Emerging Markets

Latest move underscores efforts to normalise ties and draw closer in wake of Trump’s policies, stiff tariffs.

India and China plan to resume direct flights this month between some of their cities after a five-year suspension as relations between the two countries begin to thaw, Indian authorities have announced.

The closer ties come in the face of the United States President Donald Trump administration’s aggressive trade policies.

Direct flights between the two countries were suspended during the COVID pandemic in 2020 and did not resume as Beijing and New Delhi engaged in prolonged border tensions.

On Thursday, India’s embassy to China said in a post on social media platform WeChat that flights between designated cities will resume by late October, subject to commercial carriers’ decisions.

The resumption is part of the Indian government’s “approach towards gradual normalization of relations between India and China,” the embassy added.

India’s largest carrier IndiGo announced on Thursday that it would resume flights from Kolkata, India, to Guangzhou, China, from October 26.

The resumption comes after Indian Prime Minister Narendra Modi visited China for the first time in seven years to attend last month’s meeting of regional security bloc, the Shanghai Cooperation Organisation.

There, Modi and Chinese President Xi Jinping agreed that India and China were development partners, not rivals, and discussed ways to strengthen trade ties amid global tariff uncertainty fuelled by Trump.

The US president raised the tariff rate on Indian imports to a stiff 50 percent last month, citing the nation’s continuing purchases of Russian oil. He also urged the European Union to slap 100 percent tariffs on China and India as part of his efforts to pressure Moscow to end its war in Ukraine.

Relations between China and India plummeted in 2020 after security forces clashed along a disputed border in the Himalayan mountains. Four Chinese soldiers and 20 Indian soldiers were killed in the worst violence in decades, freezing high-level political engagements.

In a provocative move that fuses foreign policy with ideological allegiance, United States President Donald Trump has threatened to impose a 50 percent tariff on all Brazilian exports, effective August 1, 2025. The announcement came in a letter posted on social media, in which Trump explicitly linked the proposed tariffs to two ongoing domestic issues in Brazil: the judicial proceedings against far-right former president Jair Bolsonaro – whom Trump described as the victim of a political “witch-hunt” – and recent rulings by the Brazilian Supreme Court against US-based social media companies, including former Trump ally Elon Musk’s X. By doing so, Trump has escalated a trade dispute into a direct attempt to influence Brazil’s internal affairs – using economic pressure to serve political ends and undermining the country’s sovereignty in the process.

Brazilian President Luiz Inacio “Lula” da Silva responded swiftly and unequivocally: “Brazil is a sovereign nation with independent institutions and will not accept any form of tutelage,” he declared, adding that Brazil’s judiciary is autonomous and not subject to interference or threat. Under Brazilian law, digital platforms are obligated to monitor and remove content that incites violence or undermines democratic institutions, and they may be held legally accountable when they fail to do so.

While a 50 percent tariff on Brazilian exports might appear economically devastating, it could in fact become a strategic turning point – and even a blessing in disguise. Brazil has both the resilience and the diplomatic tools to weather this storm and emerge stronger.

The United States is one of Brazil’s largest trading partners, typically ranking second after China – or third if the European Union is considered as a single bloc. Brazilian exports to the US include industrial goods such as Embraer aircraft, iron and steel, crude oil, coffee and semiprecious stones, alongside agricultural products like beef, orange juice, eggs and tobacco. In return, Brazil imports large quantities of US-manufactured goods, including machinery, electronics, medical equipment, chemicals and refined petroleum. Notably, the US has maintained a trade surplus with Brazil for the past five years.

Should Washington proceed with the 50 percent tariffs, Brasília has several retaliatory options under its Economic Reciprocity Law. These include raising import tariffs on US goods, suspending clauses in bilateral trade agreements, and – in exceptional cases such as this – withholding recognition of US patents or suspending royalty payments to American companies. The impact on US consumers could be immediate and tangible, with breakfast staples like coffee, eggs and orange juice spiking in price.

Brazil is not without friends or alternatives. The country has already been deepening ties with fellow BRICS members (China, India, Russia, South Africa) and newer partners in the bloc. This dispute only strengthens the case for accelerating such integration. Diversifying export markets and embracing South-South cooperation isn’t just ideological; it’s economically pragmatic.

Closer to home, the tension presents an opportunity to reinvigorate South American integration. The long-held regional dream of enhanced collaboration – from trade to infrastructure – could gain new momentum as Brazil reassesses its global alignments. This realignment could breathe life into stalled Mercosur bloc initiatives and reduce dependence on an increasingly erratic relationship with the US.

Ironically, Trump’s aggressive move may weaken his ideological allies in Brazil. While Bolsonaro supporters (including members of his family) have praised the US president’s intervention, they may be missing its broader political consequences. Trump’s past influence abroad has often backfired, with right-wing candidates in countries like Canada and Australia paying the price. A similar outcome in Brazil is not unthinkable. Lula, who has consistently positioned himself as a pragmatic, diplomatic and stabilising global figure, may gain political ground from this latest episode. His defence of sovereignty, democratic institutions and balanced international relations could resonate more deeply with Brazilian voters ahead of next year’s elections.

This moment need not be seen as a crisis. Rather, it presents a pivotal opportunity for Brazil to assert itself as a sovereign economic power – less reliant on Washington and more engaged with an emerging multipolar global order. If Lula navigates it wisely, Trump’s latest provocation may deliver not only a diplomatic win but a significant boost to his re-election prospects. In attempting to punish Brazil, Trump may well have undercut both his foreign policy ambitions and his ideological allies abroad.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.

Another 36 workers remain in hospital with burns and other injuries after the blast and fire at the Sigachi factory.

At least 36 people have been confirmed dead after a powerful explosion triggered a fire at a pharmaceutical factory in the southern Indian state of Telangana.

“The condition of the bodies is such that we’ve had to deploy a specialised medical team to carry out DNA tests,” said Health and Medical Cabinet Minister of Telangana Damodar Raja Narasimha on Tuesday.

A government panel has been formed to investigate the cause of the disaster.

The blast, which erupted on Monday afternoon at a facility run by Sigachi Industries, took place in the plant’s spray dryer unit – a section used to convert raw materials into powder for drug manufacturing. The factory is located roughly 50km (31 miles) from Hyderabad, the state capital.

Authorities recovered 34 bodies from the debris, while two more workers succumbed to injuries in hospital, according to Telangana’s fire services director, GV Narayana Rao.

“The entire structure has collapsed. The fire is under control and we’re continuing to clear the rubble in case more people are trapped,” he told the Associated Press news agency.

Twenty-five of the deceased are yet to be identified, a district administrative official, P Pravinya, said.

About 36 workers remain in hospital with burns and other injuries. Police officials said that more than 140 people were working in the plant when the incident occurred.

Local residents reported hearing the blast from several kilometres away.

The incident has raised new concerns about industrial safety in India’s booming pharmaceutical sector. Despite the country’s reputation as a global supplier of low-cost medicines and vaccines, fatal accidents at drug manufacturing units are not rare, particularly in facilities handling chemicals or solvents.

Sigachi Industries, which has its headquarters in India, produces active pharmaceutical ingredients and nutrient blends, and operates manufacturing plants across the country. It also runs subsidiaries in the United Arab Emirates and the United States, according to its website.

Officials say rescue and recovery efforts will continue until the entire site has been cleared. The factory’s operations have been suspended pending the outcome of the investigation.

Many of the world’s poorest countries are due to make record debt repayments to China in 2025 on loans extended a decade ago, at the peak of Beijing’s Belt and Road Initiative, a report by the Sydney-based Lowy Institute think tank has found.

Under the Belt and Road Initiative (BRI), a state-backed infrastructure investment programme launched in 2013, Beijing lent billions of dollars to build ports, highways and railroads to connect Asia, Africa and the Americas.

But new lending is drying up. In 2025, debt repayments owed to China by developing countries will amount to $35bn. Of that, $22bn is set to be paid by 75 of the world’s poorest countries, putting health and education spending at risk, Lowy concluded.

“For the rest of this decade, China will be more debt collector than banker to the developing world,” said Riley Duke, the report’s author.

“Developing countries are grappling with a tidal wave of debt repayments and interest costs to China,” Duke said.

What did the report say?

China’s BRI, the biggest multilateral development programme ever undertaken by a single country, is one of President Xi Jinping’s hallmark foreign policy initiatives.

It focuses primarily on developing country infrastructure projects like power plants, roads and ports, which struggle to receive financial backing from Western financial institutions.

The BRI has turned China into the largest global supplier of bilateral loans, peaking at about $50bn in 2016 – more than all Western creditors combined.

According to the Lowy report, however, paying off these debts is now jeopardising public spending.

“Pressure from Chinese state lending, along with surging repayments to a range of international private creditors, is putting enormous financial strain on developing economies.”

High debt servicing costs can suffocate spending on public services like education and healthcare, and limit their ability to respond to economic and climate shocks.

The 46 least developed countries (LDCs) spent a significant share – about 20 percent – of their tax revenues on external public debt in 2023. Lowy’s report implies this will increase even more this year.

For context, Germany used 8.4 percent of its budget to repay debt in 2023.

Lowy also raised questions about whether China will use these debts for “geopolitical leverage” in the Global South, especially with Washington slashing foreign aid under President Donald Trump.

“As Beijing shifts into the role of debt collector, Western governments remain internally focused, with aid declining and multilateral support waning,” the report said.

While Chinese lending is also beginning to slow down across the developing world, the report said there were two areas that seemed to be bucking the trend.

The first was in nations such as Honduras, Burkina Faso and Solomon Islands, which received massive new loans after switching diplomatic recognition from Taiwan to China.

The other was in countries such as Indonesia and Brazil, where China has signed new loan deals to secure critical minerals and metals for electric batteries.

How has China responded?

Beijing’s Ministry of Foreign Affairs said it was “not aware of the specifics” of the report but that “China’s investment and financing cooperation with developing countries abides by international conventions”.

Ministry spokesperson Mao Ning said “a small number of countries” sought to blame Beijing for miring developing nations in debt but that “falsehoods cannot cover up the truth”.

For years, the BRI has been criticised by Western commentators as a way for Beijing to entrap countries with unserviceable debt.

An often-cited example is the Hambantota port – located along vital east-west international shipping routes – in southern Sri Lanka.

Unable to repay a $1.4bn loan for the port’s construction, Colombo was forced to lease the facility to a Chinese firm for 99 years in 2017.

China’s government has denied accusations it deliberately creates debt traps, and recipient nations have also pushed back, saying China was often a more reliable partner than the West and offered crucial loans when others refused.

Still, China publishes little data on its BRI scheme, and the Lowy Institute said its estimates, based on World Bank data, may underestimate the full scale of China’s lending.

In 2021, AidData – a US-based international development research lab – estimated that China was owed a “hidden debt” of about $385bn.

Does the Lowy report lack ‘context’?

Challenging the “debt-trap” narrative, the Rhodium consulting group looked at 38 Chinese debt renegotiations with 24 developing countries in 2019 and concluded that Beijing’s leverage was limited, with many of the renegotiations resolved in favour of the borrower.

According to Rhodium, developing countries had restructured roughly $50bn of Chinese loans in the decade before its 2019 study was published, with loan extensions, cheaper financing and debt forgiveness the most frequent outcomes.

Elsewhere, a 2020 study by the China Africa Research Initiative at Johns Hopkins University found that, between 2000 and 2019, China cancelled $3.4bn of debt in Africa and a further $15bn was refinanced. No assets were seized.

Meanwhile, many developing countries remain in hock to Western institutions.

In 2022, the Debt Justice Group estimated that African governments owed three times more to private financial groups than to China, charging double the interest in the process.

“Developing country debt to China is less than what is owed to both private bondholders and multilateral development banks (MDBs),” says Kevin Gallagher, director of the Boston University Global Development Policy Center.

“So, Lowy’s focus on China lacks context. The truth is, even if you remove China from the creditor picture, lots of poor countries would still be in debt distress,” Gallagher told Al Jazeera.

Following the COVID-19 pandemic and Russia’s invasion of Ukraine, inflation prompted the United States Federal Reserve, as well as other leading central banks, to hike interest rates.

Attracted to higher yields in the US, investors withdrew their funds from developing country financial assets, raising yield costs and depreciating currencies. Debt repayment costs soared.

Global interest rates have since come down slightly. But according to the UN, developing country borrowing costs are, on average, two to four times higher than in the US and six to 12 times higher than in Germany.

“A crucial aspect about Chinese lending,” said Gallagher, “is that it tends to be long-term and growth enhancing. That’s precisely why a lot of it is focused on infrastructure investment. Western lenders tend to get in and out faster and charge higher rates.”