China, India and the land between

Michael Vatikiotis – Asia Times

Copyright Asia Times
4 March 2006
SINGAPORE – Strategic analysts often regard China’s
extraordinary rise as a direct challenge to the
primacy of the United States as the sole global
superpower. But sometimes lost in the debate about the
pros and cons of China’s emergence is the political
and economic significance of India’s concomitant rise
onto the global scene.
A Pentagon strategy report issued in January clearly
identified China as the greatest potential threat to
the US military. Certainly a new Cold War revolving
around US-China strategic rivalry would be bad news
for the rest of Asia, let alone the world. But it is
just as likely that China will pursue its regional
interests peacefully, as it has over the past decade,
and that a warming trend between China and India will
pay huge dividends for Asian security and economic
For Southeast Asia, long under the United States’
political and economic influence, the future of
India-China relations will arguably have a bigger
future impact on the region’s stability and
prosperity. In the historical long view, India and
China were the two most important influences on the
commercial, cultural and political development of
early Southeast Asia. Hinduism and Buddhism came from
India and helped forge the early state systems; people
and goods came from China, helping to establish a
vibrant network of commerce that made Southeast Asia
an attractive prize for European colonizers.
Lying between India and China has therefore always
been Southeast Asia’s principal geostrategic asset.
Colonial intervention obscured this natural geographic
advantage, distorting local trade patterns and
aligning the region economically with Europe. The
restoration of China’s and India’s power makes this
historical synergy relevant again. For all the
distortion of time and space that globalization and
technology would have us imagine, there’s no stronger
influence on human behavior than hard geographic
China and India are often cast as antagonists because
of a short war they fought in 1962 over the contested
territory of Ladakh, with China initiating the
military action. However the legacy of mistrust was
less about the month-long military campaign that ended
in a stalemate, and more about India’s sense of
betrayal at the hands of China.
India’s first prime minister, Jawaharlal Nehru, had
lent crucial support to the isolated new revolutionary
regime in Beijing after 1949. He saw the communists as
an important bulwark against resurgent Western
imperialism. This past notion of China and India
supporting each other as emerging Asian powers lies
very much at the core of new strategic thinking in New
Delhi and Beijing that transcends the 1962 war and
envisages the former rivals building a broad political
and economic partnership.
China and India have recently laid down clear markers
signaling a closer relationship. Prime Minister Wen
Jiabao made an official visit to India last year, the
first by a senior Chinese leader in a decade. This
year President Hu Jintao will visit Delhi, possibly in
May, and Prime Minister Manmohan Singh will make a
reciprocal visit to Beijing later this year. Indian
President A P J Abdul Kalam told a Singapore audience
in February that the wounds of 1962 had healed.
Indeed, the two countries have formally declared 2006
Sino-Indian Friendship year.
Trade and investment are skyrocketing. Bilateral trade
in 2005 was up almost 40% from the previous year at
US$18.7 billion, and China is soon expected to
overtake the US as India’s largest trading partner.
India’s high-tech companies, such as Infosys and
Satyam Computer Services, are flocking to China, where
there are opportunities for applying research and
innovation in cost-effective ways. Infosys recently
established a new software development center in
Shanghai, employing more than 200 local engineers.
China’s manufacturers, meanwhile, increasingly view
India as a potentially vast market for its
manufactures, particularly appliances and cars, as
well as the steel that is used in their production.
Political leaders are cheering the trend. Speaking in
Shanghai in early January, Indian Foreign Secretary
Shyam Saran said India and China “are too big to
contain each other or be contained by any other
country”. He spoke of both countries fashioning a
“strategic and cooperative partnership for peace and
Peaceful rivals
Diplomatic niceties aside, India and China appear to
have put their bitter past behind. But the world’s two
most populous countries will no doubt continue to
regard each other as competitors in terms of power and
influence, and neighboring Southeast Asia with its
mature and increasingly lucrative consumer markets
will be the arena where they compete head to head.
China has always had a strategic interest in Southeast
Asia, where it supported communist insurgencies and
governments across the region during the Cold War.
More recently China has arguably taken a more
diplomatic approach in pursuit of its strategic
interests, although it is widely criticized for
propping Myanmar’s autocratic regime, where it
maintains strategic listening posts aimed at India.
Now with India’s “look east” policy initiated in the
1990s, India is beginning to assert its influence and
interest in Southeast Asia in more forceful ways.
Militarily, India and China both go to great lengths
to avoid the forward-basing of military assets in
Southeast Asia that would threaten each other’s
boundaries or develop a coercive advantage. Both
countries maintain they only aim to develop their
economic and political clout in pursuit of building
regional alliances and partnerships, rather than
forging competitive spheres of influence.
Consider, for instance, the diplomatic way in which
India successfully inserted itself into the East Asian
Community unveiled last year in Kuala Lumpur, which
China had originally envisaged as its own exclusive
preserve. China has been busy in recent years sewing
up strategic partnerships with Association of
Southeast Asian Nations (ASEAN) members that include
elements of security cooperation and agreements that
ensure they do not take sides in any conflict with
China. For its part India has started flexing its
military muscle and offered to help patrol the Malacca
Strait, ostensibly to ward of terrorist and pirate
China in turn has rather neatly entered into the South
Asian power equation. At last November’s South Asian
Association for Regional Cooperation summit, China
enlisted help from Nepal, Bangladesh and Pakistan to
force India to accept China as an observer and
dialogue partner in the regional body.
The quest for oil is a strategic priority for India
and China, both of which rely on crude-il imports for
70% and 40% of their needs, respectively. Competition
for overseas supplies has already seen some ferocious
bidding wars, most of which China has won. This year
CNOOC Ltd – of the state-owned China National Offshore
Oil Corp – beat out India’s Oil and Natural Gas Corp
to buy a 45% stake in a Nigerian oil and gas field for
$2.3 billion. In the past two years, China has trumped
India in Kazakhstan, Ecuador, Angola and, most
recently, Myanmar.
With stakes so high, the two countries have agreed to
cooperate rather than compete. In January, Indian Oil
Minister Mani Shankar Aiyer signed an agreement to
cooperate with China in securing crude oil resources
overseas. The landmark deal is aimed at preventing
fierce competition for oil driving up the price of
“It is clear to me that any imitation of the ‘Great
Game’ between India and China is a danger to peace,”
Aiyer said. “We cannot endanger each other’s security
in our quest for energy security.”
Perhaps this agreement reveals something of how Asia’s
new emerging superpowers intend to behave.
Comfortably in the middle
What can, and should, Southeast Asia do to influence
the competing agendas of these two Asian leviathans?
Probably very little, but the region’s leaders would
serve their interests well by seeking to balance the
new yin and yang of Asian power. Over China’s initial
objections, India was accommodated in the East Asian
Community last year, helping to offset concerns in
some ASEAN countries that the arrangement was too
Apart from regional talk shops, India and China are
expected to avoid any head-on confrontation. Both
countries’ leaderships arguably share a new sense of
pragmatism, which understands the risk confrontation
poses to economic progress. The best demonstration of
this has been with regard to Pakistan. China has long
backed Pakistan, using significant military and
financial aid, to prevent India’s northward and
westward hegemonic extension. Yet Beijing’s ties with
Islamabad have, perhaps surprisingly, not proved a big
obstacle to the recent improvement of India-China
China stays out of the Kashmir quagmire, in return for
which India doesn’t play games in Tibet – although the
Dalai Lama still maintains his headquarters-in-exile
in the northern Indian town of Dharamsala. Beijing is
notably backing India’s candidacy for permanent
membership of the United Nations Security Council,
although partially as a ploy to scupper Japan’s bid
for permanent membership.
Southeast Asia stands to gain in a number of ways from
growing Sino-Indian cooperation. For one, geography
conspires to make Southeast Asia the easiest access
route between the two powers. In the next few decades,
bankers and businessmen expect to see burgeoning
infrastructure development paving the way for more
China and India trade.
China has already started to build a network of roads
and pipelines running south through mainland Southeast
Asia to help connect Western China to the sea. Along
the East-West axis there is a strong strategic desire
to build pipelines so that oil and gas can be piped
into China and avoid passage through the Malacca
Strait. China’s leaders have said this is less a
question of cost and more about enhancing the security
of China’s energy supplies, notably from a possible US
naval blockade.
Southeast Asia is in a prime position to play the
middleman. With large communities of overseas Chinese
as well as overseas Indians, the region is a natural
meeting point for corporations from both powers. And
although direct foreign investment from China and
India into the region may still be relatively small,
all indications point to rapid future growth.
There are few cultural obstacles for both countries,
and if anything Southeast Asia represents neutral
ground. Both New Delhi and Beijing have recently laid
stress on exploiting their respective ethnic diasporas
in more developed societies such as Europe and the US,
driven mainly by their mutual desire to acquire
technology. At the same time, Indian and Chinese
companies are starting to tap business and investment
opportunities in Southeast Asia’s comparatively more
developed markets, particularly in manufacturing and
banking. And there already is a growing market for
Indian and Chinese entertainment, which will soon
rival Hollywood for command over the eyes and ears of
young Southeast Asians.
Western jealousies
What could go wrong? There is always the risk that
China and India will allow pretensions to power and
national pride overcome their current tendency toward
engagement and cooperation. More worrying is the
potential for the US or Europe to drive a wedge
between the two historic rivals, playing one off the
other to achieve their own political and economic
interests. Both are nuclear powers and both have a
history of flexing their nuclear weaponry as a
bargaining chip with both allies and foes.
There are plenty of potential hotspots. What’s to stop
India, for instance, from using its membership on the
UN Security Council – if it transpires – to block
China’s interests? Both powers, in hot pursuit of new
energy sources, could be enlisted by Russia as a
contiguous and potentially disruptive ally as part of
any energy deal
US President George W Bush’s current four-day visit to
New Delhi underscores Washington’s recognition of
India’s growing strategic importance, politically and
economically. The United States could just as likely
complicate the move toward a new regional balance of
power by pressuring India to forge a China containment
strategy. That’s already happening in Japan, with
Tokyo hastily attempting to shore up ties with India
as a hedge against what it regards as a more
aggressive China.
Such superpower scenarios are all reasonable and
historically borne out, but they are grounded in
Western-oriented assumptions about the behavior of
large powers. The 21st century could just as likely
see the rise of two Asian powers drawing as much on
their historical traditions of diplomacy and
engagement as on the past century’s Western
antecedents of competition and conflict
The Asian tradition has arguably placed greater
emphasis on trade and diplomacy, with war conducted
only on a limited scale and in extreme circumstances.
Nandan Nilekani, chief executive officer, president
and managing director of Indian software giant
Infosys, told global leaders at this year’s World
Economic Forum in Davos that it was time to “change
the perception about India and China being a zero-sum
game” and instead presented them as economies that
offer complementary opportunities.
The United States, Japan and Southeast Asia would do
well to support Sino-Indian rapprochement, which will
produce economic benefits for the wider region and
ideally promote a more peaceful 21st century.
Michael Vatikiotis is former editor of the Far Eastern
Economic Review. He is currently a visiting research
fellow at Singapore’s Institute of Southeast Asian

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