India’s Jaishankar: China, Not the U.S., Is the Bigger Problem in Global Trade

NEW DELHI, Investortrust.id— India’s External Affairs Minister Subrahmanyam Jaishankar offered a candid assessment of global trade issues during a discussion with Indonesian Indonesian editors-in-chief on Sunday, Jan 26. 2025, arguing that the primary threat to fair trade comes not from U.S. protectionism but from China’s non-market practices.

“What happens in many parts of the world is that there is great unhappiness with the current model of trade,” Jaishankar said. “People feel sometimes free trade is not fair trade.”

His remarks come at a time when countries globally are grappling with trade imbalances exacerbated by China's market distortions and subsidy practices.

A Shift from Trump’s Trade Policies

During the first term of his presidency, Donald Trump took an aggressive stance on trade, introducing a series of tariffs aimed at reducing the U.S. trade deficit. The measures included duties on Chinese goods, part of a broader effort to challenge Beijing’s trade practices. Dubbed the "Trump Tariffs," these policies aimed to correct what the U.S. administration described as “unfair” trade imbalances. 

The extensive tariffs imposed during his first administration remained in effect, as former President Joe Biden largely chose to keep them unchanged. During his presidential campaign, Trump promised a punishing 60% levy on goods from China, but it has yet to be realized.

While these measures drew sharp criticism, they also spurred broader discussions about China’s role in global trade. Jaishankar acknowledged the perception of U.S. protectionism but redirected the focus toward Beijing.

“You speak about the U.S. being protectionist. My biggest trade problem is not the U.S. My biggest trade problem is China,” Jaishankar stated, adding that his country faces a “huge deficit” with China.

India’s trade deficit with China has long been a source of contention, with imports of Chinese goods far outpacing Indian exports. In 2024, India's exports to China stood at $18 billion, while imports from China were $120.5 billion, resulting in a trade deficit of over $102.5 billion, according to data from General Administration of Customs of China (GACC).

The deficit has been exacerbated by Beijing’s restrictive market access policies and an economic strategy focused on heavily subsidizing investments and exports rather than promoting domestic consumption, often to the detriment of foreign industries. In 2024, the majority of China’s trading partners experienced a trade deficit with the country, GACC data showed.

The Core Issue: China’s Market Distortions

Economists have long argued that that China's economic model, which relies heavily on high savings and investment rates, has created substantial overcapacity in several industries. Michael Pettis, an American professor of finance at the Guanghua School of Management at Peking University, argued that strengthening domestic consumption is essential for China to address its economic imbalances, though such changes would take time to implement. 

Meanwhile, Jaishankar noted that the distortions caused by China’s state-driven economic model are already being felt globally.

“One of the biggest problems today in the trade regime is non-market economies subsidizing trade, dumping on other markets,” he explained. “The problem today is the countries which produce a lot do not open their markets to other countries. And when they export to countries, often the industries of those countries are hurt.”

The issue, he argued, isn’t limited to India. "If I were to ask my industry today, where is your biggest concern? Their concern is not America. Their concern is China," he emphasized.

Jaishankar urged a reevaluation of trade policies, particularly around market access, saying, “Everybody should look at what their market access is with China. So, you know, let us diagnose the issue well.”

Jaishankar’s comments reflect a growing global consensus that China’s economic practices require greater scrutiny. While the U.S. tariffs under Trump spotlighted the issue, countries like India are now voicing similar concerns.

“Before you put your worry, let me put what is the world’s worry,” Jaishankar said, underscoring his belief that China’s trade practices represent a systemic problem in global commerce. “And I think that is a bigger worry."