Indo-China Relations - 2 | UPSC Mains: International Relations PDF Download

Composition of Bilateral Trade

• In 2016, India’s top exports to China included diamonds, cotton yarn, iron ore, copper and organic chemicals. Indian exports of diamonds grew 28.48% and amounted to US$ 2.47 billion. India was the second largest exporter of diamonds (worked/not worked) to China (with a share of 31.81%). India’s cotton (including yarn and woven fabric) exports to China showed a decline of 44.1% to reach US$ 1.27 billion, although India was the second largest exporter of cotton to China with 16.43% market share. In 2016, Indian exports of iron ore registered an increase of over 700% to reach US$ 844 million.
• In 2016, China exports of electrical machinery and equipment saw an increase of 26.83% to US$ 16.98 billion. India was the largest export destination of Fertilizers exports from China. China exported 23.48% of its total Fertilizers (worth US$ 1.54 billion) to India. India was the largest export destination for Chinese Antibiotics worth US$ 711 million in 2016, with a share of 23.55%. India was the second largest export destination for Chinese organic chemicals, worth US$ 5.68 billion in 2016. 
• Seven Indian Banks have a branch of representative office in China. Chinese bank, ICBC has one branch in India in Mumbai. According to data released by China’s Ministry of Commerce, the Chinese investment in India in Jan-Mar 2017 were to the tune of US$ 73 million. Cumulative Investment in India till March 2017 stood at US$ 4.91 billion. The cumulative Indian investment in China till March 2017 reached US$ 705 million. More recently, in April 2017, e-business visa has been introduced to encourage more number of business people from China travelling to India.
• The India-China Economic and Commercial Relations are shaped through various dialogue mechanism such as Joint Economic Group led by the Commerce Ministers of both sides, Strategic Economic Dialogues led by the Vice Chairman of NITI Ayog and the Chairman of National Development and Reform Commission of China, the NITI Ayog and the Development Research Center Dialogue and the Financial Dialogue led by Secretary Department of Economic Affairs of India and Vice Minister, Ministry of Finance of PRC.
• Some of the other institutionalized dialogue mechanisms between the two countries include the Joint Working Group (JWG) on Trade, JWG on Collaboration in Skill Development and Vocational Education, Joint Working Group on Information and Communication Technology & High-Technology, Joint Study Group and Joint Task Force on Regional Trading Agreement (RTA), India-China Joint Working Group on Agriculture, India-China Joint Working Group on Cooperation in Energy and the Joint Study Group on BCIM Economic Corridor.

Cultural Relations 

• India-China cultural exchanges date back to many centuries and there is some evidence that conceptual and linguistic exchanges existed in 1500-1000 B.C. between the Shang-Zhou civilization and the ancient Vedic civilization. During first, second and third centuries A.D. several Buddhist pilgrims and scholars travelled to China on the historic “silk route”. Kashyapa Matanga and Dharmaratna made the White Horse monastery at Luoyang their abode. Ancient Indian monk-scholars such as Kumarajiva, Bodhidharma and Dharmakshema contributed to the spread of Buddhism in China. Similarly, Chinese pilgrims also undertook journeys to India, the most famous among them being Fa Xian and Xuan Zang.  
• As a mark of the historical civilizational contact between India and China, India constructed a Buddhist temple in Luoyang, Henan Province, inside the White Horse Temple complex which was said to have been built in honour of the Indian monks Kashyapa Matanga and Dharmaratna. The temple was inaugurated in May 2010 by President Pratibha Patil during her visit to China. Besides this, in February 2007, the Xuanzang memorial was inaugurated at Nalanda. In June 2008, joint stamps were released, one stamp depicting the Mahabodhi temple at Bodhgaya and the other depicting the White Horse temple at Luoyang. In order to further academic exchanges, a Centre for Indian studies was set up in Peking University in 2003. Chairs of Indian Studies/Hindi have also been established in Shenzhen University, Jinan University, Fudan University, Guangdong University and in Shanghai International Studies University.
• Indian Bollywood movies were popular in China in the 1960s and 1970s and the popularity is being rekindled in recent times again. India and China have entered into an agreement on co-production of movies, the first of which based on the life of the monk Xuan Zang hit the theaters in 2016.
• Yoga is becoming increasingly popular in China. China was one of the co-sponsors to the UN resolution designating June 21 as the International Day of Yoga. During the visit of Prime Minister Narendra Modi to China in May 2015, a Yoga-Taichi performance in the world heritage site of Temple of Heaven was witnessed by Premier Li Keqiang and the Prime Minister. During the same visit, an agreement was signed to establish a Yoga College in Kunming, Yunnan Province.
• In recent events, on 20 June 2017, eve of International Day of Yoga, a successful Yoga@ Great Wall event was organized at the Juyongguan section of the Great Wall. Minister of State for External Affairs Gen. (Dr) VK Singh (Retd) attended the event.
• Colors of India Festival showcasing a unique blend of Indian performing arts, Bollywood movies and Indian photography was held from 15-26 May, 2017 at Beijing and Nanjing. The 2nd International Conference of Indologists-2016 was successfully held at Shenzhen from 11-13 November 2016. The Conference saw participation of more than 75 Indologists from world over including China, Germany, Thailand, Chile and India. An exhibition of Gupta Art at the Palace Museum in Beijing, titled "Across the Silk Road: Gupta Sculptures and their Chinese Counterparts, 400-700 CE" featuring 56 Indian sculptures was held in year 2016.

Education Relations

• India and China signed Education Exchange Programme (EEP) in 2006, which is an umbrella agreement for educational cooperation between the two countries. Under this agreement, government scholarships are awarded to 25 students, by both sides, in recognized institutions of higher learning in each other’s country. The 25 scholarships awarded by India are offered by Indian Council for Cultural Relations (ICCR). During the visit of Prime Minister Sh. Narendra Modi to China, both the countries have signed fresh Education Exchange Programme (EEP) on May 15, 2015. The same provides for enhanced cooperation between institutions in the field of vocational education; collaboration between Institutes of higher learning, etc. 25 Chinese students have been selected to join Hindi language course for the academic year 2017-18 under EEP scholarship awarded by ICCR.
• Apart from this, Chinese students are also annually awarded scholarships to study Hindi at the Kendriya Hindi Sansthan, Agra to learn Hindi. For the year 2017-18, 5 Chinese students have been selected to study in Agra under this scheme.
• The cooperation in the education sector between the two sides has resulted in an increase in the number of Indian students in China. During the Academic Year 2016-17 there were 18171 Indian students studying in various universities in China in various disciplines.
• Shri Prakash Java-dekar, Minister of Human Resource Development, attended BRICS Ministers of Education on 5th July, 2017 at Beijing, China. In his speech, he appreciated the creation of institutional mechanism in the form of BRICS Network University and BRICS Think Tank Council. BRICS Network University, where 12 universities from each of the 5 countries will engage with each other in education research and innovation, is another commendable initiative. Five areas of cooperation are prioritised which are Communication and IT, Economics, Climate Change, Water Resources and Pollution, and BRICS study. India will participate whole-heartedly in all these cooperative efforts.
• The Embassy maintains regular communication with MoE in China as well as all universities where there are a sizeable number of Indian students. Further, Embassy officials also visit universities to not only establish direct contact with university authorities but also to interact with the Indian students. Students are encouraged to approach the Embassy in case they are faced with serious problems. For this purpose, the mobile number and email address of Minister (Education/Consular) and email address of Second Secretary (Education) is provided on the Embassy website. The Mission has also launched a social media account on We chat for Indian students, with the objective to make it easy for them to reach out to the Embassy as well as to link them to other fellow Indian students studying in different cities of China.

Indian Community

• The Indian community in China is growing. Present estimates put the community strength to around 35,500. A major part of this comprises of students (over 18000), who are pursuing courses in various universities in China. A number of Indians and PIOs are also working as professionals with various multinational and Indian companies.

Recent Developments

Trade Composition & Bilateral Dynamics

• Record Trade Deficit: India’s trade deficit with China reached a historic high of US $99.2 billion in FY 2024‑25, driven by surging imports and relatively stagnant exports.
• Trade Volume Growth: From FY 2015‑16 to FY 2024‑25, bilateral merchandise trade rose by 81%, reaching around US $128 billion, largely propelled by an 84% increase in imports from China.
• Export Trends: India’s exports to China grew modestly—just 19.2% over a decade, from US $12 billion in FY 2015 to US $14.3 billion in FY 2025; India ranks 34th among China's import sources.

Strategic Shifts in Electronics & Manufacturing

• Tech Manufacturing Surge: India is rapidly becoming a global electronics manufacturing hub:

  • Apple now produces iPhones domestically—approximately 14% of global iPhone output is manufactured in India, with plans to double this by 2025.

  • AirPods production in India is slated to begin by 2025 at Foxconn’s Hyderabad facility.

  • Google Pixel phones are being assembled in India through partnerships with Foxconn and Dixon, and production is scaling significantly.

• Domestic Production Landscape: India now excels in electronics output:

  • The sector is valued at ₹12 lakh crore (~US $140 billion), with 99.2% of mobile phones sold in India being domestically manufactured.