Courting New Delhi: Washington and Beijing Compete for Influence

[candypreet]

Sino-Indian Relations: Perspectives, Prospects and Challenges Ahead"
http://www.pinr.com/report.php?ac=view_report&report_id=283

------------------------------

Courting New Delhi: Washington and Beijing Compete for Influence
Drafted By: Adam Wolfe
http://www.pinr.com

Last month, U.S. Secretary of State Condoleezza Rice paid a visit to India where she discussed Washington's desire to help India become a "major world power." Chinese Premier Wen Jiabao followed suit with Beijing's most recent wooing of New Delhi by announcing a "strategic partnership" between the world's two most populous countries. India has clearly become an object of desire for the major powers in Asian politics; how this courtship plays out will have global ramifications.

Several factors have coalesced in recent years to thrust India into a prominent role on the global stage. China and the United States are increasingly looking to New Delhi to secure the realization of their interests in the complex world of Asian geopolitics and energy security. Although Washington has thrown its support behind Pakistan since September 11, 2001, it is beginning to place more importance on India's potential to impede the expansion of China's influence to its west. Beijing sees New Delhi as a potential rival for energy resources and an obstacle to its "peaceful rise" strategy; naturally, bringing India within its sphere of influence will help it to clear these hurdles.

However, India's continued border dispute with Pakistan and its immature relations with several neighboring states have the potential to scuttle any gains the U.S. or China are looking for from improved relations with India. New Delhi has been remarkably successful in encouraging the advances of Washington and Beijing without scaring off the competing suitor; in many ways, it has demonstrated a more "non-aligned" approach to its international relations than when this was official policy. India is likely to use its newly discovered desirability to increase its status as an economic and military power, ideally operating independently of Beijing's and Washington's influence; nevertheless, there are many roadblocks preventing any of these states from seeing gains from this triangular relationship.

China Looks West

Wen and his Indian counterpart, Prime Minister Manmohan Singh, announced, "India-China relations have now acquired a global and strategic character. The leaders of the two countries have, therefore, agreed to establish an India-China Strategic and Cooperative Partnership for Peace and Prosperity." This partnership will be built on expanded bilateral trade, the resolution of border disputes dating back to the 1962 war between the two countries, military cooperation, coordination on energy security issues, cultural exchanges, water use agreements, and enhanced air and shipping links. [See: "Sino-Indian Relations: Perspectives, Prospects and Challenges Ahead"]

The goals of this enhanced partnership were laid out in the joint statement as well: "The two sides are supportive of democratization of international relations and multilateralism, stand for the establishment of a new international political and economic order that is fair, rational, equal and mutually beneficial, and promote North-South Dialogue and South-South Cooperation." In this, both sides agree that Washington's dominance of international affairs poses a threat to the expected rise of each state.

An emphasis on multilateral organizations will continue to be a point of agreement for India and China at least until either country assumes its expected role as a major power. In fact, India claimed that Wen threw China's support behind New Delhi's bid for a permanent seat on the U.N. Security Council, although this was not mentioned in the joint statement. Even though this appears not to be the case, the agreement does demonstrate China's willingness to support a greater role for India in global affairs, hoping that it will help to push the world towards multipolarism at the expense of Washington.

China's desired gains from a better relationship with India are largely tactical in nature, with a general objective of preventing an "encircling" of its western border. If China is to develop its western provinces, it will need to guarantee new energy sources and delivery routes, as well as resolve the long-standing disputes as to the geographic borders of its western territory. In both of these situations, India plays a pivotal role in ensuring Beijing's success.

The rapid expansion of China's and India's economies has had a dramatic effect on the energy markets worldwide. In order to secure the continued growth in their countries, India and China both must look abroad for energy resources in an environment of increased competition for new energy sources, largely found in difficult to access areas. Although this competition has the potential to push China and India further apart, the two countries have demonstrated that they prefer to cooperate on energy issues.

This can be seen in Sudan, where India has invested in a pipeline to deliver petroleum from a refinery in which China owns a stake. Central Asia and Russia have also been areas in which the two countries have acted as partners in securing energy resources. The most visible sign of Sino-Indian cooperation can be found in Iran, where the Yahavaran oilfield is being financed by India, China and Iran. This project demonstrates how geopolitics are being shifted by China's and India's need for energy.

Foreign investments in energy are rarely devoid of security issues, and with India and China they never are. Partly in order to secure a stake in the Yahavaran oilfield and the Jufeir oilfield, India is more closely cooperating with Iran on defense and intelligence issues. In 2003, Tehran and New Delhi conducted joint naval exercises, which spooked India's newly found allies in the U.S. and Israel. The dissimilarity between New Delhi's and Washington's allies may prove to be the most difficult sticking point in their budding relationship. For China, this is yet another reason to develop a closer relationship with India.

While in general India and China have seen cooperation as the optimal method to secure their future energy needs, there are some areas of concern for both states. 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. Developing a port at Kyaukpyu in Myanmar off the Andaman Sea, with significant investments to Myanmar's transportation infrastructure, would allow China to fuel the economic expansion of its western provinces while avoiding the pirate-rife Malacca Strait and ease the burden on its already strained eastern ports.

However, India is also looking to develop the Andaman Sea, without cooperation from China. India is unlikely to move towards cooperation with Beijing on this issue because New Delhi sees building a port at Dawei, Myanmar as a major component to its security strategy for the region. The port will support its Far Eastern Naval Command project at Port Blair, which is aimed at gaining "blue water" status for India's Navy, affording India the ability to launch military operations away from its coast.

While there will certainly be sticking points in energy security with China, it is India's relations with its neighboring states that will seriously complicate China's courtship. While China has largely resolved its territorial disputes with its neighbors, India has not. China has already established relationships with the states that India must now negotiate. The challenge for China will be to remain above-the-fray in the negotiations, while maintaining a close relationship with both parties. Bangladesh, Nepal, and Myanmar will all have their flashpoints with India in the near future, but it is Pakistan that stands as the greatest threat to China's courtship of New Delhi.

Although India and Pakistan are moving toward a negotiated settlement on the Kashmir region, there is still a long road ahead. In the meantime, India will continue to seek the weakening of Pakistan's influence, and Pakistan will return the favor. The recent events in Nepal highlight this fact. When India announced that it would discontinue its military aid to Nepal's government after King Gyanendra sacked the government, Pakistan announced that it would fill the gap. This was clearly aimed at weakening India's influence in Kathmandu, and it is likely to be a common occurrence in the region for the near future. Although there is hope that the proposed natural gas pipeline from Iran, through Pakistan, to India will help to bind these countries to diplomatic skirmishes, as opposed to direct conflict, there is little hope that a pipeline will diminish the desire of either side to weaken the reach of the other.

China's "all-weather" relationship with Pakistan will remain an important factor in its western relations; this will box in any future India-China partnership, making the prospect of a Sino-Indian power bloc less likely. China has historically supported Pakistan in an effort to contain India, but it is also aimed at containing the separatist threat it perceives in its western Xinjiang region. The current leadership in Beijing has placed a premium on integrating China's western regions into the booming economies of its east. Beijing clearly believes that Uighur militants and activists are a threat to this integration, and maintaining good relations with a neighboring, Islamic, nuclear-armed state on its western border will remain an important aspect of its efforts to contain this perceived threat.

For this reason, China will maintain close military ties with Pakistan, evidenced by China's recent cooperation with Pakistan on the FC-1 fighter jet development project. Also, China has financed 80 percent of a port in Gwadar, Pakistan, which will have potential uses for China's expanding navy in the future. India's objections to China's close military ties to Pakistan will limit any inroads that Beijing will gain from their proposed partnership.

While India and China are in the process of sorting out their differences and building a "strategic partnership," another suitor has come knocking on India's door. As the "war on terror" fades in importance to Washington's approach to southern Asia, the U.S. is looking to make India an important aspect of its strategy to contain China.

Washington's "Natural" Alliance

Shortly before Premier Wen arrived in India, Secretary of State Rice brought Washington's proposal to help New Delhi become a "major world power" to India. Many in Washington have long considered India a "natural partner" for the U.S. because both countries are multi-ethnic democracies. However, geopolitical concerns have historically limited their willingness to allow this partnership to bloom. There is hope that as Washington begins to turn its attention away from the "war on terror" and back to the traditional game of managing geopolitical alliances and the increasingly complicated world of energy security, India and Washington will finally be able to pursue their "natural" alliance.

To this end, Rice used her recent visit to India to promote expanded cooperation between Washington and New Delhi on a variety of issues, including civilian nuclear and space programs, bilateral trade and further military ties -- but most of all she touted India's democracy. By putting the emphasis on the U.S.' and India's similar political systems, Washington highlights the differences between China and India, as well as the reasons New Delhi should be suspicious of its eastern suitor.

Washington hopes to use its closer ties to New Delhi in order to help India become a major regional power. The objective is that where the U.S. military is impeded, India can act as a bulwark against China's expected rise in influence in South Asia. This has led to a very close relationship between the American and Indian navies. Their cooperation during the recent tsunami relief efforts in the region has deepened these ties. Washington would like to see India's navy acting in areas, such as the Malacca Strait, where the local governments are suspicious of the world's only superpower patrolling their seas.

There are many obstacles to achieving these goals, and outside of the prospect of expanded economic ties, India is approaching the U.S. with more skepticism than it has China. Like China, the U.S.' support of Pakistan is the major issue of contention for India. Washington has complicated the problem through its recent policy decisions. It agreed to sell Pakistan several F-16 fighter jets, which Pakistan had paid for years in advance only to see U.S.-imposed sanctions scuttle the deal.

The fact that Washington agreed to sell India a greater number of F-16s, and even the more advanced F-18 jets, has done little to alleviate New Delhi's concern that Pakistan will be able to arm their new jets with nuclear weapons. However, Washington could not reasonably back away from the sale to Pakistan without fear of losing its support in Afghanistan and the larger "war on terror." However, India is likely to successfully use this issue to gain U.S. assistance for its civilian nuclear projects in the future.

India is even less pleased that Washington's policy of starving the government of Iran out of power through economic isolation has become a major sticking point in India's attempt to bind Pakistan's economy to its own. The U.S. is the most vocal opponent of the proposed natural gas pipeline from Iran, through Pakistan, to India. Given its hold over Pakistan's government, U.S. opposition may be enough to kill the proposal. This would greatly complicate India's and Pakistan's advances on a negotiated settlement -- New Delhi's number one foreign policy objective.

For Washington, the challenge ahead is to help facilitate the growth of India, and encourage it to look to the West for new alliances, without causing too much concern in Islamabad. Though this creates a very narrow framework in which Washington can work with India, there is unlikely to appear any flagging in its desire to make it work.

Conclusion

It is Beijing's and Washington's ties to Pakistan that remain the greatest obstacles to forming a greater partnership with India. However, both states have been able to maintain their good relations with New Delhi even after a change in India's government last year. India would like to continue the courtship from both countries, as long as it can remain noncommittal on hitching its future to either power. As long as Washington and Beijing continue on their current path of avoiding direct conflict, India will see gains from this strategy. As Washington and Beijing jockey for position in South Asia's geopolitics, India will be the main benefactor, something that it hopes to exploit in the future. Indeed, only its strained relations with its neighbors appear to be holding it back from achieving this aim.

Report Drafted By:
Adam Wolfe

------------------------------



The Power and Interest News Report (PINR) is an independent organization that utilizes open source intelligence to provide conflict analysis services in the context of international relations. PINR approaches a subject based upon the powers and interests involved, leaving the moral judgments to the reader. This report may not be reproduced, reprinted or broadcast without the written permission of inquiries@pinr.com.

[candypreet]

30 March 2005
''Sino-Indian Relations: Perspectives, Prospects and Challenges Ahead''
pril 2005 marks the 55th anniversary of the establishment of diplomatic relations between China and India. It is a major milestone for the two ancient civilizations, neighbors, and rising powers. Over the past five and half decades, the bilateral relationship has witnessed the warm "Hindi-Chini bhai-bhai" brotherhood and the famous Panch Sheel or the Five Principles of Peaceful Coexistence in the 1950s but has also been overshadowed by the 1962 border war and the acrimonious spat in the wake of India's May 1998 nuclear tests.

Sino-Indian relations today are enjoying a period of stability and growing economic ties. Chinese Premier Wen Jiabao's forthcoming visit to India between April 9-12 will build on the positive momentum generated by the June 2003 visit by the then Indian Prime Minister Atal Bihari Vajpayee. However, there remain unresolved disputes and emerging conflicts between the two countries -- ranging from boundary issues to energy security -- that require strategic vision, diplomatic skill and mutual accommodation.

Rebuilding the Bilateral Relationship after the Pokhran II Nuclear Tests

Beijing reacted strongly to New Delhi's accusation that the Chinese threat was the key rationale behind its May 1998 nuclear tests. China retaliated by canceling the scheduled Joint Working Group meeting on boundary issues and played an active role in pushing through United Nations Security Council Resolution 1172 calling for nuclear rollback in India and Pakistan. Beijing's relentless diplomatic campaigns to isolate New Delhi eventually induced the latter to seek rapprochement. Sino-Indian relations gradually thawed and Indian policymakers publicly retracted from the China threat rhetoric.

In May 1999, Kashmiri militants, with the support of the Pakistani military, crossed the Line of Control into the Kargil area in the India-controlled state of Jammu and Kashmir. The Indian army launched military operations seeking to repel the intrusion. As the conflict escalated, threatening a major military confrontation between the two nuclear states, both New Delhi and Islamabad were seeking international support. Pakistani Prime Minister Nawaz Sharif and Foreign Minister Sartaj Aziz went to Beijing soon after the crisis broke out and sought to secure Chinese support; however, their requests were turned down. Instead, the Chinese leaders advised the Pakistani visitors to seek a peaceful settlement with India. Indian Foreign Minister Jaswant Singh subsequently visited China in June 1999 as the Kargil crisis reached the boiling point.

International pressure on Pakistan, including unequivocal warnings by the Clinton administration to Sharif, eventually brought the crisis to an end in July. China's apparent neutrality in the dispute gained much appreciation from India. The two sides have since then on many occasions publicly announced that they do not view each other as a security threat. Improvement in the bilateral relationship continued with Indian President K.R. Narayanan's visit to China in May 2000 to mark the 50th anniversary of the establishment of Sino-Indian diplomatic relations. Chinese parliamentary head Li Peng and Premier Zhu Rongji visited India in January 2001 and 2002, respectively, further consolidating the bilateral relationship.

Of all the key events over the past few years, perhaps the most important would be Indian Defense Minister George Fernandes' week-long visit to China in April 2003 and Prime Minister Atal Bihari Vajpayee's June 2003 visit. The former was more symbolic while the latter ushered in important milestones. Fernandes' China trip was significant in three respects. First, the visit was the first by an Indian defense minister to China in more than a decade. Second, the visit, coming from someone who five years earlier had been widely quoted by the media as describing China as India's "security threat number one" just prior to the Indian nuclear tests, signified just how much the two countries had mended their fences. Third, at a time when China was embroiled in the crisis over S.A.R.S. and when many international events originally scheduled to be taking place in China had been canceled, Fernandes' visit was much appreciated by his Chinese hosts.

While no major breakthrough was achieved during Vajpayee's visit -- and indeed no such expectation had ever been entertained -- there was nevertheless significant progress in four areas that deserve closer scrutiny. The first is the growing consensus and converging interests between Beijing and New Delhi covering a wide range of bilateral, regional and global issues. The two countries issued a joint declaration on principles for relations and comprehensive cooperation and vowed not to view each other as a security threat. They reaffirmed their determination to resolve their disputes through peaceful means. This is a far cry from the suspicions and hostility between the two Asian powers in the wake of India's May 1998 nuclear tests.

This stabilizing and maturing relationship is clearly marked by the two countries' converging interests in developing a fair, equitable, international political and economic order, the role for the United Nations, and support of global disarmament, including efforts to prevent the weaponization of outer space. Beijing and New Delhi are seeking to promote greater equality and fair distribution of wealth between the rich and poor by working to improve the current international economic system. As developing countries, both China and India are interested in gradually integrating their economies into the global trading system in ways that provide the necessary protection and transition time for their industries to adjust; in addition, Beijing and New Delhi are also calling for greater economic assistance from the northern industrialized countries to the vast majority of developing countries in the South.

Likewise, both are critical of U.S. unilateralism and seek to promote a multipolar world where they can play a more important role in global affairs. India is looking forward to securing a seat in the proposed expansion of the U.N. Security Council, to which aspiration China has already indicated its support. India has long championed for nuclear disarmament, a goal shared by China. Beijing and New Delhi are also interested in promoting the peaceful use of outer space as both are developing their emerging civilian space programs. Weaponization of outer space could well put into jeopardy these programs, threaten existing peaceful use such as environmental monitoring and weather forecasting, and risks inducing an arms race in this new frontier.

Second, by each appointing a special representative to oversee the political framework of border negotiations, the two countries have clearly demonstrated their determination to speed up the process of resolving the territorial disputes. This reflects a consensus reached by Chinese and Indian leaders that to reach the full potential of bilateral relations requires the satisfactory closure of this issue. So far, four rounds of meetings have already been held and the change of government in India has not affected the process.

Third, China and India have made important -- although largely token -- gestures toward each other. New Delhi has shown greater appreciation of Beijing's sensitivity over the Tibetan issue by affirming for the first time that the Tibetan Autonomous Region is part of the territory of China. Beijing, on the other hand, has extended de facto recognition of Sikkim being a state of India, something that Beijing had refused to do ever since the small Himalayan kingdom acceded to India in 1975. While Chinese diplomats continue to characterize the issue as a historical legacy that takes time to resolve, the fact that official Chinese maps are showing Sikkim as part of India suggests that Beijing considers the issue closed. Indeed, New Delhi is confident that de jure recognition will not be long in forthcoming.

Finally, Vajpayee's visit was marked by its economic orientation. A large entourage of Indian business executives accompanied the Indian prime minister; further, of Vajpayee's three important speeches delivered during his visit, two were addressed at business venues. Indeed, bilateral trade grew to $7.6 billion annually by 2003 and is projected to reach $10 billion in 2004 and surpass $15 billion by 2007, if not earlier. That target may be achieved earlier as the bilateral two-way trade already reached $13 billion in 2004, surpassing the original goal by over 30 percent. A Sino-Indian Joint Study Group on Trade and Economic Cooperation was formed in March 2004. In addition to growing bilateral economic ties, the two countries are also active in exploring potentials for regional economic cooperation, including the sub-regional "Kunming Initiative."

The momentum generated by the Vajpayee visit has continued. There have been more high-level exchanges between the two countries, with the Chinese defense minister visiting India last, the first in almost a decade, and the first joint Indian-Chinese naval exercises. India's chief of army staff also visited China in late 2004 and the commander of the Indian 4th Army Corp, the unit that was involved in the 1962 war and is now stationed in the areas along the Line of Actual Control, paid a visit to the Tibet Military District Command in Lhasa.

Rivalry or Partnership: Challenges Ahead

The coming months and years will testify if the good will and momentum generated by Vajpayee's successful June 2003 visit can be maintained. While the two countries are on good terms for now and, indeed, their domestic priorities -- economic development and prosperity -- provide strong incentives for them to avoid conflict, obstacles remain and sustained efforts at the highest political level are required to steer the ship of bilateral relationships without hitting any major shoals. These include the intractable territorial disputes, even though the Line of Actual Control has been relatively peaceful during the last 40 years, mutual suspicions and the potentials for competition and rivalry, China's relationship with Pakistan in the regional context, the China-India-U.S. strategic triangle, India's eastward diplomacy, and the emerging energy security issue along with potential trade disputes.

Despite the generally benign atmosphere between the two countries, there remain lingering suspicion and distrust; the scar of the 1962 war has yet to be healed. India claims the Chinese-controlled Aksai Chin of approximately 35,000 square kilometers as part of the territory in Ladaakh, Kashmir. Beijing, on the other hand, disputes New Delhi's possession of more than 90,000 square kilometers in what is now the Indian state Arunachal Pradesh. Without a satisfactory resolution of the territorial disputes, there can never be a "full and complete" normalization of bilateral relations. Since the early 1980s, eight rounds of border negotiations and 14 rounds of Joint Working Group meetings have taken place. During Vajpayee's visit to China in June 2003, the two governments designated their respective special representatives to provide the political impetus to the process. Four rounds of meetings have been held so far. However, a solution remains elusive due to fundamental differences over the mechanisms of settlement. Clearly, final resolution of the issue requires not only political decisions at the highest level in both capitals but also the political skills to sell it to their respective domestic constituencies.

A stable Sino-Indian relationship requires the effective management of the delicate China-India-Pakistan triangle. For more than forty years, and specifically in the wake of the 1962 China-India war, Beijing and Islamabad have developed a close political-security relationship. Through the years, China has provided both moral and material support in assisting the latter's rivalry with India. This "all-weather" relationship was a key component of China's South Asia policy as Beijing sought to tie down India and extend its influence to the subcontinent. Since the early 1980s, as China and India embarked on the path of normalization, Beijing has shifted to a policy of balance and made greater efforts to address New Delhi's legitimate concerns regarding Sino-Pakistani ties, particularly in the defense area.

While China's neutrality during the 1999 Kargil crisis demonstrates a more balanced Chinese South Asia policy, that gesture has yet to translate into good will and confidence on India's part that the Sino-Pakistani relationship is not targeted at India. Indeed, Sino-Pakistani ties, in particular in the security area, remain a serious concern to India as reports suggest continued Chinese missile assistance to Pakistan. New Delhi remains suspicious of the Sino-Pakistani relationship and their resilient security ties, ranging from the construction of a strategic outlet for Pakistan in the Gwadar Port and continuous supplies of military equipment, reinforce the specter of strategic encirclement of India. While China's continuing support of Pakistan is partly due to containing India, it is also aimed at maintaining a stable relationship with an important Islamic country -- and a nuclear weapons state -- and therefore retains its influence over the government in Islamabad out of concerns regarding the Islamic unrest in its own territory, especially in Xinjiang.

Despite progress in bilateral relations during the past few years, mutual suspicions remain. Partly this is due to the dynamics of the security dilemma and structural conflicts between the two Asian giants; it is also because of the lack of institutionalized and regular high-level official exchanges. India has watched China's phenomenal growth in the economic and military sectors with both envy and alarm. Beijing's defense budgets have grown at double digits for more than a decade and Chinese acquisitions of advanced weaponry from Russia has resulted in improved aerial and naval capabilities of the two-million strong People's Liberation Army.

In addition, China is also modernizing its strategic nuclear forces. If there is one single lesson that New Delhi's security analysts have drawn from the 1962 war, it would be this: power and strength are the only ticket to the club of great powers. For many of them, the very fact that China continues to lead India on many indicators of power poses a greater threat than its military defeat 40 years ago. China is also paying close attention to India's growing military power and its nuclear and missile development. New Delhi is purchasing advanced Russian fighter aircraft, submarines and an aircraft carrier. In addition, India is expanding its defense contacts with Israel and has acquired the Phalcon early warning system that was denied to China. Jerusalem's proposed sale of the Phalcon system to China was effectively blocked by Washington in 2000 out of concerns about its use by the Chinese military against U.S. interests in the region, especially around the Taiwan Strait.

Chinese security analysts are also debating the significance and implications of a warming U.S.-India relationship. Prior to September 11, there were growing concerns that the new and growing ties between Washington and New Delhi could have negative security implications for China, especially the apparent attempt by Washington to enlist New Delhi as a potential counterweight, if not part of a containment strategy, against China. Within this context, the growing security ties, including U.S. military sales to India, joint military exercises, and regular defense consultations between the two are of particular concern to China. Washington and New Delhi were drawing closer to each other than ever before. There were regular high-level visits to each capital, and the Bush administration briefed the B.J.P.-led government on major policy initiatives, treating India almost as an ally. New Delhi, in return, openly endorsed U.S. missile defense positions. Indeed, even many U.S. allies were concerned with the strategic implications of Washington's decisions.

Washington's current focus on combating global terrorism and the post-September 11 policy shift brought a renewed engagement of Pakistan and an emphasis on great power cooperation; this reduced Beijing's worries about an Indo-U.S. entente against China. But a China-India-U.S. strategic triangle has clearly emerged in that policymakers are increasingly aware of and attentive to policies taken in the other two capitals and how these may affect its own security interests. Within this complex structure, Washington and New Delhi share normative values (democracy) and strategic interests while Beijing's ties with both are more driven by contingent rather than structural interests.

Beijing is wary of New Delhi's eastward strategy of developing greater economic and military ties with Japan and the Association of Southeast Asian Nations (A.S.E.A.N.). India has in recent years launched a new post-Pokhran offensive diplomacy of engagement and entente with countries beyond New Delhi's traditional strategic domain: Japan, Vietnam and, to a broader extent, members of A.S.E.A.N., many of which have ongoing disputes with China. The Indian defense minister visited Japan in January 2000, the first such visit since India gained independence. Japanese Prime Minister Yoshiro Mori visited India in August 2000 and Vajpayee paid an official visit to Japan in February 2001. Japanese Prime Minister Junichiro Koizumi's upcoming visit to India this month will further consolidate such ties.

India has also broadened its relationship with A.S.E.A.N. countries and improved relations with Myanmar. Chinese analysts note that New Delhi's Southeast Asia diplomacy could add complexity to China-A.S.E.A.N. relations. For example, growing Indian and A.S.E.A.N. naval cooperation could impinge upon China's maritime interests, making a final resolution of the territorial disputes in the South China Sea even more difficult. The Indo-Vietnamese defense cooperation is viewed with suspicion given that China has unresolved territorial issues with both countries.

China-India trade has experienced significant gains in the last few years, totaling $13 billion in 2004. However, given the size of both economies, the level of economic interdependence remains low. Both countries have registered significant growth over the last decade. There is intense competition for, and protectionism against, each other in the areas of foreign direct investment (F.D.I.) and market access. China is now in a comfortable lead, with $60 billion F.D.I. -- twelve times India's total -- in 2004. While leaders in both countries have touted the complementarities of their industries -- India's software and China's hardware -- they have yet to make significant investments in each other's economy. How to promote and expand greater economic contacts and manage competition for markets and investment and technology imports would also test the leadership skills and entrepreneurship in both countries so that their projected growth could both benefit from and generate more win-win cooperation instead of falling into the trap of zero-sum games.

Finally, India and China are both energy consumers and importers. A net oil importer since 1993, China today is the number two oil consumer after the United States, depending on imports for two-thirds of its total consumption. While ranking sixth in the global petroleum demand, India's fast growing economy and its lack of domestic energy sources mean that it is bound to move up the imports ladder, projected to occupy fourth place by 2010. On energy security issues, the two could compete as well as cooperate. Indian and Chinese oil companies are already involved in overseas oil field exploitation, extractions and acquisitions from the Middle East, to the Persian Gulf, to Latin America. An uncoordinated competition from the world's most energy-thirsty countries could drive up prices and rivalry in yet another field.

Beijing and New Delhi would both do well in working with each other to find energy security. Already the two countries are seeking to cooperate rather than to compete directly with each other since the latter strategy is bound to drive up oil prices. India hosted the first-ever meeting between major Asian oil importing countries, including China, and the Middle Eastern oil exporting countries such as Saudi Arabia. Chinese and Indian oil companies have acquired equity stakes in Iran's Yadavaran oil field. In addition, China and India are also discussing a potential natural gas pipeline.

Conclusion

The Sino-Indian relationship is bound to be one of the most important bilateral relationships in the coming decades simply by the sheer weight of numbers: combined, they represent 40 percent of the world's population and their continuing economic growth will project them to second and third place within the next two decades. How they manage their relationship will have a tremendous impact on peace and stability in the regional and, increasingly, global context.

Report Drafted By:
Dr. Jing-dong Yuan



The Power and Interest News Report (PINR) is an independent organization that utilizes open source intelligence to provide conflict analysis services in the context of international relations. PINR approaches a subject based upon the powers and interests involved, leaving the moral judgments to the reader. This report may not be reproduced, reprinted or broadcast without the written permission of inquiries@pinr.com. All comments should be directed to content@pinr.com.

[candypreet]

back to page one

[candypreet]

:) a bump:)

[candypreet]

:add09: :happy_01:

[candypreet]

...............:happy_01: :happy_01: ...................