China’s economy is experiencing a noticeable slowdown, with its Gross Domestic Product (GDP) expanding by only 4.8% in the third quarter, marking the weakest growth in the past year. This deceleration is attributed to the ongoing trade friction with the United States and a lack of vigor in domestic demand. Adding to the economic uncertainty, U.S. President Donald Trump has signaled the possibility of imposing heavy tariffs, potentially as high as 100%, beginning in November. These developments raise concerns about China’s ability to transition towards a more domestically driven, sustainable growth model through structural reforms.
In sharp contrast, India is demonstrating impressive economic momentum. The country recorded a robust 7.8% GDP growth in the first quarter of FY 2025-26 (April-June 2025). This strong performance has captured the attention of the global economic community, positioning India as a key engine for worldwide growth and a stable investment destination.
The latest economic indicators from China reveal a third-quarter GDP growth of 4.8%, a decrease from the 5.2% recorded in the previous quarter. While analysts predict the full-year growth might approach 5%, potentially aided by further stimulus measures, fundamental challenges persist. These include weak consumer confidence, subdued investment activity, and ongoing pressures in the real estate market. Beijing’s reliance on manufacturing and exports to support its economy, while effective in the short term, risks exacerbating existing structural imbalances.
Trade patterns show a significant decline in China’s exports to the U.S., down by 27% year-on-year. However, China has successfully expanded its exports to other major markets, such as the European Union (up 14%), Southeast Asia (up 15.6%), and Africa (up 56.4%). Despite these international successes, domestic consumption remains a weak point, with retail sales in September reaching their lowest level in ten months. Efforts to control inflation and maintain export competitiveness are ongoing, but challenges persist.
Chinese businesses are facing pressure on profitability due to intense competition in non-U.S. markets, which can make export-led growth unsustainable. The looming threat of U.S. tariffs, even if subject to negotiation, creates a volatile business environment. Companies are already experiencing the impact; one Chinese aluminum manufacturer, for example, saw U.S. orders plummet by 80-90%, leading to a substantial revenue loss. Adapting to new markets requires significant strategic adjustments, including investing in new languages and increasing overseas travel, yet these efforts struggle to fully compensate for the lost U.S. business.
As China navigates its economic challenges, India’s accelerated growth presents a compelling alternative. Driven by strong domestic demand, supportive government policies, and ongoing structural reforms, India is increasingly becoming a favored destination for global manufacturing and investment. The property market issues and cautious consumer spending in China are prompting a global reassessment of supply chains and investment portfolios, creating a significant opportunity for India to increase its share of global trade and investment, potentially leading to a substantial shift in economic influence across Asia.