You are right about this being over-blown. As well as the Paki problem. Surprising how many naive folks at FR will believe that India and China will form an alliance. Who was it who said "there is a sucker born every minute"?
However, you are incorrect regarding trade. China has a trade imbalance not only with India but also with Brazil, Argentina, Australia, Indonesia, and a few other countries.
Stranger things have happened...and economic issues and agreements can led to military ties if they are successful and if the participants feel that success is somehow threatened.
As to it being naive...the same thing would have been said about any warnings of Stalin and Hitler getting together in the late 30's...and yet it happened to the horrble chargin of all of Europe at the time. What is naive is to ignore historical precedence and think it cannot happen here.As Sophocles wrote well over 23 centuries ago :
Far-stretching, endless Time
Brings forth all hidden things,
And buries that which once did shine.
The firm resolve falters, the sacred oath is shattered;
And let none say, "It cannot happen here".