Explained: How the India-US trade deal could hit China’s economic interests | World News

New Delhi: Bilateral trade between India and China will break a new record in 2025, exceeding $155 billion. This was an increase of over 12 percent from the previous year. China’s ambassador to India said the growth follows a successful meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping in Tianjin last August, which strengthened ties between the two countries.

China also expressed support for India’s leadership role in BRICS and expressed readiness to cooperate in advancing the interests of the Global South.

The record trade figures come at a time when India and the US have reached a trade agreement. Although China has expressed doubts about the long-term stability of the agreement, experts suggest it could pose a direct disadvantage to Beijing even if bilateral trade between India and China remains unaffected.

Chinese state media has raised questions about India’s commitment to the deal, particularly claims that New Delhi may stop buying Russian oil. Experts pointed out that India maintains its long-standing ties with Russia and a sudden cut in oil imports seems unlikely.

They suggest that India may continue to purchase Russian oil through clandestine shipping methods even after a deal is struck with the United States.

Chinese media have questioned whether India can actually purchase $500 billion worth of US energy, technology, agriculture and other goods, as India’s imports from the US were much lower last year.

Strategists see the deal as part of broader U.S. efforts to counter China’s growing influence. The US’s 2026 National Defense Strategy identified China as the primary adversary capable of changing the global order. According to the strategy, Washington aims to strengthen its position in the Indo-Pacific region by cooperating with its allies to maintain the balance of power and prevent domination by any one country.

Over the past two decades, the United States has built strong ties with India to counter China’s influence. Trade agreements, defense partnerships and strategic initiatives such as the Quad (India, Australia, Japan and the US) have been key tools.

Analysts say India’s careful diplomacy and selective engagement with China sends a message to the US and Europe about India’s independent stance even as it cooperates on regional security.

From a commercial perspective, the trade agreement positions India as a partner that can offset China’s influence. Trade measures by the United States, Britain and Europe are changing the flow of global trade in India’s favor, while giving incentives to companies to diversify their production outside China. India’s finance minister stated that the “China Plus One” strategy will gain momentum and encourage companies to expand production in India along with China.

This could directly impact China’s economy and its dominance in global supply chains.

Market experts emphasize that the agreement may appeal to China, but India must ensure that the agreement is not used solely as a tool of US strategy. While Indian companies can continue to benefit from competitively priced Chinese goods, the agreement opens up avenues for critical minerals and rare earth resources in India, reducing global dependence on China. Investments in rare earth corridors in Odisha, Tamil Nadu and Andhra Pradesh are expected to further strengthen India’s position and pose a challenge to China’s supply dominance.

The trade deal also intersects with U.S. initiatives to secure essential minerals through projects such as Project Volt, which aims to build $12 billion worth of commercial stockpiles. India joining the agreement could help the United States reduce China’s control over key supply chains and increase India’s influence in the Indo-Pacific region.

The deal has the potential to benefit India while indirectly challenging China’s global economic interests. Analysts agree that while New Delhi maintains strong bilateral trade and diplomatic ties with Beijing, Beijing may face pressure from India’s growing role as an alternative manufacturing hub and critical supply source.