boring machines. India, in turn, authorized the resumption of tourist visas for Chinese nationals. Moreover, initiatives like the "China–India Semiconductor Supply Chain Alliance" and joint R&D on agri-tech demonstrate potential for collaboration in technology and other sectors.
However, India's strategic environment has also been influenced by other factors, such as its relationship with the United States. Increased tariffs from the U.S. have led India to seek trade agreements with other countries and consider strategic hedging, including "reopening limited diplomatic channels with China".
Looking ahead, the trajectory of India-China relations will likely involve balancing strategic competition with pragmatic cooperation. While challenges remain, the record-breaking bilateral trade in 2025 and the restoration of various exchanges provide a foundation for further engagement and the potential for a more stable and mutually beneficial relationship.