As trade deficit mounts, China says ready to import more premium goods from India; Envoy seeks fair environment for Chinese firms

Amid the escalating US-China trade tensions, Beijing has reached out to India saying China is ready to welcome more premium Indian goods and stands ready to help Indian businesses tap into the Chinese market demands to address India’s trade deficit that, according to reports this week, widened to a record $ 99.2 billion. In an exclusive interview to TOI, his first to the Indian media since he assumed charge, Chinese ambassador Xu Feihong , however, also expressed hope that India will provide a transparent and non-discriminatory business environment for Chinese companies.

Echoing PM Narendra Modi ’s recent remark that competition should not be allowed to tun into conflict, Xu said dialogue is important for a stable and cooperative relationship and added China is ready to warmly welcome the PM for the SCO summit later this year. Asked about the US reciprocal tariffs, he said China and India have the responsibility to oppose all forms of unilateralism and protectionism. He responded in writing also to questions about India’s concerns over Chinese export controls on manpower and equipment, the threat of Brahmaputra water diversion and role of media and people to people contacts in fostering understanding.

Excerpts:

1. India and China seem to have resolved the 2020 border standoff, leading to signs of improvement in ties, but the bigger question of rebuilding trust between the 2 countries remains. I understand it’s a two-way process but what can China do on its part to facilitate further de-escalation and ensure long term border peace?

A. Last October, President Xi Jinping and PM Narendra Modi held a fruitful meeting in Kazan, which provided strategic guidance for improving and developing China-India relations. Recently, both sides have been earnestly implementing the important consensus reached by the leaders of the two countries, strengthening exchanges and practical cooperation at all levels, and have made a series of positive progress. In my opinion, first and foremost, the key to the sustainable, healthy and stable development of China-India relations is adhering to the strategic judgement made by the two leaders that “China and India are partners rather than rivals, and development opportunities rather than threats to each other” and correctly view each other’s development and strategic intentions. Secondly, both countries should respect each other’s core interests and major concerns, properly handle differences through dialogue and consultation, and put the boundary question in a proper place in bilateral relations. We should not allow bilateral relations to be defined by the boundary question, or let specific differences affect bilateral cooperation. Thirdly, we should steadily promote friendly exchanges and cooperation in various levels and fields, make bigger the cake of practical cooperation, so that more people from the two countries will benefit from the development of bilateral relations and more actively participate in the cause of China-India friendship. During a recent podcast interview, PM Modi noted that for centuries, India and China have learned from each other and together contributed to the global good in some way. As two major neighbours, differences are natural. Our focus is to ensure these differences do not turn into disputes. Only through dialogue can we build a stable cooperative relationship that serves the best interests of both nations. Similarly, External Affairs Minister Dr. S Jaishankar , while attending the News18 Rising Bharat Summit, observed that the situation between 2020 and 2024 was neither in the interest of China and India, nor in the interest of our relationship. Indeed, as ancient civilizations, China and India possess the wisdom and experience to navigate challenges constructively. I am fully confident in that.

2. Are you expecting PM Modi to visit China for the SCO summit this year?

A. PM Modi is warmly welcome to China to attend the SCO Summit this fall. China is ready to work with India and other member states to jointly host a friendly, united and fruitful summit, and lead the SCO into a new stage of high-quality development to benefit people from both countries and the region.

3. As India opens up to China, how can China help India address the trade imbalance?

A. The essence of China-India economic and trade relations is mutual benefit and win-win cooperation. China has never deliberately pursued a trade surplus. Trade surpluses reflect market-driven efficiency and evolve with changing economic conditions. During the meeting with representatives of the international business community last month, President Xi Jinping pointed out that China offers great potential for investment and consumption with the world’s second largest consumer market and largest middle-income group. Valuing China’s super-sized market will unlock greater commercial opportunities for Indian companies. In Fiscal Year 2024, Indian products such as chili peppers, iron ore, and cotton yarn, saw significant export growth to China, surging by over 17%, 160%, and 240% respectively. We welcome more premium Indian goods export to China and stand ready to help Indian businesses tap into China’s market demand, further exploring the vast potential of our economic and trade collaboration. Indian enterprises can fully leverage platforms such as the China International Import Expo (CIIE), the China-South Asia Expo, and the China International Consumer Products Expo (CICPE) to connect with Chinese buyers and consumers. At the same time, we hope that India will take China’s concerns in the economic and trade field seriously, provide a fair, transparent, and non-discriminatory business environment for Chinese enterprises, elevate China-India bilateral economic and trade cooperation to new heights, and deliver tangible benefits to the people of both countries.

4. India is concerned about China’s export controls on equipment and manpower that are coming in the way of India’s efforts to ramp up its domestic manufacturing. As ties improve, will Beijing address this issue?

A. China has never imposed mandatory restrictions on the export of relevant equipment or the travel of personnel to India. On the contrary, China has always been willing to share its experience with friendly nations and strengthen mutually beneficial cooperation. However, the reality is that Chinese citizens face significant difficulties in obtaining Indian visas, Chinese enterprises based in India encounter unfriendly and unfair treatment, and voices opposing Chinese investment are often heard in the media. These factors have created a backlash in Chinese society. Therefore, both sides need to meet each other halfway and work together to improve the situation.


5. Can China assure India that the flow of water into downstream countries won’t be impacted by the mega Chinese hydropower project in the lower reaches of the Brahmaputra/ Yarlung Zangbo river?

A. China adheres to a responsible attitude towards cross-border river development and pursues a policy of balancing utilization and protection and taking into account the interests of upstream and downstream countries. China’s hydropower development aims to speed up developing clean energy, and respond to climate change and extreme hydrological disasters. China’s decision to build the hydropower project in the lower reaches of the Yarlung Zangbo River was made after rigorous scientific evaluation. The project does not consume water but only uses the potential energy of water to generate electricity. China never seeks “water hegemony” and will not use the normal development of water resources to “coerce” downstream countries. The project will not have a negative impact on the ecological environment, geological conditions and the rights and interests related to water resources of downstream countries. On the contrary, it is beneficial to downstream disaster prevention and relief as well as climate change response to some extent. China and India have maintained communication on this issue, and a new round of Meeting of China-India Expert Level Mechanism on Trans-Border Rivers will be held in New Delhi shortly. China will continue to maintain communication with countries at the lower reaches through existing channels, and step up cooperation on disaster prevention and relief for the benefit of the people by the river.

6. You have spoken about a reboot in ties. Do you think there’s a need now for a new framework for effective border management?

A. In recent years, China and India have maintained close communication through dialogue mechanisms such as the Working Mechanism for Consultation and Coordination on China-India Border Affairs (WMCC) and Corps Commander Level Meeting, reached the solution on relevant issues in the border areas and brought the border situation back to tranquillity. In the 23rd Meeting of Special Representatives on China-India Boundary Question held late last year, both sides emphasized the need to give full play to the role of this mechanism, strengthen the normalized management and control of the border situation, and jointly maintain peace and tranquillity in the border areas. In the future, both sides should continue to make full use of the existing diplomatic and military communication channels, adhere to the principles of equal consultation and mutual equal security, further refine the border area management and control rules according to the actual situation along the LAC, and strengthen confidence-building measures, so as to achieve sustainable peace and tranquillity in the border areas.

7. India and China are also looking to facilitate media interactions. What role do you see the media playing in addressing the issue of trust deficit between the 2 countries?

A. You have rightly pointed it out that trust deficit is a prominent problem in China-India relationship, which stems largely from the lack of exchanges between the two countries in recent years, leading to an information deficit and a cognitive deficit. At present, most of the established exchange and dialogue mechanisms between China and India remain stalled, and the level of people-to-people exchanges is quite low. Although China has been actively working to enhance bilateral exchanges, and the Chinese diplomatic missions in India issued 280,000 visas last year and over 85,000 visas so far this year, it remains difficult for Chinese citizens to obtain Indian visas. Additionally, the two countries have yet to resume the exchange of resident journalists, resulting in a lack of first-hand information about each other. Meanwhile, narratives such as the so-called China’s unfair trade practices and the China threat theory amplified by certain media outlets, have significantly influenced the perceptions of ordinary Indians toward China. Media plays a crucial role in boosting China-India understanding. China is not afraid of negative reports and welcomes Indian media to put forward constructive suggestions on China’s development and China-India relations. As the Chinese saying goes “listen to both sides and you will be enlightened; listen to only one side and you will be confused”. It is hoped that media friends can obtain information and opinions from multiple sources, break through the third-party filter and present the whole picture of China from your own perspective.

Recently, the competent departments of China and India have engaged in intensive discussions on issues such as the mutual dispatch of resident journalists and visa facilitation. It is hoped that both sides can achieve tangible outcomes at an early date to bridge the information deficit, cognitive deficit and trust deficit between the two countries.

8. To what extent, if any, can this warming-up between India and China be attributed to the prevailing global uncertainty, exacerbated by some of President Trump’s policies including his tariff focus?

A. The so-called reciprocal tariffs, unilaterally imposed by the US through threats and pressure are neither reciprocal nor anything but unilateral protectionism. Such actions blatantly infringe upon the legitimate rights and interests of other countries, seriously undermine the rules-based multilateral trading system, and pose a grave threat to the stability of the global economic order. China’s development is a result of self-reliance and hard work. China does not seek a tariff war or trade war. However, if such a war is imposed on us, we will resolutely fight back, firmly defend our own interests, and steadfastly uphold multilateralism and globalization. Facing the US abuse of tariffs, we saw some countries made concessions and gave the bully an inch. Yet the US did buy it, and they wanted to take a mile. This clearly demonstrates that compromise and concession lead nowhere in the face of US bullying and hegemony.

The US is just one country, not the whole world. Its foreign trade only accounts for 13% of global trade volume, while the remaining 87% is conducted among over 190 other countries. These countries have vast opportunities for cooperation and can still achieve stable economic growth. China and India are the most populous developing major powers, facing development imperatives and sharing vast potential for cooperation. As leading emerging economies and key members of the Global South, China and India have the responsibility to oppose all forms of unilateralism and protectionism. Together, we must uphold multilateralism and inject much-needed stability into a turbulent world.