INDIA CHINA Connect

China’s trade surplus topped US$1 trillion in 2025, yet foreign exchange reserves rose only slightly. Analysts say the gap reflects private-sector capital outflows, not missing funds. Chinese firms are investing abroad, paying down foreign debt and holding earnings offshore, signalling a shift from state-led reserve accumulation to market-driven global expansion

From January 1, 2026, all Australian tariffs on Indian exports will be eliminated under the India–Australia ECTA, boosting trade ties. The pact has driven export growth, aided labour‑intensive sectors, and strengthened supply chains. Key industries like gems and jewellery have surged, with India’s exports to Australia rising 8% in FY25.

Vinod Khosla has backed Elon Musk’s call for a universal U.S. digital ID and stricter voter ID laws, citing India’s Aadhaar as a successful model that boosts convenience and reduces fraud.

Shenzhen jewellery malls have introduced smart restroom doors that turn transparent when smoke is detected, discouraging smoking in non-smoking areas. Installed in men’s toilets, the system aims to enforce strict indoor smoking bans. While praised online for effectiveness and innovation, legal experts caution about privacy risks if the technology malfunctions.

India has approved $4.6 billion in electronics investments, clearing 22 projects expected to generate $28.6 billion in output. Backed by firms including Samsung and Tata, the plan targets key components to cut import dependence and strengthen supply chains. The push aligns with Apple’s expanding India production and upcoming semiconductor fabs from Micron and Tata this year to boost manufacturing resilience nationwide.

Yiwu overcame US-China trade tensions by rapidly diversifying exports toward emerging markets. Despite tariffs and reduced US demand, total trade surpassed 700 billion yuan in the first 10 months of 2025, up 25.2%. ASEAN trade jumped 51%, while Africa and Latin America rose strongly. Exports grew 24.4%, alongside booming cross-border e-commerce imports, supported by flexible supply chains and logistics networks.

India holds the world’s third-largest rare earth reserves at 6.9 million tonnes but produces under one percent globally. Output was about 2,900 tonnes in 2024, far behind China. Regulatory hurdles, monazite-linked thorium, and weak refining capacity limit growth. China dominates processing. Without value-chain integration, India’s vast resources won’t translate into global influence. The imbalance highlights execution gaps across mining nationwide.

India has become the world’s fourth-largest economy with a nominal GDP of about $4.18 trillion, overtaking Japan after surpassing the UK in 2022. Driven by strong domestic demand, favourable demographics, low inflation and robust growth, India is now targeting Germany. Sustained reforms, investment and macroeconomic stability could lift it to third place within a few years.

Prime Minister Narendra Modi said 2025 marked a turning point in India’s reform journey, strengthening growth and advancing the Viksit Bharat 2047 vision. Calling it the “Reform Express,” he highlighted youth-led growth, simplified governance, tax and labour reforms, ease of doing business, energy, trade, and education reforms, signalling a shift toward trust-based governance and inviting global partnerships.

India is poised to become a major global growth engine, driven by IT leadership, digital infrastructure, entrepreneurship, and strong demographics, an EY report says. High-value services, expanding credit, manufacturing competitiveness, and infrastructure upgrades could fuel growth, boost consumption, and integrate India deeper into global value chains, provided policy reforms sustain long-term momentum.