With the completion of the U.S.-India civil nuclear agreement
earlier this year, Washington's ties with New Delhi stand on the
threshold of great promise. China's attempt to scuttle the
agreement at the September 2008 Nuclear Suppliers Group (NSG)
meeting was evidence for many Indians that China does not willingly
accept India's rise on the world stage, nor the prospect of closer
As the relationship between the world's oldest and the world's
largest democracies develops, Washington will need to pay close
attention to the dynamics of the India-China relationship. The
future direction of relations between China and India, two
booming economies that together account for one-third of the
world's population, will be a major factor in determining broader
political and economic trends in Asia directly affecting U.S.
While on the surface Indian-Chinese relations appear to be
improving (trade has increased eightfold in the last six years to
almost $40 billion), both sides harbor deep suspicions of the
other's strategic intentions. Signs of their deep-seated
disagreements have begun to surface over the last two years and it
is likely that such friction will continue, given their unsettled
borders, China's interest in consolidating its hold on Tibet, and
India's expanding influence in Asia. China has moved slowly on
border talks and conducted several incursions into the Indian
states of Sikkim and Arunachal Pradesh since January 2008.
Some Indian analysts believe that China is pursuing a
two-pronged strategy of lulling India into complacency with
greater economic interaction while taking steps to encircle
India and undermine its security. China is strengthening ties to
its traditional ally Pakistan and slowly gaining influence
with other South Asian states. Beijing is developing strategic port
facilities in Sittwe, Burma; Chittagong, Bangladesh;
Hambantota, Sri Lanka; and Gwadar, Pakistan, in order to protect
sea lanes and ensure uninterrupted energy supplies. China also
uses military and other kinds of assistance to court these
nations, especially when India and other Western states attempt to
use their assistance programs to encourage respect for human
rights and democracy.
Tibet and Border Tensions
Despite improvements in economic ties and trade relations,
border disputes continue to bedevil Chinese- Indian ties.
India accuses China of illegally occupying more than 14,000
square miles of its territory on its northern border in Kashmir,
while China lays claim to more than 34,000 square miles of India's
northeastern state of Arunachal Pradesh. India is a long-term host
to the Dalai Lama and about 100,000 Tibetan refugees, although the
Indian government forbids them from participating in any
Out of concern for Chinese sensitivities, the Indian
government placed restrictions on Tibetan protesters in India last
spring during the uprising in Tibet, and Beijing praised New Delhi
for preventing Tibetans from marching to the Tibetan capital
of Lhasa. The Indian political opposition, however, criticized
Indian Prime Minister Manmohan Singh for appeasing the
Chinese and for not defending Tibetans' human rights. Renewed
tensions in Tibet would likely put pressure on New Delhi to
show greater solidarity with the Tibetan people. China has recently
started to raise the issue of the Dalai Lama's status in India in
diplomatic talks for the first time in several years, indicating
its increased concern over the issue.
The two sides have achieved little in the ongoing border talks
that opened in the early 1980s. In 2003, each side appointed
"special representatives"--a national security adviser for
India, a vice foreign minister for China--to upgrade and
regularize the border discussions. New Delhi has tried to
reassure China that it respects the Chinese position on Tibet by
recognizing the "Tibetan Autonomous Region" as part of China, while
the Chinese Foreign Ministry in 2003 recognized the trade route
through the Nathu La Pass on the Chinese border to the Indian state
of Sikkim and stopped listing Sikkim as an independent country
on its Web site, implicitly recognizing it as part of India.
Nevertheless, China's increasing assertiveness over the past two
years has led to a near freeze of the border talks. The 12th round of
the special-representative talks held in mid-September in
Beijing ended without any specific agreements, and with both sides
merely stating they would fulfill the guidelines of their leaders
and negotiate a "fair and reasonable" solution.
The Chinese have recently toughened their position during
border talks by insisting that the Tawang district--a pilgrimage
site for Tibetans in Arunachal Pradesh--be ceded to China. The
Indians refused the demand and reiterated their position
that any areas with settled populations would be excluded from
territorial exchanges. In what could be an attempt to pressure the
Indians on the issue, the Chinese have been strengthening their
military infrastructure along the border and establishing a network
of road, rail, and air links in the region.
Beijing also stirred controversy in May 2007 when it denied an
entry visa to an officer of the Indian Administrative Service (IAS)
from the state of Arunachal Pradesh on the grounds that he was from
territory the Chinese officially recognize as their own, prompting
India to cancel the visit of the entire group of more than a
hundred IAS officers to China for a training program.
India has recently begun to reinforce its own claims in the
border areas that are in dispute with China. New Delhi is
augmenting forces in the eastern sector along the border of
Arunachal Pradesh. It also re-deployed elements of its 27th
Mountain Division from Jammu and Kashmir to the 30-km-wide Siliguri
corridor at the intersection of India, Tibet, and Bhutan that links
India with the rest of its northeastern states. The area, referred
to as the Chicken Neck, is a vulnerable point of the border--
losing control of it would separate India from its entire northeast
The Indian army is also planning to raise a new mountain strike
corps for Arunachal Pradesh. Prime Minister Singh visited Arunachal
Pradesh in late January 2008 and announced development plans for
the region, including construction of a highway connecting the
controversial Tawang district with the city of Mahadevpur,
underlining India's non-negotiable stance on maintaining Tawang
within its boundaries.
India is also taking steps in what is referred to as the Western
Sector (in the state of Jammu and Kashmir), such as building
roads and re-opening air bases along the borders. India re-opened
an airstrip in Daulat Beg Oldie in the Ladakhregion in June and may
re-open another in eastern Ladakh close to the Line of Actual
Control (the de facto border), which would help supply
troops posted in the area.
Indian Lessons from the 1962
Sino-Indian Border War
The history of events leading up to the Sino-Indian border war
of 1962 and the severe Indian disillusionment with the Chinese in
the aftermath of that conflict provides a useful context for
assessing current developments in Chinese-Indian relations. Even
after China invaded and annexed Tibet in 1950, India's first prime
minister, Jawaharlal Nehru, believed that India should seek a close
relationship with China. Nehru was convinced that an India-China
friendship could be the basis of an Asian resurgence. Nehru
apparently wanted to give the Chinese the benefit of the doubt
since they were, like the Indians, also emerging from the colonial
era. Many fellow Indians, including members of Nehru's cabinet,
believed otherwise. They cautioned Nehru to view the event as a
sign that China could pose a danger to India's own territorial
integrity and that India should, therefore, begin to prepare its
Nehru's trust of China cost India dearly in 1962 when the
Chinese simultaneously invaded the eastern and western sectors of
their shared borders. The Indian parliament accused Nehru of
turning a blind eye to Chinese construction of a road through what
was then Indian territory in the Aksai Chin. After the invasion and
defeat by the Chinese, Nehru declared that China had revealed
itself as "an expansionist, imperious-minded country." A
feeling of betrayal from a country that they had supported in the
international arena permeated the Indian psyche for years to
Indian strategic analysts, remembering the 1962 border war, now
warn Indian officials not to make the mistakes of the past by
downplaying Chinese border aggression. They argue that if New Delhi
publicly downplays provocative Chinese actions in the border areas
(as it did with construction of the road through the Aksai Chin in
the early 1960s), the Chinese will interpret the silence as a sign
of weakness and exploit it.
At the same time that border tensions are simmering,
however, the two countries are beginning to conduct joint military
exercises. Holding even minor joint military exercises--as long as
they are reciprocal in terms of exposure--can help build confidence
and increase transparency between their militaries, helping to keep
border tensions in check. Last December, for example, 100 troops
from each country engaged in a joint anti-terrorism military
exercise in China's southwestern province of Yunnan.
Civil Nuclear Deal Brings Out
Increasing U.S. attention paid to India over the past five
years--especially Washington's decision to extend civil nuclear
cooperation to New Delhi-- surprised Chinese policymakers and
caused them to reassess their policies toward India. Chinese
officials have developed a more serious policy toward India
and now acknowledge that India is becoming a major Asian power.
China's apparent attempt to scuttle the U.S.- India Civil
Nuclear Agreement at the September 2008 NSG meeting was evidence
for many Indians that China does not willingly accept India's rise
on the world stage. The Chinese--buoyed by the unexpected
opposition from NSG nations like New Zealand, Austria, and
Ireland--threatened the agreement with delaying tactics and
last-minute concerns signaled through an article in the Chinese
Communist Party's English language paper, The People's
Daily. The public rebuke of the deal followed
several earlier assurances from Chinese leaders that Beijing would
not block consensus at the NSG.
Indian observers claim the Chinese tried to walk out of the NSG
meetings in order to prevent a consensus, but that last-minute
interventions from senior U.S. and Indian officials convinced them
that the price of scuttling the deal would be too high, forcing
them to return to the meeting. Indian strategic affairs
analyst Uday Bhaskar attributed the Chinese maneuvering to
longstanding competition between the two Asian rivals. "Clearly,
until now China has been the major power in Asia," said Bahskar.
"With India entering the NSG, a new strategic equation has been
introduced into Asia and this clearly has caused disquiet to
China." In a recent speech, Indian Finance Minister Palaniappan
Chidambaram, citing China's position within the NSG, said that,
"From time to time, China takes unpredictable positions that raise
a number of questions about its attitude toward the rise of
China is also wary of the potential for stronger U.S.-India
military cooperation. India has embarked on an ambitious
military modernization effort and is increasingly looking to
the United States to purchase advanced weaponry. The completion of
the civil nuclear deal will likely raise the confidence of the
Indian defense establishment in the U.S. as a reliable supplier
and, therefore, set the stage for a much broader and deeper defense
relationship between the U.S. and India over the next several
years. Following are some major milestones in the U.S.-India
defense trade relationship:
- The recent sale of six C130-J Hercules military transport
aircraft worth $1 billion is the largest U.S. military sale to
India to date.
- In 2006 the U.S. Congress authorized the transfer of the
USS Trenton amphibious transport dock to India.
- U.S. firms are also competing with Russian and European firms
to fulfill an Indian request for 126 multi-role combat aircraft
worth close to $10 billion.
- U.S. companies are bidding to supply 197 light observation
helicopters and 22 combat helicopters to the Indian Air Force
and the Army Aviation Corps at a cost of about $1.5 billion.
In 2005, India and the U.S. signed a 10-year defense framework
agreement that calls for expanded joint military exercises,
increased defense-related trade, and the establishment of a defense
and procurement production group. The U.S. and India have conducted
more than 50 military exercises since 2002, demonstrating how
far the military partnership has progressed in a relatively
One of the most significant of these exercises was held in
September of last year and involved three other nations--Japan,
Australia, and Singapore--in the Bay of Bengal.This exercise raised
concern in Beijing about the development of a democracy axis aimed
at countering China's influence. To reassure the Chinese of its
intentions, the new Australian government led by Prime Minister
Kevin Rudd backed away from a diplomatic quadrilateral
initiative begun in 2007 among the U.S., Australia, Japan, and
Other Areas of Potential China-India
Energy is also increasingly becoming a source of friction
between China and India. They are two of the world's
fastest-growing energy consumers, with China importing about 50
percent of its energy needs and India importing 70 percent. China
has consistently outbid India in the competition for energy
sources, and these bidding wars have inflated energy prices,
prompting the two countries to agree to joint bidding on certain
contracts. The Chinese provide monetary and diplomatic
enticements to secure energy-supplier contracts and largely
ignore international concerns over issues like human rights and
Energy competition between India and China is also reflected in
the two countries' assertions of naval power. As India reaches into
the Malacca Strait, Beijing is surrounding India by developing
strategic port facilities in Sittwe, Burma; Chittagong, Bangladesh;
Hambantota, Sri Lanka; and Gwadar, Pakistan, to protect sea lanes
and ensure uninterrupted energy supplies.
Water also has the potential to become a divisive issue in
India's bilateral relations with China. New Delhi is concerned
about the ecological impact that the Chinese plans to divert the
rivers of Tibet for irrigation purposes in China will have on
India. With China controlling the Tibetan plateau, the source of
Asia's major rivers, the potential for conflict over increasingly
scarce water resources remains a concern.
China's Relations with Other South
China is strengthening its ties to India's historical rival
Pakistan and slowly gaining influence with other South Asian states
that border India. The South Asian nations view good ties with
China as a useful counterweight to Indian dominance in the region.
China uses military and other assistance to court these nations,
especially when India and other Western states try to use their
assistance programs to encourage respect for human rights and
Pakistan: Pakistan and China have
long-standing strategic ties, and China is Pakistan's largest
defense supplier. China transferred equipment and technology to
Pakistan's nuclear weapons and ballistic missile programs
throughout the 1980s and 1990s, enhancing Pakistan's strength in
the South Asian strategic balance. Stephen Cohen, an expert on the
Indian and Pakistani militaries, describes China as pursuing a
classic balance of power by supporting Pakistan in a relationship
that mirrors the relationship between the U.S. and Israel.
The most significant development in China-Pakistan military
cooperation occurred in 1992 when China supplied Pakistan with 34
short-range ballistic M-11 missiles.
China has helped Pakistan build two nuclear reactors at the
Chasma site in the Punjab Province and continues to support
Pakistan's nuclear program, although it has been sensitive to
international condemnation of the A. Q. Khan affair and has
calibrated its nuclear assistance to Pakistan
accordingly. In the run-up to Chinese President Hu Jintao's
visit to Pakistan in November 2006, media reports speculated that
China would sign a major nuclear energy cooperation agreement with
Pakistan. In the end, however, the Chinese provided a general
pledge of support to Pakistan's nuclear energy program, but
refrained from announcing plans to supply new nuclear reactors.
During Pakistani President Asif Ali Zardari's visit to Beijing in
mid-October 2008, Beijing did come through with a pledge to help
Pakistan construct two new nuclear power plants at Chasma, but did
not propose or agree to a major China-Pakistan nuclear deal akin to
the U.S.-India civil nuclear agreement.
China is also helping Pakistan develop a deep-sea port at the
naval base at Gwadar in Pakistan's province of Baluchistan on the
Arabian Sea. The port would allow China to secure oil and gas
supplies from the Persian Gulf and project power in the Indian
Ocean. China financed 80 percent of the $250 million for completion
of the first phase of the project and reportedly is funding most of
the second phase of the project as well.
Nepal: Nepal occupies a strategic location along
the Himalayan foothills dividing China and India. China provided
military supplies to Nepalese King Gyanendra before he stepped down
in 2005 while India and the U.S. were restricting their military
assistance in an effort to promote political reconciliation
within the country. Nonetheless, it does not appear that Nepal's
new prime minister, Prachanda, holds a grudge against the Chinese
for their previous support of the king. Prachanda's Maoist
movement patterned itself after Mao Zedong's "people's war"
principles, and upon his assumption of power in August, Prachanda
promptly paid a visit to Beijing where he met President Hu
Over the past two years, Nepal has begun to crack down on
Tibetan refugees on its territory in an apparent attempt to appease
the Chinese. Last spring, Nepal's government ordered a raid on a
center for Tibetan refugees and deported one of them shortly
before the visit of China's Assistant Foreign Minister to
Kathmandu. The center, funded by the United Nations High
Commissioner for Refugees, acts as a transit point for Tibetans
fleeing to India. In 2005, Nepal closed down the Tibetan Welfare
Office in Kathmandu, which had been established in the 1960s. About
two to three thousand Tibetans travel through Nepal every year.
During the widespread unrest and demonstrations in Tibet from
March to June 2008, the Nepalese banned all protests and
heavily patrolled their border with Tibet.
Sri Lanka: Chinese assistance to Sri Lanka has
increased substantially over the past year and may now even eclipse
that of Sri Lanka's longtime biggest aid donor, Japan.
The Chinese are building a highway, developing two power plants,
and constructing a new port facility at Hambantota harbor.
Chinese analysts say the port is strictly a commercial
venture, while Indian analysts warn it could be used as a Chinese
naval base to control the area.
China wants to expand political and security ties with the
countries of the South Asia-Indian Ocean region to ensure the
safety of Chinese sea lines of communication across the Indian
Ocean. Sri Lanka, for its part, needs Chinese
assistance--especially military aid--as it fights a civil war with
Tamil insurgents with whom it recently officially broke a six-year
cease-fire. The U.S. and India have curtailed military
supplies toSri Lankabecause of human rights concerns, and Chinese
aid to Sri Lanka comes with no strings attached.
Bangladesh: Total trade between China and
Bangladesh was around $3.5 billion in 2007, up about 8.5 percent
from the previous year. China is an important source of military
hardware for Bangladesh and increasingly is investing in
Bangladesh's garment sector. With natural gas deposits in
Bangladesh estimated at between 32 trillion and 80
trillion cubic feet, Bangladesh has gained strategic
importance for both China and India as a potential source of
energy. Bangladesh turned down India's proposal for a tri-nation
gas pipeline with Burma.
India's Relationships with Southeast
India established a "Look East" policy in the early 1990s, but
it has only recently begun to build political and economic
ties with the states of Southeast Asia, which generally welcome
India's involvement to balance growing Chinese influence. Most
countries in the region that are wary of China do not have the
same apprehensions toward India.
India and the Association of Southeast Asian Nations (ASEAN)
signed a Partnership for Peace, Progress and Shared Prosperity
agreement on November 11, 2004, marking a significant step in the
development of relations between India and the countries of
Southeast Asia. India became a full dialogue partner of ASEAN
in 1995, joined the ASEAN Regional Forum (ARF) in 1996, became a
summit partner of ASEAN (called ASEAN Plus One) in 2002, and became
a member of the East Asia Summit in December 2005.
In another step toward building its economic relations with the
region, India will sign a free trade deal with the ASEAN countries
in December 2008 after four years of talks. New Delhi says it wants
to raise two-way trade with ASEAN to $50 billion by 2010, up from
its current level of $38 billion.The India-ASEAN free trade
agreement will reduce or eliminate import tariffs on 96 percent of
items traded between the two starting in January 2009. India has
also enhanced its naval profile in Southeast Asia to
strengthen its Look East policy and to disrupt the flow of arms
across the Bay of Bengal to insurgents in India's northeast and to
the Tamil Tigers in Sri Lanka.
In addition to integrating with the multilateral institutional
structures of Southeast Asia, India has focused on building
stronger bilateral relationships in the region, especially with
Malaysia, Singapore, Vietnam, Thailand, Burma, and Indonesia. India
holds periodic naval exercises with these countries and
participates in a biannual gathering of regional navies, called the
Milan. India has also entered into bilateral defense cooperation
agreements with Malaysia, Vietnam, Singapore, Laos, and
Burma: India is particularly concerned about
growing links between China and Burma, with which it shares land
and maritime borders. New Delhi in recent years has de-emphasized
its support for democracy there in order to build ties to the
military junta, a policy that is causing friction between New
Delhi and Washington. India was a strong proponent of the
democracy movement in Burma throughout the 1980s and gave sanctuary
to thousands of Burmese refugees following the military
junta's assumption of power in 1988. India changed its position,
however, to one of "constructive engagement" when it sought
Burmese cooperation against insurgents across their porous frontier
in the mid-1990s and has more recently sought to counter growing
Chinese influence and secure oil and gas deals with Burma to
fulfill its growing energy requirements. In the fall of
2007, attempts of the Gas Authority of India Limited (GAIL) and
other Indian companies to tap Burmese oil and gas were thwarted by
Chinese pressure on Burmese authorities.
In response to the September 2007 crackdown on pro-democracy
demonstrators, India placed arms sales to Burma under "review,"
halting them at least temporarily. Prime Minister Singh hosted the
second-in-command of the military junta General Maung Aye in New
Delhi six months later, however, and announced a deal to refurbish
the Sittwe port as part of a larger project to allow sea access to
India's northeastern states.
What This Means for U.S. Policy
As China and India rise politically and economically on the
world stage, it is natural that they compete with one another
for influence. Although China's economic rise will continue to be
faster than India's, Beijing may seek to counter New Delhi's
political and geo-strategic influence. Rivalry between the two
nations will be fueled especially by each country's efforts to
reach into the other's traditional spheres of influence, for
example, China in South Asia and India in Southeast Asia. China's
willingness to overlook human rights and democracy concerns in
its relations with the smaller South Asian states will at times
leave India at a disadvantage in asserting its power in the
region, as was seen recently in Nepal and Sri Lanka.
China is wary of U.S. plans to support India's position in Asia
and will seek to blunt Washington's overtures toward New Delhi.
Beijing may discuss in private and public forums the importance of
simultaneous development of both China and India to try to
show it welcomes India's rise. New Delhi, however, will pay
closer attention to Beijing's actions along the disputed
China-India border to gauge Chinese overall strategic intentions
toward India. China's unhelpful stance at the recent NSG meetings
on the U.S.-India civil nuclear agreement was a reminder that
Beijing remains uncomfortable with India's growing global role.
The U.S. should:
- Continue to build strong, strategic ties to India by
encouraging India to play a more active political and economic role
in the region. To help India fulfill that role, Washington
should continue to seek a robust military-to-military relationship
with New Delhi and enhance defense trade ties. Washington should
also develop an Asian dialogue with India to discuss
developments in the broader Asia region more formally and
- Encourage India's permanent involvement in values-based
strategic initiatives like the U.S.-Japan-Australia trilateral
dialogue. Former Japanese Prime Minister Shinzo Abe had
proposed that Japan, India, Australia, and the U.S. formalize a
four-way strategic dialogue. The new government in Canberra led by
Kevin Rudd, however, has since backed away from the
initiative. Washington should convince Canberra of the
benefits of reviving and elevating a quadrilateral forum
focused on promoting democracy, counterterrorism, and economic
freedom and development in Asia. In the meantime, Washington
should continue to build the bilateral components of such a
grouping--U.S.-Japan, U.S.- India, and U.S.-Australia
relations--and work on a meaningful trilateral agenda among the
U.S., Japan, and Australia that can accommodate additional partners
down the road. The U.S. can also pursue U.S.-Japan-India trilateral
initiatives, especially in the areas of energy and
maritime cooperation, and through the institution of regular
dialogue on Asian security issues. Indian- Japanese relations have
been strengthening in recent years, as demonstrated by Prime
Minister Singh's late October visit to Japan, where he signed a
joint declaration on security cooperation and accepted a $4
billion Japanese loan commitment for infrastructure projects in
India. The security agreement was the third such pact Japan has
ever signed, including one with the U.S. and one with
- Collaborate more closely with India on initiatives that
strengthen economic development and democratic trends in the region
and work with India to counter any Chinese moves that could
potentially undermine such trends in order to ensure the peaceful,
democratic development of South Asia and Southeast Asia. This
will require close coordination on developments in both South and
Southeast Asia and increasing mutual confidence between India and
the U.S. on each other's strategic intentions in the region. The
U.S. should, for example, encourage India's role in helping
Afghanistan develop into a stable democracy by encouraging Indian
assistance for strengthening democratic institutions in
Afghanistan, deepening U.S.- Indian exchanges on developments in
Afghanistan, and ensuring that India has a role in any
regional efforts to stabilize the country.
- Help India strengthen its cooperative activities with
the International Energy Agency to coordinate response mechanisms
in the event of an oil emergency. The U.S. has a major stake in
how India copes with its increasing energy demand and how it
pursues competition with China for energy resources. The U.S.
should work closely with India as it develops its strategic oil
reserves to ensure that the major energy-consuming countries
are prepared to cooperate to resolve any potential global energy
- Avoid any potential India-China military conflict over
unresolved border issues given the U.S. interest in ensuring
stability in the region. Washington should watch their ongoing
border talks closely without trying to mediate. The two sides
are unlikely to reach any breakthroughs in their discussions in the
near future, but Washington should remain watchful for any signs
that tensions are ratcheting upward.
As the relationship between India and the U.S. develops,
Washington will need to pay close attention to the dynamics of
the India-China relationship and be smart about its approach:
Even though Washington and New Delhi share similar concerns
regarding China, Indian officials will balk at any U.S. overture
that appears to use New Delhi to contain or directly counter
Chinese influence. Tensions between the two Asian giants could
increase, especially over their disputed borders and as they
compete in each other's regional spheres of influence. But
there are other, positive trends in Sino-Indian relations, such as
improving economic ties, closer coordination on some common global
political interests, and more frequent diplomatic exchanges. India
and China have a long history and a complicated relationship.
Any misstep by the U.S. that puts India in an awkward political
situation has the potential to damage overall U.S. interests in the
region and limit the prospects for the U.S.-India relationship.
Lisa Curtis is Senior
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