India is the largest trading partner of China in South Asia. According to the China Customs, the bilateral trade volume between China and India in 2005 reached US$18.69 billion, up by 37.4 percent, among which China's export to India was US$8.93 billion, up by 50.5 percent, while China's import from India was US$9.76 billion, up by 27.2 percent. China had a deficit of US$830 million. China mainly exported to India electric motors, organic chemicals, mineral fuel and products, mulberry raw silk, special woven fabric, etc. The major imported products of China from India included ore, steel, iron, organic chemicals, plastics and plastic products, jewellery, cotton, etc. According to the Ministry of Commerce (hereinafter referred to as MOFCOM), the turnover of completed engineering contracts by the Chinese companies in India reached US$ 400 million in 2005, and the volume of the newly signed contracts was US$ 1.72 billion. The volume of completed labor service cooperation contracts was US$1.58 million, and that of the newly signed labor service cooperation contracts was US$4.75 million. The turnover of completed design consultancy contracts was US$10.32 million, and the volume of the newly signed contracts was US$ 81.45 million.

According to MOFCOM, 10 Chinese-funded non- financial enterprises were set up in India in 2005, with a contractual investment amount of US$23.12 million. By the end of 2005, there were accumulatively 27 Chinese-funded non-financial enterprises set up in India with a total contractual investment of US$45.95 million by Chinese investors.

According to MOFCOM, India investors invested in 58 projects in China in 2005, up by 56.8 percent, with a contractual volume of US$120 million, up by 96.5 percent and an actual utilization of US$21.40 million, up by 9.9 percent.