India's shipments to China saw a rare year-on-year increase in 2025. This positive development came even as the bilateral trade gap expanded to an all-time high. The data highlights the persistent imbalance in the two-way economic relationship between the two Asian giants.
Export Growth Amidst Widening Deficit
Chinese customs data released on Wednesday revealed a significant rise in Indian exports. During January to December 2025, Indian exports to China increased by $5.5 billion. This took the total outbound shipments to $19.75 billion. The figure represents a 9.7 per cent increase over the previous year.
This growth marks a notable departure from years of stagnation. For many years, India's exports to its largest trading partner remained largely flat. The recent increase provides a glimmer of hope for Indian exporters.
Record Trade Deficit Emerges
However, the improvement in exports was overshadowed by a sharper rise in Chinese exports to India. Chinese exports grew by 12.8 per cent to reach $135.87 billion. As a direct result, India's trade deficit with China widened to a record $116.12 billion.
This massive deficit crosses the $100-billion threshold for the second time since 2023. The widening gap contrasts sharply with the previous year. In 2024, India's trade deficit with China stood at $99.21 billion. That year, China exported goods worth $113.45 billion to India, while India's exports remained stuck at $14.25 billion.
Overall Bilateral Trade Reaches New Heights
Overall bilateral trade touched an all-time high of $155.62 billion in 2025. This reflects strong trade momentum between the two economies. The growth occurred despite heightened global uncertainties and tariff hikes imposed by US President Donald Trump during the year.
It is important to note a key methodological difference. China reports its trade figures on a calendar-year basis. India follows an April–March accounting year. This discrepancy limits direct year-on-year comparisons between the two nations' official data.
Diversification of India's Export Basket
Industry watchers offered their analysis on the situation. They said the rise in Indian exports, though modest relative to the size of the trade relationship, signals a gradual diversification. India's export basket to China is slowly changing.
Products such as oil meals, marine items, telecom equipment and spices have begun gaining traction. These items are finding more buyers in the Chinese market. This is happening even as China faces weak domestic consumption growth.
India has consistently urged China to provide greater market access. The request focuses on sectors where Indian firms have a comparative advantage. These sectors include information technology services, pharmaceuticals and agricultural products.
China's Global Trade Performance
China's own trade performance remained resilient despite tensions with the US. Customs data showed that China's global trade surplus surged nearly 20 per cent year-on-year. It reached almost $1.2 trillion in 2025. Exports stood at $3.77 trillion, while imports were valued at $2.58 trillion.
Officials in Beijing attributed the export strength to diversification efforts. Wang Jun, vice-minister of the General Administration of Customs, commented on the situation. He said supportive policies and the depth of China's industrial base helped offset external headwinds.
"Our trading partners are increasingly diversified, and our risk-resilience has significantly strengthened," Wang told the Hong Kong-based South China Morning Post.
Economists Urge Caution
Economists, however, cautioned against extrapolating the trend too far. Gary Ng, senior Asia-Pacific economist at French investment bank Natixis, shared his perspective. He said external demand may moderate as global monetary easing cycles approach their limits.
"I think Chinese exports will continue to grow in 2026, but at a slightly slower pace," Ng told the newspaper. His comments suggest a potential cooling of the rapid export growth witnessed in 2025.
