by Lisa Curtis
Heritage.org, Washington, DC
November 25, 2008

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 U.S.-India ties.

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. interests.

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.[1]

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 political activity.

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.

China-India Snaps shot:
http://www.heritage.org/Research/AsiaandthePacific/images/b2209_table1.jpg