What's Happening?
In 2025, China and India have made significant strides in their economic and trade cooperation, marked by several new agreements between Chinese and Indian enterprises. Notably, LONGi Green Energy Technology, a Chinese solar company, has partnered with
India's Inox Solar to localize 5 gigawatts of photovoltaic technology. Additionally, CALB Group, a Chinese lithium battery producer, has entered a 20-year strategic partnership with Ashok Leyland, India's second-largest commercial vehicle manufacturer. These developments come amid a global economic slowdown and rising protectionism, positioning China-India cooperation as a stabilizing force in Asian industrial chains. Despite challenges such as a $64 billion trade deficit for India and structural imbalances in trade flows, the two countries continue to deepen their economic ties, with China remaining India's largest trading partner.
Why It's Important?
The expansion of China-India economic cooperation is crucial for both nations as they represent significant voices in the Global South and account for 20% of the world's economic output. This partnership not only supports their modernization efforts but also contributes to global economic stability. The agreements in solar technology and lithium batteries highlight the potential for technological collaboration, which could shift the relationship from basic goods trade to a more substantive partnership. However, challenges such as trade imbalances and political tensions, including India's bans on Chinese apps and investment restrictions, pose risks to this cooperation. Addressing these issues through strategic direction and institutional safeguards could enhance the bilateral relationship and provide broader benefits to both countries.
What's Next?
To further strengthen their economic ties, China and India may explore establishing fast-track mechanisms for managing trade frictions and easing institutional barriers to investment. Potential initiatives include creating 'China-India cooperation demonstration zones' in industrial corridors and enhancing cooperation in digital and green energy sectors. Additionally, both countries could explore opportunities in third-country markets, combining their strengths in engineering, construction, and IT services. These efforts aim to move beyond zero-sum thinking and offset geopolitical risks, placing their trade relationship on a more sustainable footing.
Beyond the Headlines
The deepening of China-India economic cooperation could have long-term implications for global economic governance. As both countries navigate challenges such as market-substitution risks and supply-chain restructuring, their ability to align manufacturing strengths with market potential will be pivotal. The collaboration in digital economy and green energy sectors could serve as a new growth engine, fostering innovation and technological advancement. Moreover, the partnership could influence the broader landscape of global economic governance, particularly in the context of geopolitical competition and third-party interference.
