India Emerges as Last Hope for China’s Slowing Economy: Why Beijing Is Eyeing Delhi

New Delhi, February 17, 2026: China’s economy is currently facing a sharp slowdown, with many companies struggling amid domestic stagnation and rising trade barriers in developed markets. As a result, Chinese firms are increasingly looking at foreign direct investment (FDI) in India as a strategic opportunity.

Economic Struggles in China

According to prominent Chinese economist Zhou Tianyong, without significant market reforms, China’s growth rate could fall to 2.5% in the coming years. Weak domestic demand and long-standing property market downturns have already reduced quarterly GDP growth to 4.5%, the lowest in three years. This is well below last year’s 5% growth and also below the 4.17% annual average growth rate Beijing projected to double per capita GDP by 2035.

Why India Matters

Amid this slowdown, India represents a large, growing consumer market and a policy environment conducive to investment-driven manufacturing. Chinese companies see India as a vital market for electronics, automobiles, and machinery—sectors that can help balance the slower domestic growth in China. India’s vast population offers opportunities for Chinese smartphone brands and auto companies such as BYD.

Government’s Approach

While India-China relations remain cautious, the Indian government is reportedly considering easing FDI rules for neighboring countries, including China. Authorities are exploring the idea of automatic approval for smaller investments, potentially under a revised “de minimis” threshold, instead of requiring prior approval as mandated under Press Note 3 (April 2020). This move could accelerate foreign investments in sectors critical to India’s growth.

Industry Perspective

Indian electronics companies have previously advocated for joint ventures with Chinese firms, capping equity participation at 26%, to access capital, technology, and established supply chains—resources that remain limited domestically. Such collaboration is seen as a practical approach to strengthening India’s manufacturing ecosystem while allowing China to deploy capital strategically in the region.

In summary, India is emerging as a key economic partner for China, offering a growth market that could partially offset the dragon nation’s domestic slowdown.