The political landscape of South Asia has changed completely because of the formation of new governments in most of the South Asian countries. India, one of the important players in the region is going to have its general elections in March-April 2014. China also underwent change in its leadership in 2013. Recent years have seen increased competition and repeated rivalries between China and India over the issue of their engagements with South Asian countries. China in this paper is treated as part of South Asia itself as over period of last few decades it has succeeded in connecting itself with this region through well built highways and rail-networks, which has enabled China to have unrestricted access towards Arabian Sea, Bay of Bengal and Indian Ocean. Since long, China has exerted its influence on all the South Asian countries, except India and worked along with all of them for reducing India's influence in the region. This great strategy of China continues even as on today when it has replaced former USSR as a balancer to the USA at the global level.

For India, continuing with the economic growth and seeking strategic autonomy within and around the region remains high on to the agendas of foreign and defense policy makers. Sooner after the declaration of ‘Asia as Pivot’ for US policy towards Asia-Pacific, China's engagement towards South Asia and Central Asia has risen in recent years. China's policy towards South Asia in present decade is to have ‘all weather partnership’ with Pakistan, continue with ‘string of pearls’ policy for encircling India and remain wary of US presence in South Asian region. China's security cooperation with Pakistan, its support for Iran, and likely bigger role in Afghanistan after US's withdrawal in 2014 has made South Asian security very complex. India has a daunting task of not allowing adverse balance of power to emerge in the region. This paper looks into emerging security scenarios with shifting balance of power in South Asian region in near future. The paper analyses the modernization and rising defense budget of China, India and Pakistan along with the U.S. determination to increase its presence in the region. Finally, paper concludes that China's role in South Asia cannot be reduced; rather, India and China need to cooperate with each other for turning South Asia as one of the developed regions of the world by emphasizing upon regional cooperation among South Asian countries, thus making China's engagement with South Asia a success story.

One of the hallmarks of South Asian region has been that much like China; the states of South Asia are multiethnic, multi-religious, multilingual and multicultural. All South Asian states have historic, cultural, linguistic, and religious ethnic links with India and they all share borders with India rather than with each other. The postcolonial geopolitical landscape has created a number of overlapping ethno-religious and linguistic problems in South Asia. For example, Bengalis live in Bangladesh as well as in India; Kashmiris, Sindhis and Punjabis live in both India and Pakistan; more Tamils live in India than in Sri Lanka; Nepalese live in Nepal as well in India and Bhutan; and Tibetans live in China as well as in India, Nepal and Bhutan. Internal security issues in one state inevitably have external security ramifications. Broadly speaking, India's relations with South Asian states have been guided by two major concerns: (1) geostrategic concerns, that is, a desire to insulate the Subcontinent from adverse external forces that might ‘fish in troubled waters’ and thus destabilize India's security environment; and (2) geopolitical concerns, that is, a desire to ensure that geographical proximity and ethno-religious affinities do not lead to instability on or near its borders, particularly as they inevitably affect India's domestic, ethnic, religious and political relationships, and could give rise to secessionist demands within India.¹ For India, South Asia has always been an important area from the point of view of its security. Security concerns have often guided India's relations with its South Asian neighbors. At the same time, South Asian countries have always pursued foreign policies which are India centric. Neighboring countries have always expressed concerns regarding India's domination in the South Asian region. Asymmetrical relationship between India and her neighbors has made South Asian countries to involve China as a counterweight to India, thereby, complicating the security scenario and often resulting in strained relations with India. As a result, South Asian geo-strategy and geo-politics constantly gets influenced because of the presence of external powers like China and the USA in the region.

For China, it has been important to keep Indian influence at bay in recent years and China has been of the view that problems and disputes should be handled strictly according to the Five Principles of Peaceful Coexistence without resorting to force or other means. From Beijing's perspective, ‘whether China and Nepal, Sri Lanka, Bangladesh, or Pakistan wishes any particular relations is exclusively for them to decide. For India to attempt to dictate or limit those relations is unacceptable.’ In their meetings with these countries, the Chinese continue to bemoan India's ‘big brotherly’ and ‘hegemonic attitude’. Emphasizing that ‘all countries, big or small, should be treated equally’, Beijing has long been critical of the use of coercive strategies aimed at ensuring New Delhi's security interests are not compromised by their ties with China.² However, it is now a foregone conclusion that South Asian security/balance of power cauldron, often quadrilateral is characterized by the geostrategic/geopolitical intertwining of the security policies of nuclear powers China, India and Pakistan with the presence of US as external nuclear power. China's ambitions in the Indian Ocean region and Arabian Sea further complicate the situation. For China, deepening of Indo-US strategic cooperation in recent years is seen as strengthening of balance of power against it and containing its influence in Central, South, South-East Asia and South Pacific region. At the same time, Sino-Pak strategic cooperation puts strain and pressure on India's security policy.

China's deeper involvement in Nepal, Sri Lanka and Maldives has certainly rang alarm for India. Extending of its Rail network right up to Kathmandu from Tibet's Lhasa would bring it very close to Indian borders. India's perceived security threat emanating from this step of China would also depend upon this factor that Nepal would like China to have a stronger foothold on their soil or not. At the same time, Nepal would prefer development of such rail cum road networks from China side so that trade and commerce gets easier and its dependence on India gets reduced to some extent. For India, it would be necessary to help these countries in developing and enabling them to stand on to their own feet. It would go a long way in winning the trust of its smaller neighbors rather than coercing them on every issue because of its strategic consideration. As on today, both India and China are into competition mode through providing bigger economic aid to Nepal running into billions of dollars. India by remaining constantly engaged with leadership in Nepal has not allowed China-Nepal ties to overshadow its ties with Nepal. It has adopted pragmatic approach by allowing democratic forces to grow stronger in Nepalese politics. With the conclusion of elections to the formation of second Constituent Assembly in Nepal, it is expected to fasten the process of Nepal limping back to normalcy in early 2014. Doubts regarding China exercising influence over Maoist groups stands diminished after the electoral defeat of Maoists group in recent elections in Nepal.

Within the region, China has established stronger relationship with Bangladesh and Bhutan, while India continues to have better relationship with the two nations and has received firm assurances from these countries not to allow their territories to be used by non-state actors for carrying out illegal activities in India. Last year Indian Prime Minister Manmohan Singh visited Dhaka though lack of agreement on Teesta river water overshadowed the visit. In principle, India has decided to hand over 111 enclaves (about 17, 160 acres) to Bangladesh; Bangladesh is to transfer 51 enclaves (about 7, 110 acres) to India thus resolving one of the long pending issues with Bangladesh, however, this land agreement is yet to be approved by the Indian Parliament. Indo- Bangladesh relations are passing through one of the best periods because of the personal chemistry between Prime Minister Man Mohan Singh and Prime Minister Shiekh Hasina's second government which strongly favors good relationship with India. No doubt, policy of non- interference in internal politics and greater accommodation over economic and trade relationships with these countries has helped many South Asian countries to not see India as their adversary. India has developed the technique of avoiding over play of China factor in its relationship with South Asian countries, however, Pakistan remains exception to it. The dynamics of China-India-Pakistan security dilemmas is discussed in later section.

About Sri Lanka also, India's policy has been to keep itself away from its domestic politics. India certainly is very positive about helping Sri Lankan government in rehabilitating Tamil people in millions who got badly affected during military versus LTTE war. Regarding Chinese help in developing Hambantota Port on Sri-Lankan coast, it was only after India's reluctance to undertake this project that China got this contract. In the past Sri Lanka has shown its preference for Chinese FDI. Though, it has also entered into free trade agreement (FTA) with India. For Sri Lanka, victory against LTTE has removed a constant India factor as irritant from their bilateral relationship greatly reducing the chance of seeking balance against India for roping into external powers like US or China like in past. As on today, Sri Lanka continues to nurture grudges against India for having stopped Prime Minister Man Mohan Singh from visiting Sri Lanka during CHOGM Summit last year just after months when India had abstained during UNSC Resolution against Sri Lanka for having violated human rights of hapless Sri Lankan Tamilians during its war final war against LTTE. Recent developments in Maldives also have shown that India did not intervene into its internal affair and allowed fresh elections to take place after removal of President Nasheed from his office. India has been of the view that growing stronger of democracies in South Asia would bring more stability in the region. Democratization shall force host governments to pursue people's welfare programme. India has been supportive of the idea of democracy getting stronger in Bhutan. The tendency of overtly seeking help of China in reducing India's influence in the region on part of South Asian countries except Pakistan has reduced.

As discussed in preceding sections, Chinese leadership is making an effort in improving its relations with Myanmar, Bangladesh, Nepal and Sri Lanka, along with China's growing military and economic power in East Asia, South Asia and Central Asia, proves a new world order, other than the one to the advantage of U.S., is in the making, and majority of analysts believe that this development is the cause of serious concern for the U.S.. U.S. needs to check the fast growing strength of China in the Asian continent, so that China may not tilt the balance of power against U.S. Therefore, U.S. is trying to keep India away and counterbalancing China with India to support its hegemonic ventures coupled with its desire to have a sway over the entire continent of Asia. US recognizes China as a giant economic power but at the same time it would interplay diplomacy to restrain China's emergence as a potential power in Asia, Hence the diplomatic game is more political than military in clipping Chinese power. The progress accomplished by China in recent years in the political, economic, military, science and technology and other sectors, suggest that, probably America want to play India as counterweight in the coming years, keeping the strategic compulsions of India in mind and this makes the issue of US-India and Sino- India relationship as a centre of serious debate.³ Another noted scholar is of view that the traditional Sino-Indian geo-political rivalry has thus acquired a maritime dimension, as Beijing is laying the groundwork for a naval presence along maritime chokepoints in the South China sea, the Malacca Straits, the Indian Ocean and the Straits of Hormuz in the Persian Gulf through acquisition of or access to naval bases in Cambodia, Burma, Bangladesh, Sri Lanka and Pakistan to protect its long term economic security interests. For its part, India has countered the Chinese efforts by promoting defence cooperation with Iran, Oman and Israel in the west while upgrading military ties with the Maldives, Madagascar and Burma in the Indian Ocean and with Singapore, Indonesia, Thailand, Vietnam, Taiwan, the Philippines, Australia, Japan and the US in the east. As part of its ‘Look East’ strategy, India has concluded over a dozen defense cooperation agreements over the last decade and the Indian Navy has been holding joint naval exercises with East and Southeast Asian countries to signal to the Chinese navy that its future presence will not go unchallenged.⁴

China has several objectives which shapes its South Asia policy like; China pursuing good neighborly policy in order to reduce the influence of the US in the region and getting recognition as responsible and great country, China maintaining a balance between Pakistan and India and pursuing policies so as to keep India tied down to the South Asian region only, maintaining cordial relationship with all smaller countries including Nepal to isolate and marginalize India's influence over the region. China has been focusing a lot on the economic development of the Tibetan region which would prove beneficial to many countries of the region including more benefits for Nepal.⁵ Seen in backdrop of China posing security challenges to India in South Asian region under ‘String of Pearls Policy’, India apart from pursuing goals of modernization and indigenous production of its defense equipments, it has strengthened its relations with Myanmar, Vietnam, Singapore, Thailand, South Korea and Japan. India's deeper engagements with ASEAN countries in the 21^st century has yielded sufficient fruits by helping it to develop larger strategic understanding with these countries which have security concerns emerging from China's side. India has also been able to develop close cooperation with Australia and New Zeeland also. India's engagements with regional groupings like BIMSTEC, MGCI, CLVM and BCIM⁶ have yielded positive results. India has also taken several measures for responding to this emerging complex security scenario in South-East Asian region and is expected not to lower down its guard when China has been making open pronouncements against Indian oil-companies’ presence in South-China sea. China has also expressed reservations over India seeking closer cooperation with ASEAN countries, specially Myanmar and Vietnam. China's assertive behavior came to forefront recently when no resolution on South-China Sea could be passed during ASEAN Summit held in Cambodian capital of Pnom- Phen in mid July 2012.

Pakistan's former Prime Minister Yousuf Raza Gilani once described the relationship between Pakistan and China as being ‘higher than mountains, deeper than oceans, stronger than steel and sweeter than honey.’ Present Prime Minister Nawaz Sharif has echoed similar sentiments about its relationship with China. In 2006, Chinese President Hu Jintao had declared equally evocatively that ‘China can leave gold but not friendship with Pakistan’. Shorn of the hyperbole, these statements accurately capture the essence of the two countries’ long-standing partnership based on mutual trust and understanding. From China's perspective, Pakistan serves many of its vital geo-strategic objectives in the region. First, friendship with Pakistan provides a useful counterbalance to India's pre-eminence in South Asia, helping to check India's growing presence and clout in the region. Second, Pakistan serves as an important gateway to the Muslim world. It also provides China an access to energy rich countries in Western Asia, helping China meet its growing energy requirements. It also provides a quick physical channel to China's relatively less developed Western parts, particularly spurring development in the restive province of Xinjiang, which is crucial to China's internal security. Third, it helps China in its long-term strategy of keeping US pre-pond rent influence in the region at bay. From Pakistan's perspective, China is an indispensable ally in helping Pakistan counter India with which it has had an acrimonious and unequal relationship for the last six decades. In addition, given US fickle track record as an ally in the past, Pakistan has a stake in reducing its dependence on the US and cultivating China as a reliable strategic partner in the regional security scenario. Pakistan is also heavily dependent on China for its vital defense supplies and critical help in augmenting its technological and nuclear capabilities. Last, but not the least, China provides it crucial moral and diplomatic support in the international arena in its time of need.⁷

Reinforcing their past relationship further, Prime Minister Nawaz Sharriff and Chinese Premier Likeqiang recently signed an agreement for the development of a national ‘Economic Corridor’ that would connect Kashgar in China and Gwadar Port in Arabian Sea, involving a sum of $ 18 billion in May 2013, is going to change the geo-strategic and balance of power scenario of the entire region for next several decades to come. As discussed, China has helped Pakistan to pose counterbalance to India and presently it is helping Pakistan to tie down the US in its war against Afghanistan. Given China's stake in the region, it would not like to see Pakistan as a failed state and it might step in bigger aid in Afghanistan after US pull out in 2014 and continue to shore up Pakistan's internal security. However, past decade and a half has witnessed nuclear and missiles technological cooperation between Pakistan and China gathering strength. Pakistan's nuclear programme is largely attributed to China's help. Iran's nuclear imbroglio is largely attributed to Sino-Pak nuclear nexus. China provided short range M-11 Missile, which was named as Shaheen. Pakistan also acquired from North Korea Dong-Feng’ Medium-range missiles. For the past few decades China has pursued such policy towards Pakistan so as to enable Pakistan to close military and strategic gap vis-à-vis India. A noted Indian scholar Brahama Chellaney has always cautioned Govt. of India to be wary of Chinese ambitions in the region. He does not want India to make any compromises with China. C.V. Ranganathan, has rightly observed, “The triangular relationship between China-India-Pakistan is interestingly poised and opportunities have been open up for the management of this delicate triangle to the benefit of all three.”⁸

Another crucial factor that China bears in its mind is that it is through Pakistan that extremist elements might stoke ethnic revolt in Xin-Jiang province of China where considerable Muslim population resides. China would never like that any nexus between these Islamic elements receives support of Pakistan Government. Pakistan is allegedly holding discussions with Chinese Government for allowing them a greater presence in Gilgit and Baltistan area of POK. China is already developing crucial infrastructure related projects like roads, tunnels and rail networks in the POK area that would enable China to establish a land route through this difficult terrain region to Gwadar Port being constructed by Chinese engineers, which has lot of military and strategic importance. China's military is making all efforts to develop communication links in POK and lay railways lines to connect Xinjiang province to Pakistan. This is China's new ‘Silk Route’ to the west. India's leaders need to put a plan in place to counter China's moves to dominate South Asia and aggressive designs on Indian territory in Arunachal Pradesh and Ladakh.⁹ Overall, China, India and Pakistan, all three of them being nuclear power states are of immense significance particularly in the context of security in the South East Asian region. The Southern Asian security triangle is characterized by the geostrategic/geopolitical intertwining of the security policies of all the three powers.¹⁰ China-India-Pakistan relations during last six and half decades proves the fact that the sense of insecurity among them about each other is deep rooted in the objective reality of their geopolitical and historical experiences leading to the complex trilateral relationship that exists between these three nations. China-India-Pakistan, have an immediate impact on, and response from, the other two. The dynamic of the three-power relationship in Southern Asia has predominantly been one of enduring antagonism between India and Pakistan, ambivalent friendship and discord between India and China and close cooperation and strong friendship between Pakistan and China.¹¹ Pakistani observers, argue that their country's relationship with the People's Republic of China arises from the need to counter Indian dominance of the subcontinent.¹² Most Pakistani characterization of China is as that of loyal friend who helps out at times of acute crises, by diplomatically pressuring the opposing side or by providing moral and material support. Though in post Kargil period, China has made it clear that all India-Pakistan issues ought to be settled through bilateral dialogue and China does not want being hyphenated in Indo-Pakistani equation.

Both the countries seemed to be caught in an ongoing arms race between them just on the patterns of U.S. and former U.S.S.R. during hey days of cold war. China in recent past surprised the world by destroying a satellite in space by its newly developed missiles/rockets capability. It has also shown to world of its new technological capabilities by developing J-20 Stealth Bomber. China also has successfully developed Deng Fong ICBM having capability to cover a distance of 5000 Kms. It has also acquired an Aircraft Carrier and is also making three more aircraft carriers which would help it in acquiring a capability of true ‘Blue Water Navy’.¹³ It has very fast bridged gap in space sector vis-à-vis western world. China's emergence of world's second largest GDP in recent years has helped it in going for modernization of its defense forces in a very big manner. In recent past years, Russia¹⁴ has emerged as one of the largest suppliers of arms to China in order to overcome its economic crisis. For Russia, China has a large surplus of US dollars that enables it to import latest defense equipments which has not even been made available to Russian forces. China today has attained global force projection; it continues to pose serious security challenges to its neighboring countries like India, Vietnam, Malaysia, Philippines, South Korea and Japan. Its economic surplus has led to normalization of relations with Russia by turning Russia to be the largest exporters of weapons to China and helping it in carrying out the modernizations of its defense forces. Until last year, China was the biggest importers of arms in the world as well as had the highest defense budgets in the world. China has begun laying claim on entire Yellow Sea, East China Sea and South China Sea as areas of its core interests, thus, raising serious differences with countries like Japan, Vietnam, Thailand and Philippines over demarcation of maritime boundaries. It has also been opposing the presence of US Navy in areas of its core interest. In past, it has also tried to increase its presence in Bay of Bengal, Arabian Sea and disputed India's presence in Indian Ocean region by openly stating that China has valid interests in this region too for the sake of keeping all the ‘sea lanes’ opened round the year. It is this new strategic approach on part of China that has raised serious doubts within minds of all neighbors including India.

No doubts, China factor is firmly embedded in India's foreign and security policy into the 21^st century. For India, economic development along with maintaining strategic autonomy in its foreign affairs is very crucial from the point of view of the current UPA-II Government at the center. Despite the fact that India has been slow to match the pace of China's quest for defense modernization for the fear of kickbacks in defense deals. India has succeeded in establishing strategic cooperation with all-important countries of the world including China. It has pursued its defense modernization programme in a steady manner. It has diversified its defense procurements unlike in past when it was largely dependent on Russia for its defense related needs. Just after retaliation of PLA's incursions in summers, Govt. of India¹⁵ announced the spending of Rs. 64, 000 crore ($10 billion approximately) to raise a new strike corps against China in the eastern sector, the first of its kind against the giant northern neighbor China in July 2013. The recent decision of going for French made 126 Rafale multi-role fighter aircrafts worth $10 billion and rejecting offers of US companies pointed that India's procurement policy is less affected by politics rather more guided by objective factors. India has already finalized deal with Russia worth 30 billion $ for FGFA SUKHOI T-50 PAK FA and T-90 Tank worth $800 million. It has acquired P81 Submarine Hunter worth $ 2.1billion and C-17 Globe Master III worth $ 5.8 billion from USA.¹⁶ India in last few years has imported weapons and aircrafts from US, Russia, Sweden and Israel as well. India became the largest importer of arms¹⁷ last year in the world. Its missiles development and space programmes are moving ahead satisfactorily. India also has aircraft carriers and few more are being developed indigenously is again a matter of satisfaction. Aircraft Carrier Gorshkov (INS Vikramaditya rechristened Indian name)of Russian origin recently joined Indian Navy which would multiply its capabilities in Indian ocean region. Indian Navy also inducted indigenously built nuclear propelled ‘INS Arihant’ in August 2013. India has also undertaken development of infrastructure in areas close to borders from all sides. As China built a rail line to move its troops into Tibet, the Indian Air Force¹⁸ moved its Sukhoi MKI squadrons closer to the border. Indian government has been pursuing policies in commensurate with its economic goals not getting hampered just because of skirmishes or war taking place on its borders. India's defense budget in past few years also has seen significant rise. At a more strategic level, the IAF has been enhancing its airlift capability. First, it inducted the C- 130 Super Hercules, and then the cabinet sanctioned 10 C-17 Globemaster strategic airlift planes,¹⁹ which was recently flown to Daulta Beg Oldie (DBO) airstrip area which has been operationalized recently after the end of Sino- Indian Border conflict in 1962 and is being opposed by China resulting into increased cases of incursions near LAC. Pending these issues, China and India need to enter into arms control dialogue with each other. China cannot be allowed to push India-Pakistan to such a mechanism at bilateral level or South Asia level alone without entering into similar kind of arrangement with both of them. It would be in the interest of both the countries that they do not get caught in arms race like scenario. Both have to have credible deterrence capabilities but at the same time they must show willingness to put into place such mechanisms on patterns of US and former USSR. Rather, attempts must be made that China plays a constructive role in South Asia by impressing upon Pakistan to agree to some kind of institutional arrangement so as that South Asia does not remain on the brink of nuclear war ever. So far, China has not shown any keenness in engaging India over arms control negotiations rather it has preferred to exert pressure on India's nuclear and missile's programme through international nuclear and technology denial regimes.

The recent shift in China's policies in South and South East Asia particularly against Pakistan and India could be attributed to the change in the global strategic order that has been gradually unfolding ever since the end of cold war and 9/11 attack. The US predominance is growing more conspicuous; after the counter- terrorism assumed global significance the influence of the US in the world affairs is getting increased; the US withdrawal from the ABM treaty, collapsing the strategic stability, has exposed the US ambition of maintaining uni-polar world under its leadership. The US has successfully expanded the NATO by including more east European countries, which were allies of former Soviet Union.²⁰ The US President Barak Obama and his State Secretary Hillary Clinton have openly advocated increasing the presence of US Naval Forces in Asia- Pacific region because of ever growing Chinese threats to its neighbors in Southeast.²¹ China is wary of US presence continuing in Afghanistan even after President Obama's declaration of recalling US forces from there by 2014. Cooperation between Russia and China has hardened US posture towards them which has led to the precipitation of Iranian Crisis in Persian Gulf region. Given the outbreak of war US/NATO forces are expected to operate from bases in Central Asian Republics only. China is expected to maintain significant level of strategic cooperation with Pakistan for success of its policies towards Islamic world also. China's stand on Syrian crisis is also to be seen through this perspective only when in recent past China and Russia both vetoed US supported UNSC resolution for authorizing use of forces against Syria in July-Aug 2012. For China, improved Indo-US relations may influence India to create trouble in Tibet and South China seas close to Taiwan by ingloriously supporting its cause have led to this Chinese shift in its approach towards South Asia. China has taken very hardstand against the presence of Indian oil companies in Vietnamese territory in South China Sea. India in past has mended its relationship with Myanmar also and Indian Prime Minister visited Myanmar in mid 2012. This policy of Govt. of India has been very important, as it has helped India in keeping a check on those rebel groups who had been operating from Myanmar's soil against her national interest. After this development, internal security scenario in Northeast has improved considerably. Experts say, the growing economic relationship between China and India is so critical to New Delhi, that its interests in China cannot be threatened or replaced by any agreement with the United States. For past one decade, emergence of very close politico-strategic cooperation between India and USA has made China to pursue its policies in South Asian region aggressively.²²

India and China, recently, have resolved to improve communications with each other and identified West Asia, Central Asia and Africa as areas where they would hold a regular dialogue. The visit of Chinese Premier to India in June 2013 and Indian Prime Minister Manmohan Singh's return visit to China in October 2013 led to the signing of important Border Security Agreement between India and China which brought a thaw between both the countries after the April 2013 incursions into Indian Territory. It must be said that India ought to remain careful in not getting trapped into the strategies of major powers always that is likely to escalate the cost of its security and putting immense burden on country's socio-economic developmental programs. Both the countries have shown enough restraint towards each other so as to ensure that they avoid direct confrontation and rather remain engaged through dialogues. The way India and China are engaged and collaborating at Global level on issues of WTO reforms, issues of Climate Change, Energy Security and Global Terrorism, this form of synergy is needed at bilateral as well as South Asia level too. India also cannot go on overplaying bogey of China's domination in the sub-continent beyond an extent as India also knows it well that China's trade to a tune of 60 percent takes place through Arabian sea and Indian ocean region.

The relationship between the USA and China, and India and China are normal at the moment yet China is identified as USA's global rival and India's regional rival. The relationship between China and the US is not without suspicion and competition still China is more important than India for US with regard to global and Asia pacific economic development and various security issues. There are other forums where both stand engaged with each other like, BRICS, BASIC, EAS, ARF, and SCO. However, ‘String of pearls’ thesis and the fear that China is “encircling” India by building close relations with smaller South Asian neighbors like Nepal and Sri Lanka is not uniformly shared within the government. China realizes well that India has moved much ahead from 1962. China also has its own set of problems on domestic front, its dependence on multilateral trade and institutions have increased by several times. China's dependence on global export has created a problem of its own kind. China has so much of trade surplus in its favor on worldwide basis that it is lending to US as well EU countries by buying government issued treasury bonds and helping these countries in keeping interests rates very low and keeping their fiscal deficits under control. But at the same time it is getting caught into a trap that if any economic recession were to persist for a longer duration then China's exports earning would come down and it may have serious repercussions for China on domestic front. Demands for more wages by workers, a change in Communist Party leadership which is in offing, demands for more democracy, ethnic dissensions, and large looming threats of war in Persian Gulf can have serious repercussions for China's resurgence/domination in the region. After Russia's resurgence, who would dominate the Central Asian region, will US and Russia align together against China, or US-India-Japan would stand against China, or US-China would work together because of huge economic dependency upon each other are some issues which are of very important nature demanding more analysis in future. China's ultimate aim of emerging as one of the significant poles of the international system with global responsibilities and China's goal to concentrate on its developmental energies is one of the determinant factor responsible for shift in China's policies with regard to Pakistan and India.

China and India have been competing with each other over the development of infrastructure in areas close to their borders. Both the countries were faced with a stalemate like situation in areas close to Indian side of LAC in Leh Ladakh area because of PLA's incursion in those areas in March–April 2013. In recent past, issues like denial of visas by China to senior army officers posted in Kashmir and Arunachal Pradesh; protests by Tibetan students in New Delhi; arrest of Indian traders and then their release in one of the China's province; denial of contract to Chinese company over security concerns by India; have been certain pin pricks between India and China, where both have shown greater accommodation towards each other. It can rightly be said that benefits far outweigh the number of differences India and China have and so far, both countries have shown pragmatism in managing their relations. India's trade with China in year 2011–12 was $70 billion which came down to $ 63 billion in 2012–13 and again it is expected to reach $ 100 billion per annum by 2015.

In essence, China's engagement with South Asia shall continue to shape broad contours of Indian foreign policy in the 21^st century. India would prefer to remain wary of getting ensnared in any U.S. led initiatives that might be perceived as “anti-China” and thereby complicating its relations with Beijing. Multi prong approach towards the world and the region in and around all-important issues had been the hallmark of UPA government. India has now found confidence in various sphere of its military, economy and other areas, that today no major international issues can be concluded without the participation of India. Pending WTO reforms, finalizing of Climate Change Treaty or means for extracting world out of economic recession, everywhere India's voices are being heard. It is this new change on part of India, which has potentials for warranting special attention of China in its relationship with India along with other South Asian neighbors. China has been taking stand on global issues as a responsible power along with other major powers inside and outside the United Nations. China's arms transfers and cooperation with Pakistan continues but at the same time it has been trying to introduce element of independence in its relations with India. Though Pakistan has counted on China's support in maximizing its power capabilities down the years but in recent times Pakistan has also been willing to adopt a soft approach towards India and it is reflected from resumption of talks between Manmohan Singh and Nawaz Sharif recently in New York on 29 Sep 2013. Notwithstanding, resumption of bi-lateral talks between India and Pakistan and India and China, Sino-Pak strategic cooperation and rivalry between India and China would continue in future too. India also need to remain realistic that presence of NATO/US forces in Afghanistan and some Central Asian Republics next to China always remains a security concern and they are expected to take appropriate decisions and China's proximity with Pakistan has to be understood differently. South Asian countries ought to learn managing their relations with China and India both to their advantage without being responsible for pitting China and India against each other. China's role in South Asia cannot be reduced, rather, India and China need to cooperate with each other for turning South Asia as one of the developed regions of the world by emphasizing upon regional cooperation among South Asian countries, thus making China's engagement with South Asia a success story.

Reference