India’s trade deficit with China widens as Beijing hits record $1tn trade surplus despite Trump tariffs

New Delhi: India’s trade deficit with China has widened in the last year as Beijing’s trade surplus surged to hit a record $1.19 trillion in 2025, with the world’s second-largest economy continuing to expand its exports to other parts of the world despite heavy US tariffs.

India’s deficit in the first nine months of 2025-26 stood at roughly $81 billion. In the same period of the previous year, it was at $74 billion.

China’s exports to India have also grown by 13.46 per cent between the first nine months of the 2024-2025 financial year and the 2025-26 financial year, according to the latest trade data published by the Indian Ministry of Commerce and Industry Thursday. Between April 2025 and December 2025, India imported roughly $95.95 billion worth of goods from China. In 2024-2025 for the same period it stood at roughly $84.57 billion.

For India, its largest imports from China include electrical machinery, organic chemicals and plastic articles. India has been urging China to import more goods from the country. There has been some movement, with the data indicating a 36.68 per cent increase in the first nine months of the 2025-2026 financial year in comparison to the previous year.

India’s exports to China between April and December 2025 stood at $14.25 billion, in comparison to $10.42 billion the previous year during the same period. Amongst the increase in exports, Indian smartphones and marine products have seen a significant increase in the current financial year, according to the Ministry of Commerce and Industry.

Marine products from India exported to China grew to $1.05 billion in the first nine months of the current financial year from $877 million in the previous year during the same period. Similarly, its export of smartphones grew by 565 per cent in the same period in 2025. However, the baseline exports of smartphones to China in the previous year was relatively low.

China’s overall global trade surplus grew by 20 per cent in 2025 from around $992 billion in 2024. The surplus in December alone stood at $114 billion, which is the third-highest month in 2025. Beijing’s overall surplus crossed $100 billion for seven months in 2025, according to the General Administration of Customs of the People’s Republic of China.

Trump’s tariffs make little dent to Chinese global exports

In 2024, China’s trade surplus crossed $100 billion only once. The trade tensions with the US and the ongoing tariff war with Trump has made little dent to China’s overall global exports.

China’s surplus far outstrips the history of positive trade balances for any other country in history. For example, Germany’s record surplus was in the year 2017 when it hit $364 billion—a fourth of China’s 2025 trade surplus.

The tariffs have impacted China’s trade with the US, with the surplus falling by 22 per cent, but Beijing’s overall exports have grown with its factories shipping to other countries and bypassing the tariffs through third countries, according to The New York Times.

China’s imports in 2025 was almost similar to the figure as the year before—$2.58 trillion—indicating the weakness in this sector. Beijing’s overall consumer demand domestically has remained weak, according to media reports. China’s imports from the US fell by 14.6 per cent in 2025.

Its overall exports stood at $3.77 trillion for 2025, up from $3.5 trillion the year before. It has gained significantly in exports to Africa (25.8 per cent), South East Asia (13.4 per cent) and the European Union (EU) (8.4 per cent), according to Reuters.

In terms of imports, China, the world’s largest agricultural importer, bought record levels of soybean, primarily from South America, as it had held off purchases from the US due to the train tensions. Beijing at the end of 2025 restarted purchases of American soybean after reaching an agreement with the US on trade.

Despite China’s growing exports, its imports showcase a country that is still grappling with domestic issues. The Chinese housing bubble crashed in 2021, seeing a number of large firms go bankrupt including the Evergrande Group, which has dented consumer demand. The weak yuan has also helped Beijing’s exports grow in US dollar terms.

The weak consumer demand has seen Chinese factories seeking foreign markets to sell their goods, explaining to some extent the growth in merchandise exports, notes the New York Times.

Domestically, prices have dropped considerably on a number of products, indicating the deflationary cycle of the Chinese market, an analysis by Bloomberg shows. Even wages in factory jobs that paid close to $1000 a month a few years ago have almost halved, according to the American financial and media company.

The falling domestic prices indicates that the economy is producing more goods than demanded, leading to factories looking abroad to offload their products. The overabundance of cheap Chinese products in foreign markets has led to other countries warning Beijing of further action against the world’s second-largest economy.

Just last month, French President Emmanuel Macron, on a state visit to China, warned Beijing of the imposition of tariffs similar to the US, if the country does not balance the growing trade surplus with the EU.

India, similarly has been seeking greater exports to China, as New Delhi’s imports have considerably grown to over $100 billion in the last financial year. China has not maintained a trade deficit since 1993. However, its current surplus is by far the largest in the history of the world, according to the New York Times.

(Edited by Shashank Kishan)

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