India

CNBC | English | News | Jan. 23, 2026 | UndeterminedEconomic Growth

China is shifting from being primarily a global exporter to becoming a major overseas investor, focusing on regions that attract U.S. strategic interest. Chinese Vice Premier He Lifeng emphasized the need for a fair international environment for Chinese businesses, as investments in factories and technology face risks amid rising global tensions. China's trade surplus hit a record $1.2 trillion in 2025, with significant growth in Belt and Road Initiative countries, especially in Latin America, the Middle East, and Africa. The Financial Times' FDI Intelligence survey forecasted China as the largest source of outward foreign direct investment in 2026, surpassing the UAE and India.

Chinese overseas investments are increasingly concentrated in technology and manufacturing sectors, partly driven by tariffs pushing Chinese electric vehicle companies to localize production abroad. Companies like autonomous delivery vehicle maker Neolix have begun expanding globally, obtaining licenses and forming partnerships in countries like the UAE and Portugal, with plans to deploy over 10,000 vehicles internationally and enter European markets. Beyond distant markets, intra-Asia trade is a growing "mega theme," with China establishing local operations in countries like Vietnam and benefiting from increased renminbi transactions, which accounted for 60% of Asian trade in 2024.

Southeast Asia has become China's largest trading partner, supporting a 5.5% growth in China's global exports last year despite a 20% decline in shipments to the U.S. due to ongoing trade conflicts. U.S. companies like FedEx are adjusting to these shifts by enhancing their presence in Asia, reflecting broader "re-globalization" trends amid U.S.-China tensions. Chinese companies are responding by hiring more foreign relations experts to navigate complex international business environments and expanding manufacturing abroad.

Additional context includes China’s slow retail sales growth of 0.9% in December 2025, a record low birth rate, and progress in the AI sector, with Chinese models reportedly only months behind U.S. competitors. The chip market remains dominated by Nvidia and Huawei despite increased domestic IPOs. Chinese markets showed moderate gains amid geopolitical tensions, highlighted by the Hang Seng Index's 3.7% year-to-date rise. Upcoming economic events include Chinese Vice Premier He Lifeng's visit to Switzerland and industrial profit reports for December.

Hindu Business Line | English | News | Jan. 23, 2026 | Geopolitical Conflict and Disputes

The European Union has agreed with India to proceed with the signing of a new security and defence partnership. This development was confirmed by EU Foreign Policy Chief Kaja Kallas on January 21, 2026.

The agreement marks a significant step in strengthening the strategic ties between the EU and India in the fields of security and defence. Further details regarding the scope and implementation of this partnership were not disclosed.

Hindu Business Line | English | News | Jan. 23, 2026 | UndeterminedEconomic Growth

In 2025, India experienced a rare "Goldilocks" phase characterized by moderate and resilient economic growth alongside subdued inflation, supported by stable macroeconomic fundamentals despite global volatility. The Reserve Bank of India’s cumulative 125 basis points repo rate cuts and fiscal, monetary, and regulatory policies have fostered this growth environment, leading to a prediction-defying Q2 FY26 GDP growth of 8.2 percent. Both urban and rural consumption contributed, with rural demand boosted by good monsoons and government incentives. Manufacturing output grew impressively by 9.1 percent in Q2 FY26, driven in part by the Production Linked Incentive (PLI) program, which attracted investments totaling ₹2 lakh crore and generated over 12.6 lakh jobs.

Government capital expenditure remains the primary growth driver, while private capital expenditure is gradually picking up, supported by strong corporate balance sheets, easier banking conditions, and growth in corporate bond markets, which reached $642 billion by March 2025. India’s economic trajectory is fueled by comprehensive reforms including GST rate rationalization, income tax rationalization, labor code streamlining, and policies focusing on clean energy and energy self-reliance. The Insolvency and Bankruptcy Code (IBC), implemented nine years ago, has been pivotal in resolving ₹12 lakh crore of stressed debt and reducing non-performing assets, thereby improving the ease of doing business and enhancing investment attractiveness.

The investor base expanded notably in 2025, with increased participation from younger generations, women, and households in tier-2 and tier-3 cities, reducing dependency on foreign capital. Monthly Systematic Investment Plan (SIP) flows highlight growing retail investment, which supports capital formation and wealth creation. However, foreign portfolio investors showed caution, with net outflows of around $10.4 billion in 2025, exerting pressure on the Indian rupee. Regulatory initiatives such as SEBI’s ‘India Market Access’ platform and RBI’s proposal to expand External Commercial Borrowings framework aim to improve global investor participation and access to capital.

Looking ahead to 2026, India is expected to shift from policy intent to tangible outcomes with ongoing policy easing, regulatory clarity, and FDI openings in insurance and nuclear energy sectors supporting sustained growth. The financialisation of savings and increased capital expenditure in sectors like electronics manufacturing services and defence are anticipated to drive the next investment cycle. Strengthened corporate balance sheets, rising credit demand, and improved earnings position India to leverage its structural advantages and emerge as a significant global growth engine amid ongoing global uncertainty.