China is breaking into the top ranks of global power-equipment exporters with a $10 billion deal signed with India on Thursday.

By nabbing the deal with India, which is on an infrastructure spending spree, China poses a new competitive threat to established suppliers of technology such as General Electric Co., Siemens AG and Alstom SA.

China's new position is also evidence of a growing trend of emerging markets doing business among themselves, after years of focusing on trade with partners in developed nations.

On Thursday, Shanghai Electric Group Co. signed a $10 billion deal to sell power-producing equipment to Indian conglomerate Reliance ADA Group.The contract for coal plant turbines dwarfs the $750 million contract Reliance inked with GE last week for gas turbine power equipment. GE doesn't have a large presence in coal-based turbines, but it has roughly 40% of the global market share for gas turbine power equipment. It is likely to face competition in gas turbines from Chinese power equipment firms in the future.

Power generation has been one of the last remaining areas of U.S. manufacturing dominance. That now appears to be under threat.

Shanghai Electric has almost four times the manufacturing capacity in power-generation equipment as companies such as GE, Siemens and Alstom, according to Zheng Jianhua, a division president with the Chinese company. "There is no way but to go international," he said Thursday.

GE Chief Executive Jeffrey Immelt has struggled to meet the company's target of quadrupling sales in India to $8 billion annually by 2010, a goal he expressed in 2006 when revenues were $1.9 billion. Hurt by the GE Capital finance division, GE's India revenue fell to $1.6 billion last year from $2.1 billion a year earlier, even though GE Energy's sales rose in that period. But GE is making a renewed push.

Analysts said the Shanghai-Reliance deal demonstrated how Chinese companies have a growing ability to compete for technology-supply contracts in some markets. "It tells you that the Chinese power-equipment makers have pricing ability to capture overseas orders," said Pierre Lau, an analyst at Citigroup Inc. in Hong Kong.

"What has been accomplished today is the largest single business relationship between India and China," said Reliance Chairman Anil Ambani on Thursday. At a Shanghai hotel, Mr. Ambani signed deals with Shanghai Electric Chairman Xu Jianguo to import 42 coal-fired thermal-generation units, each with 660 megawatt capacity, and related services over the next three years. Chinese banks agreed to lend $12 billion to finance Reliance's Shanghai Electric purchases along with other power-equipment exports to India.

New Delhi says it must commit $1 trillion over the five years starting in 2012 to boost power-generating capacity, which falls 12% short of demand at times, and otherwise improve telecommunications and roadway infrastructure to ensure 10% annual growth. India's economic growth rate increasingly rivals the pace China has set as a benchmark for developing countries over the past decade, and the power deal underscores how China is poised to tap into spending as such nations try to catch up.

Meanwhile, as China's market downshifts after years of heavy investment in infrastructure, its companies have spare manufacturing capacity and technical expertise gathered during its own boom. They are now looking to grow outside of China.

Industry watchers say that Chinese equipment makers face questions about quality control on their power turbines. Still, multinational companies that once cooperated with Chinese business groups now face them as competitors. When GE, Siemens and Alstom were breaking into China several years ago, for instance, each established joint ventures with Shanghai Electric.

Siemens owns 40% of a joint venture with Shanghai Electric called Shanghai Electric Power Generation Equipment Co. The two have shared technology.

India represents a key battleground for Chinese upstarts and existing multinationals in the energy equipment. "India will soon be announcing a GDP of 10% double digit growth rates, in fact possibly even surpassing China for the first time this year," said Ron Somers, President of the U.S. India Business Council. "India's market looms large for American businesses."

Reliance officials said international bidding on their coal-fired technology needs didn't pit Shanghai Electric directly against Western producers, but rather against smaller regional makers. They also noted that when U.S. President Barack Obama visits India next month, the agenda is expected to include efforts to spur a 2005 pact for the country to import U.S. nuclear-power-plant kits.

Thursday's announced deals—some of which had been agreed upon earlier—in total call on group subsidiary Reliance Power Ltd. to buy 30,000 megawatts of capacity in so-called super-critical boiler, turbine and generator packages, which Shanghai Electric will provide over three years.

For China and India, the world's two most populous nations, whose history has included military, diplomatic and economic skirmishes, the agreement carries deep significance.

"I think the best way to bring countries together is economic cooperation," Mr. Ambani said.

India's ambassador to China, S. Jaishankar, said Thursday's announcements "underscore that infrastructure demand in India will be the key driver in the economic relationship." He also saidReliance's purchases demonstrate India's openness to Chinese firms. "I hope that someday someone can credibly say China is open to Indian companies in the same way," he added.

Mr. Ambani, the 50-year-old Reliance chairman, is one of India's richest and best-known executives and has turned to Chinese equipment suppliers before for his power business. He commutes across Mumbai by helicopter and is a major player in financial services and telecommunications. He is also financing a Stephen Spielberg film now shooting in London.

His brother, Mukesh Ambani, runs the larger Reliance Industries Ltd. conglomerate. After a dispute that became public in 2005, the brothers feuded over the business group their father founded and eventually split it.

"India has witnessed greater access to gas with the KG Basin discoveries," said Dan Nelson, a spokesman for GE Energy. "This should lead to gas-based power capacity build over the next 3-4 years. We believe GE is well positioned to be a major player in this segment in India."