India and China's bilateral trade reached a record high of $155.6 billion in 2025, marking a significant milestone in economic relations between the two countries. This was announced by Chinese Ambassador to India, Xu Feihong, at the Chinese New Year Reception in New Delhi. The total trade volume represents a year-on-year growth of over 12%.
Ambassador Xu Feihong highlighted that India's exports to China also experienced growth, rising by 9.7%. This increase underscores the substantial potential for further economic and trade cooperation between the two nations. The Chinese envoy attributed this positive trajectory to the improved bilateral relations after Prime Minister Narendra Modi and President Xi Jinping met in Tianjin in August 2025. This meeting was seen as a "reset and fresh start" for China-India relations, elevating them to a "new level of improvement". Since then, exchanges between the two countries at various levels have become more frequent.
The growing trade relationship occurs despite lingering geopolitical tensions stemming from the Galwan Valley clashes in June 2020. Even with existing strategic mistrust, both governments have described each other as "partners, not rivals". They have agreed that their relationship should not be viewed through the lens of third countries.
In addition to the increase in trade volume, people-to-people exchanges have also become more active. 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. India has also resumed issuing tourist visas to Chinese citizens, and direct flights between the Chinese mainland and India have been restored, further facilitating smoother exchanges.
Ambassador Xu also drew attention to the alignment of development priorities between the two countries. He noted that China's emphasis on self-reliance resonates with India's Atmanirbhar Bharat initiative. Furthermore, he stated that China's vision of "a world of great harmony" echoes India's philosophy of "Vasudhaiva Kutumbakam" (the world is one family).
While the record trade volume and improved relations are positive developments, India's trade deficit with China has also expanded to a record $116 billion in 2025. This highlights the persistent economic imbalances and strategic vulnerabilities that India faces. Despite this imbalance, the growing trade and diplomatic engagement between India and China signal a commitment to balancing strategic competition with pragmatic cooperation. This creates new opportunities for businesses in both countries to expand market access and deepen cross-border partnerships. It may also attract joint investment in various sectors, including manufacturing, digital services, and green technology.