Don't ignore dragon: Top policy expert explains why India's $10 trillion dream can't become reality without China
trade relationship with China
, said Samir Saran, President of the Observer Research Foundation (ORF), in a conversation on the ANI podcast. He noted that India's growing economy will need strong commercial links with its largest trading partner, even as strategic and defence differences continue. 'There is no way that you can be a $10 trillion economy without having a substantial trading relationship with China,' Saran said, while emphasising the need for clarity in national interest and sectoral safeguards.
India should learn from China-US relationship model
Citing China's approach to the US, Saran said both countries traded extensively even while investing in deterrence capabilities. 'China built capabilities to deter the U.S. while expanding
trade
with it. We must do the same—build deterrence and roll out the red carpet for economic engagement.'
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'We have to take a page out of their book and do to China what the Chinese did to the Americans: have political muscularity and an economic embrace,' he concluded.
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Trade and security must be dealt with separately
Saran also cautioned against linking Pakistan's use of Chinese-origin missiles with direct involvement by China. 'The challenge is not about the hardware. The challenge is about the potential of collaboration during conflicts,' he said. He added that India should focus on diplomatic efforts to prevent military coordination between China and Pakistan rather than only on arms transfers.
China returns as India's top trading partner in FY24
According to Global Trade Research Initiative (
GTRI
) data, China reclaimed the position of India's top trading partner in FY24, overtaking the US after two years. India imported goods worth US$ 101.74 billion from China, comprising over 15 percent of total imports. India's exports to China also grew, reaching US$ 16.65 billion, led by iron ore, engineering goods, marine products, and chemicals. Total bilateral trade reached US$ 118.40 billion, according to India Brand Equity Foundation (IBEF).
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Strategic tensions didn't halt trade
Samir highlighted despite the Himalayan border standoff during the pandemic, trade between India and China continued to grow. 'That's pragmatism,' Saran said, referring to India's decision to ban certain Chinese apps while allowing
commerce
to continue.
He argued that India should draw clear boundaries around 5–6 critical sectors to avoid Chinese involvement, while remaining open in others. 'Political muscularity and economic embrace is fine,' he added.
Investment gap needs correction
Saran said the investment imbalance must shift in India's favour. 'The trading advantage is with China. The balance of investments must belong to us,' he said. As per IBEF data, China ranks 22nd among foreign investors in India, with cumulative
FDI
of US$ 2.50 billion since 2000—just 0.35 percent of total inflows.
He suggested that if
Chinese firms
invested between US$ 50–100 billion in India, it could act as a stabilising factor in bilateral relations. 'That could create a sobering effect on strategic decision-making,' he said.
Engage with clarity and strength
Saran stressed that India must attract investment without compromising national interest. 'We should identify sectors where Chinese capital can contribute without compromising national security, and do this through rational, well-informed policymaking.'
Rejecting any suggestion that deeper economic ties would require India to soften its strategic position, he said, 'A strong economic relationship with China must be built on mutual respect, and that includes respect for India's political and military strength.'
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