Report By: Dr. Mohan Malik

On the surface, relations between India and China are positive. India's economic ties with China are booming. China is set to emerge as India's leading trade partner in the near future, leaving its current number one partner, the United States, behind. Between 2000 and 2005, trade with China registered a hike of 521 percent, whereas India's trade with the U.S. increased by only 63 percent during the same period.
There are regular high-level meetings between Asia's two rising powers. India and China have just concluded their second round of bilateral "strategic dialogue" and declared 2006 as a Sino-Indian friendship year. More importantly, they have agreed to cooperate, rather than compete, for global energy resources. The incipient Sino-Indian entente has prompted some to argue that it has the potential to alter Asian geopolitics radically.
Long-time observers of India-China relations, however, maintain that some improvement in the rhetoric and atmospherics notwithstanding, India-China ties remain fragile and as vulnerable as ever to a sudden deterioration. The combination of internal issues of stability and external overlapping spheres of influence forestall the chances for a genuine Sino-Indian rapprochement.
Though both sides are working to expand and deepen economic cooperation, there is as yet no strategic congruence between the two giants. Indeed, the issues that bind the two countries together are also the issues that divide them and fuel their rivalry because they have different positions in the international system, contrasting strategic cultures, world views, political systems, and competing geostrategic interests.
In the power competition game, China has clearly surged far ahead of India by acquiring potent economic and military capabilities, and the existing asymmetry in power and status serves Beijing's interests; therefore, China has resisted any Indian attempts to narrow the power gap. Unlike China, India's fractious polity continues to limit its economic and military potential. Nor has New Delhi been able to lend a strategic purpose to its foreign and economic policies.
Beneath the surface, frictions and tensions are simmering between the two countries over some fundamental issues: the territorial dispute, the nuclear issue, the U.N. Security Council reform issue, to name a few. Both remain locked in a classic security dilemma: one country sees its own actions as justifiably self-defensive, but these same actions appear aggressive to the other. In the past year, India has found itself ranged against China at the United Nations, the International Atomic Energy Agency over Iran's nuclear program, the East Asia Summit and the Nuclear Suppliers Group (N.S.G.) over the issue of India's membership.
Three major developments which shook the ground beneath South Block (India's External Affairs Ministry building) in New Delhi recently were the emergence of a pro-China axis comprising Pakistan, Nepal, and Bangladesh at the 13th South Asian Association for Regional Cooperation (S.A.A.R.C.) Summit in Dhaka, China's opposition to the July 2005 India-U.S. nuclear energy agreement, and Beijing's moves to confine India to the periphery of a future East Asia Community at the first East Asia Summit in Kuala Lumpur in mid-December 2005.
Add to this Beijing's worldwide campaign against India's (and Japan's) bids for permanent membership in the U.N. Security Council, the continuing stalemate in the India-China border negotiations, coupled with their ever-expanding economies and widening geopolitical horizons, it is clear that the bilateral relationship between the two rising Asian giants continues to be characterized more by competition and rivalry than by cooperation.
Despite the hype over India's burgeoning trade with China, it consists mostly of raw materials, iron ore, steel, and like commodities that are used to fuel China's economic growth while China exports manufactured goods, electronics and machinery to India. Even in the information technology sector, the focus of Chinese diplomacy remains on leveraging India's strengths to China's advantage without any quid pro quo in the technology hardware or manufacturing sectors.
Neither power is comfortable with the rise of the other. Each perceives the other as pursuing regional hegemony and entertaining geographical expansion. Each puts forward its own proposals for multilateral cooperation that exclude the other. Both vie for influence in Central, South and Southeast Asia, and for leadership positions in global and regional organizations.
More than ever before, the state of the India-China relationship is increasingly being influenced by "the U.S. factor" as the Southern and Central Asian region becomes an arena of strategic competition in Asia.

China's Shadow over South Asia
All the talk of a "new beginning" in Sino-Indian relations notwithstanding, there is little evidence to support the view that China has re-cast its foreign policy to build an accommodative relationship with Asia's other rising power -- India. If anything, Beijing has unveiled major strategic moves that will effectively isolate India in South Asia and further squeeze India's traditional strategic space in the region, keeping New Delhi tied down with multiple sub-continental concerns.
After Pakistan and Myanmar, Beijing is skillfully employing economic and military means to draw Bhutan, Bangladesh, Nepal, the Maldives, and Sri Lanka into China's orbit. The Chinese military's recent incursions and road construction activity in Bhutanese territory are aimed at coercing the tiny Himalayan kingdom to end its protectorate relationship with India and move into China's orbit "if Bhutan desires peace and development with the world's fastest growing superpower."
Ignoring Indian pleas not to fish in troubled waters in volatile Nepal, Beijing has gone ahead with arms supplies to the beleaguered monarchy. Nepal's King Gyanendra has been openly playing "the China card" to counter Indian and U.S. demand for an early restoration of multi-party democracy in the Himalayan Kingdom.

Taking advantage of a sharp downturn in India's relations with Bangladesh over issues ranging from illegal immigration to Islamist terrorism, transit and trade, Beijing has upgraded its ties with Dhaka to gain naval access to the Chittagong port, to establish a road link with Bangladesh via Myanmar and to acquire Dhaka's immense natural gas reserves. China is already the largest supplier of weaponry to Bangladesh. Chinese Premier Wen Jiabao's recent offer to provide Dhaka with nuclear reactor technology has led to speculation as to whether Beijing would replicate in Bangladesh the sort of military, nuclear and missile collaboration it has with Pakistan. Bangladesh and Nepal are also expected to join Pakistan in concluding peace and friendship treaties with China in the near future.
At the 13th S.A.A.R.C. summit held in Dhaka in November 2005, India's physical presence was overshadowed by China's invisible presence but growing influence. Nothing highlighted this more strikingly than India's volte-face on the issue of China's induction into the grouping as an observer or a dialogue partner.
On the first day of the proceedings on November 12, Indian Foreign Secretary Shyam Saran ruled out China's induction unless it signed a memorandum of understanding for being associated with S.A.A.R.C. However, within less than 24 hours, Indian Prime Minister Manmohan Singh was forced -- mainly by the pro-China grouping comprising Nepal, Pakistan and Bangladesh -- to come out with a statement welcoming China as an observer. (The only consolation for India was that it managed to extend the same privilege to its friend, Japan.)
India's climb-down occurred in the backdrop of the pro-China grouping threatening to veto Afghanistan's entry into S.A.A.R.C. as the grouping's eighth member, which India supported, unless China was allowed in. The inclusion of China as an observer is seen by most S.A.A.R.C. member-states as a counterbalance to India. Apparently, while India has been preoccupied with fighting cross-border terrorism on its own territory, China has been busy making significant inroads into India's backyard through cross-border economic and strategic penetration of Nepal, Bangladesh, Sri Lanka, and the Maldives.
Beijing's main objectives are said to be access to raw materials, commodities, natural resources and access to South Asian markets for Chinese goods and to expand China's influence in the region. However, China's support for India's smaller neighbors suggests that gaining access to markets and natural resources is not the only reason behind Beijing's South Asia policy: Beijing also wants to make a point on the limits of Indian power.
In fact, aiding "India-wary" countries in South Asia to "concircle (contain and encircle) India" has long been an integral part of China's strategic calculus. As a rising maritime trading power, Beijing is also seeking to once again project force into the Indian Ocean in the manner of the fleets sent out under the command of Admiral Zheng He nearly 600 years ago during the Ming dynasty.

Border Talks End in Stalemate, Again
China's growing presence in South Asia is accompanied by a hardening of its stance on the territorial dispute. This became evident at the last round of border talks held in Beijing between September 26-27, 2005. Defense analysts attribute the Chinese intransigence in resolving the border dispute to the rapidly shifting military balance of power in Beijing's favor on the Tibetan plateau. Since 1999, there has been a constant probing of the line of actual control, via frequent border crossings by Chinese border patrols in a manner designed to test Indian resolve, psychology, vulnerabilities and border intelligence.
With the near completion of the 1,118 kilometer (695 miles) Qinghai-Tibetan railway and other military infrastructure projects in Tibet, China "may be tempted to resort to force or coercion more quickly to press diplomatic advantage, advance security interests or resolve disputes," according to an unnamed senior Indian military officer.
The Chinese have also rebuffed India's pleas for a quick boundary settlement within a fixed timeframe. Even on Sikkim, the Chinese have deliberately decided to "go slow" on the implementation of their verbal promise after obtaining a written commitment on Tibet from India in June 2003 during Prime Minister Atal Bihari Vajpayee's visit to China. From the Chinese standpoint, the concept of give and take vis-à-vis India could also damage China's image in South Asia as the predominant power.

China Opposes India's Bid for U.N.S.C. Seat
Another sign of pro-active containment of India is Beijing's opposition to any move to expand the veto-holding permanent membership of the U.N. Security Council. With the exception of China, the remaining four permanent members have voiced their support for expansion of U.N.S.C. permanent membership, with the United States supporting Japan while Russia, France and Britain are supporting India's bid.
The Chinese Foreign Ministry spokesperson has now made it clear that while Beijing is willing to see India occupy a seat in the semi-permanent or non-permanent category, it remains opposed to having its Asian rivals -- India or Japan -- sitting in the U.N.S.C. permanent membership category.
The fact that China has now emerged as the major obstacle to U.N.S.C. reforms can be attributed to divergent world views held by Beijing and other world capitals. Similar to how the U.S. seeks to prevent the emergence of a peer competitor at the global level, China wants to prevent the rise of a peer competitor at the regional level. This stance leads Washington to support a multipolar Asia (with a strong Japan and powerful India to balance China) but a unipolar world (with the United States as the sole hyper-power without any peers).
In contrast, Beijing prefers a unipolar Asia-Pacific (with China as the sole superpower without any peers) and a multipolar world (with the U.S., E.U., Russia and China as four major power poles). In contrast with both Washington and Beijing, New Delhi champions multipolarity at both regional and global levels. Beijing's attitude to the expansion of the U.N. Security Council is a clear indication that it will not countenance the emergence of an Asian peer competitor.

The East Asia Summit
In early 2005, Beijing dispatched its diplomats to Laos (then "country convener for India" within the A.S.E.A.N. regional grouping) and other Southeast Asian capitals to dissuade them from lobbying for India's membership (albeit, unsuccessfully) in the East Asia Summit (E.A.S.) scheduled for its first inaugural meeting in Kuala Lumpur in December 2005. However, with the exception of Malaysia, Beijing did not find any takers for its anti-India stance primarily because nearly all Southeast Asian countries supported India's participation in the E.A.S. seeing it as a useful counterweight to China's growing power.
Having failed to keep India (and Australia and New Zealand) out of the new regional grouping, the Chinese Foreign Ministry attempted to dominate the emerging East Asian Community (E.A.C.) by dividing it into two blocs: the core or primary states with China as the leading, dominant player inside the A.S.E.A.N.+3 (China, South Korea, Japan) and the peripheral or secondary states of India, Australia and New Zealand (or, "outsiders" as the People's Daily editorial of December 7, 2005 described them).
Beijing remains leery of India's great power pretensions and attempts to extend its influence in China's backyard. Seeing New Delhi's "Look East" policy as part of a wider "congage China" strategy unveiled by the Washington-Tokyo-New Delhi grouping, the thrust of Chinese diplomacy is to confine India to the periphery of a future East Asia Community and to foil India's efforts to break out of the South Asian straitjacket.
The People's Daily commentator reacted sharply to the Indian prime minister's proposal for an Asian Economic Community (A.E.C.): "India's proposal is not warmly responded [to] as each country has its own considerations." Apparently, China's "own considerations" are primarily geostrategic in nature. Beijing fears that India's participation in the core group would shift the balance of power and make the E.A.C. less susceptible to domination by China.
Therefore, in the run-up to the East Asia Summit in Malaysia and days after obtaining observer status in S.A.A.R.C., China's message to India was crystal clear. Finding India relegated to the outer circle, an Indian diplomat expressed his disappointment over the decision to entrench the A.S.E.A.N.+3 framework within the E.A.S.: "To state that A.S.E.A.N. is in the driver's seat, the passengers have a right to know where they are going."

Energy Fuels Feud
Both face growing demand for energy and are locked in fierce competition for stakes in overseas oil and gas fields in Asia, Africa, Latin America, and the Middle East. In the energy competition stakes, however, China currently has an overwhelming lead because China has linked energy to its national security policy for longer than India has. Moreover, China has been more successful in diversifying its energy resources, developing a varied network of oil suppliers from Africa to Latin America.
China's superior financial muscle and diplomatic clout also enables it to win friends and contracts for natural resources. As 2005 progressed, Chinese oil firms went out of their way (excessively overpaying for assets) to thwart India's attempts to secure international energy assets in Kazakhstan, Ecuador, Angola, Nigeria, and Myanmar. Clearly, India's efforts to secure supplies cannot succeed unless and until New Delhi creates incentives (arms, aid and diplomatic support) or economic dependencies (via trade) for the supplying country to sell oil and gas to India.
Ironically, the day India's oil minister, Mani Shankar Aiyar, left for Beijing to discuss energy-cooperation joint ventures, Myanmar announced that its gas would be flowing east to China instead of north and west to India. Despite the conclusion of energy cooperation agreements, China is likely to go solo in its quest for energy security; energy competition, rather than energy cooperation, will be the norm.
As finding new sources of oil becomes more difficult, there are bound to be areas of friction between Asia's two fastest growing economies. While China views the Andaman Sea off Myanmar's coast as an important source of oil to fuel the economic expansion of China's western provinces, India sees China's presence in the Bay of Bengal an unwelcome development. The Chinese Navy has asserted its legitimate right to operate in the Indian Ocean to ensure security of its oil and trade transiting through the region.
China already has better relations with the two largest energy suppliers -- Saudi Arabia and Iran -- than does India. With Pakistan as its long-term military ally, China also has closer relations with four important Islamic countries (Saudi Arabia, Iran, Pakistan and Bangladesh) than India, the United States and Japan.
As a major trading country and a future world power, China is now laying the groundwork for a naval presence along maritime chokepoints in the South China Sea, the Malacca Straits, the Indian Ocean and the Strait of Hormuz in the Persian Gulf through acquisition of naval bases in Cambodia, Myanmar, Bangladesh and Pakistan to protect its long-term economic security interests.
Sooner rather than later, China's military alliances and forward deployment of its naval assets in the Pakistani, Bangladeshi and Burmese ports would prompt India to respond in kind by seeking access to the Vietnamese (Cam Ranh Bay), Taiwanese (Kao-hsiung) and Japanese (Okinawa) ports for the forward deployment of Indian naval assets to protect India's shipping and trade routes and access to energy resources from the Russian Sakhalin province.

China's No to U.S.-India Nuclear deal
In another indication of tension between India and China, the official Chinese media attacked the July 2005 U.S.-India nuclear pact (that aims to recognize India as the sixth nuclear power as well as open up civilian nuclear supplies, despite India being a non-signatory of the Nuclear Non-Proliferation Treaty) and cautioned of its "negative impact" on the global nuclear order. In a scathing commentary on October 26, 2005, the People's Daily accused Washington of being soft on India and warned if the U.S. made a "nuclear exception" for India, other powers (i.e., China) could do the same with their friends (read Pakistan, Bangladesh, and Myanmar) and weaken the global non-proliferation regime.
India and China have long been suspicious about the other's relationship with the United States, seeing it in zero-sum terms. Seeing the U.S. intent to help India become "a world power" as a way of containing China, Beijing has become alert to India's newfound coziness with the United States, particularly in the wake of U.S. support for India's civilian nuclear energy development. More importantly, China, much like Pakistan, insists that any changes to U.S. laws and the N.S.G. guidelines to accommodate the deal must not be "India-specific" so that they can benefit other countries (Pakistan) as well.
Furthermore, China is not only opposing India's N.S.G. membership but is also trying to prevent the India-U.S. nuclear deal by presenting itself as the champion of nuclear non-proliferation. With Beijing aggressively and openly joining the voices against the nuclear pact, New Delhi's quest for nuclear technology is turning knottier by the day. From Beijing's perspective, if India and the U.S. start drifting apart over the collapse of the nuclear deal, it will further contribute to China's strategy to isolate and concircle India.

Conclusion
All of these negative developments indicate that India's so-called "healthy competition with China" is becoming one of rivalry. In fact, China's behavior toward India is not much different from that of the U.S.' behavior toward China for the simple reason that China is a status-quo power with respect to India while the U.S. is a status-quo power with regards to China.