Economy
Dominant China provides both a challenge and a blueprint, says Economic Survey
Summary
- While China’s manufacturing strength and strategic control over critical sectors continue to shape the global market, India is presented with a chance to reshape its future.
New Delhi: In the Economic Survey 2025, China is mentioned 102 times, casting a long shadow over the global economic landscape. Often referred to as a “manufacturing colossus," China’s role has become a central theme, not only in India’s growth story but also in shaping the global economy.
The survey, led by Chief Economic Advisor V. Anantha Nageswaran, presents a clear picture: China’s dominance presents both a challenge and a blueprint for India’s future.
From geopolitics to the energy transition, manufacturing to artificial intelligence (AI), the survey paints a complex portrait of China’s power. Its control over critical raw materials, supply chains, and emerging technologies puts India in a delicate position—one that demands diversification, localization, and innovation to mitigate the risks of dependency.
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"China is a dominant force in the global manufacturing and energy transition ecosystems. It has gained a strategic advantage leveraging its competitiveness and economic policy to access and control key resources recognised today as critical for global supply chains," the survey noted.
The China challenge
For years, China has been the undisputed leader in global manufacturing. The survey underscores this by highlighting that China accounts for nearly 28.8% of global manufacturing, far outpacing India, which contributes only 2.8%. This vast gap remains a pressing concern for India’s economic aspirations.
“India has a large opportunity to climb up the ladder," the CEA said, adding that the contribution of the industrial sector to the country's economic output also has potential to improve.
In addition, China’s growing influence in critical minerals and electric vehicle (EV) supply chains presents a formidable challenge. The survey highlighted to China’s near-total dominance of global battery manufacturing and wind energy supply chains, areas where India is just beginning to establish a foothold.
As the world grapples with the demands of climate change and the energy transition, India’s reliance on China for essential resources, such as lithium, nickel, and cobalt, creates vulnerabilities that could jeopardize its long-term plans.
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"The lack of viable alternative battery technologies reinforces China’s stronghold on lithium-ion batteries," the survey noted, adding that lithium-ion batteries are expected to remain the primary energy source for EVs “for quite some time."
India’s strategic response
Against this backdrop, the Economic Survey emphasizes the need for India to counter China’s pervasive influence by shifting focus toward self-reliance and domestic manufacturing. The survey calls for bold steps to attract both foreign and domestic investment, positioning India as a competitive manufacturing hub. Reducing dependence on China, especially in solar panels, critical minerals, and electric vehicles, is crucial.
The need to localize supply chains also comes to the forefront. The survey notes that single-source dependencies, such as India’s reliance on China for solar equipment, expose the country to supply chain disruptions, price volatility, and currency risks. In this context, the government’s role in facilitating foreign investment and upgrading industrial capabilities is crucial.
The economic survey also indicated India's opportunity in emerging technology such as AI, at a time when the world was contemplating building affordable large language models (LLMs).
As Chinese LLM DeepSeek disrupted the global AI race in the past week, CEA Nageswaran said India’s predominantly services-driven economy, coupled with its young and dynamic population, offered a fertile ground for leveraging the benefits of emerging technologies.
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The economic survey also identified AI as a tool tailored to particular purposes, more suited to supplement human action rather than be a total replacement for work performed by them.
Manufacturing and the road ahead
The survey points to India’s manufacturing sector as the next frontier for growth. Despite China’s overwhelming lead, the report makes a case for India’s potential to climb up the industrial ladder. With the right investments, policy changes, and technological advancements, India can reduce its manufacturing deficit and increase its share in global supply chains. The country’s young, dynamic workforce is also seen as an asset that can help drive this transformation.
However, this path forward is not without its obstacles. The survey warns that India must adapt quickly, especially in light of China’s impact on industries like automobiles and AI, where it continues to disrupt long-standing global players. The globalization era, which saw the rise of China as the manufacturing epicenter, is now facing a potential reset, with India having a chance to recalibrate its role in this new world order.
China’s environmental edge
Another area where China’s influence is undeniable is in the environmental goods sector, where the survey highlights the country’s manufacturing prowess in solar photovoltaic cells and wind turbines.
China’s dominance in these technologies has driven down costs globally, making renewable energy more accessible. But this geographical concentration has also raised concerns. The survey notes that 60% of global wind energy capacity and 80% of global battery manufacturing is based in China, creating risks for countries like India that rely on these critical industries.
“As the world navigates the challenges of climate change, the road to energy transition runs through China," Nageswaran noted, acknowledging the significant role China plays in global energy infrastructure.
This economic reality places India in a tough spot. On one hand, the country must navigate the challenges posed by China’s dominance, while on the other, it must forge its own path toward energy independence and climate resilience. The survey suggests that India’s focus should be more on adaptation rather than trying to match China’s emission reduction targets, given the unique geopolitical risks the country faces.
A new era
In conclusion, the Economic Survey 2025 lays out the China challenge clearly, but also offers India a roadmap to assert itself as a global economic force.
China has positioned itself at critical junctures of global supply chains, making it difficult to ignore, said Sankalp Gurjar, assistant professor of geopolitics, Gokhale Institute of Politics and Economics, Pune. “The suggestion to develop indigenous intellectual property to counter the China challenge is an indicator that the government also takes the risks of supply chain disruptions and resource concentration very seriously."
While China’s manufacturing strength and strategic control over critical sectors continue to shape the global market, India is presented with a chance to reshape its future. By leveraging its competitive advantages—its workforce, industrial base, and emerging technologies—India can begin to close the gap and carve out its place in the rapidly changing geopolitical and economic landscape.
India's domestic investment climate has to be more conducive for attracting businesses, Gurjar said. “Fixing the land and labour laws, as well as ease of operating a business are important conditions to attract investment."
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India’s response to China’s economic influence will be pivotal in the coming years. The survey suggests that now is the time to act decisively—to reimagine manufacturing, localize supply chains, and invest in emerging technologies—if India is to secure its future as a global economic powerhouse.
