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After US tariffs on China, India-China trade relations could see revival if India reconsiders joining RCEP. Despite concerns over local industries, experts suggest mutual gains through cooperation, tech, and green energy—highlighting India’s rapid growth and widening trade gap.
RCEP Re-entry Back in Focus
New Delhi: Following the recent odious tariffs imposed by the US on China and India, trade relations between India and China are witnessing a new turn. Now, both countries are exploring ways to reinvigorate economic cooperation.
India's potential return to RCEP?
If India joins RCEP, its products can become globally competitive as China will import more Indian products as India adopts a more open approach towards China while joining RCEP, claims experts.
Moreover, the tariffs between RCEP countries could reach zero within the next 10 years.
India's Concerns
India decided to stay out of RCEP in 2019 to protect its domestic industry and farmers from the influx of cheap Chinese products. India felt threatened by cheap imports, particularly in the electronics, machinery, and dairy sectors.
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Furthermore, RCEP's service and investment conditions did not align with India's interests. Donald Trump may make bogus claims of brokering a ceasefire between India and Pakistan on his putative negotiating skills, but all he wants is the same Indian market that every major economy wants: Agricultural Industry.
The global economy knows that today's India is not indigent anymore and will need India to grow as it is currently the world's fastest-growing economy.
Widening Trade Deficit
India's exports to China declined by 14.4% to $14.3 billion in 2024–25, while imports from China increased by 11.5% to $113.4 billion. This further deepened the trade deficit.
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China Ready to Invest in India
The Chinese companies could open factories and branches in India. India's strong service sector and tourism potential could be attractive to China.
Economic Growth Comparison
China: GDP growth slowed to 5% in 2024 (5.4% in 2023).
India: Growth of 7.8% was recorded in the April–June quarter, the highest in five quarters. The projected growth rate for 2025 is 6.5%.
Global Challenges and the Impact of US Tariffs
Zhang warned that protectionist policies and heavy tariffs (50% on India, 30% on China) adopted by the US will impact the economies of both countries.
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AI and the Green Economy
He said that artificial intelligence (AI) and the green energy transition will become key drivers of investment and economic growth in the future. China is now focusing on boosting domestic consumption to address global uncertainties.
There is potential in trade relations between India and China, but India will need to strike a strategic balance—protecting its national interests while opening new avenues for cooperation on the global stage.
