China, India rivalry across the globe

Updated: Dec 15, 2010, 13:20 PM IST

Trade between India and China is booming, but diplomatic ties have become increasingly fraught over their competing global aspirations, underlined by a rivalry for natural resources, skewed trade and an unsettled border.

Here are some questions and answers about their rivalry across the globe:

What are India and china competing for?

As their economies expand, the world`s two most populous nations are scouring the globe -- from Asia to Africa and Latin America -- to secure energy resources and food supplies. China, with a decade headstart, firmly leads the race. In Africa, for example, Beijing`s investments in a single country, Ghana, topped the entire Indian investment in the continent in 2006.

Both Asian giants are dependent on energy imports. While Indian state firms are now beginning to invest in African nations such as Nigeria and Angola, China`s hunt for raw materials and resources has seen it pumping billions of dollars into Sudanese oil, mineral-rich Zimbabwe, and Zambia`s mining sector.

Standard Bank, Africa`s largest lender, is 20 percent owned by the Industrial and Commercial Bank of China.

India`s fledging investments in Africa are headed by telecoms firm Bharti Airtel`s USD 9 billion acquisition of the African assets of Zain earlier this year.

India has seen China as a military threat since its defeat in a 1962 war, but with both emerging as uneven economic powers, New Delhi now fears Beijing will use its massive clout to block its global ambitions. India fears China is a roadblock in its quest for a place on the global high table, including a permanent seat on the United Nations Security Council.

What are their geopolitical rivalries?

China is concerned about India`s growing strategic ties with the United States. Several analysts consider a 2008 civilian nuclear deal as a turning point in ties not only between India and the United States, but also indirectly impacting relations with China, which saw it as part of a US move to build up India as a strategic counterweight.

Beijing, in turn, has offered to build new nuclear powered reactors for India`s traditional foe Pakistan, despite global concerns of nuclear proliferation.

What about regional rivalries?

Concern has also mounted in New Delhi over growing Chinese strategic assistance to not only Pakistan, but also Sri Lanka, Bangladesh and Myanmar, countries India has regarded as part of its sphere of influence.

Beijing is helping build ports in Gwadar in Pakistan and Humbantota in Sri Lanka, as well as in Myanmar and Bangladesh in what is seen as a "string of pearls" strategy to build a network of port facilities across the Indian Ocean.

What worries India most is the massive Chinese investment in the region that could be helping it win support of countries New Delhi considers its friends. China has pumped USD 8.17 billion into Myanmar in the current fiscal year. In comparison, Indian investments there total around USD 200 million this year.

India has plans to invest some USD 100 billion over the next decade to modernise its Soviet-supplied military, including strengthening its borders with China, but it still lags the Chinese in military sophistication and remains outnumbered.

What are china`s concerns?

Beijing`s longest running grudge with India is its granting of asylum to the Dalai Lama, who fled to India in 1959 following a failed uprising in Tibet, setting off a chain of events that eventually led to the war between India and China. Beijing, which brands the Dalai Lama a separatist, worries that Tibet`s spiritual leader is using his base in the northern hill town of Dharamsala to keep separatist fires alive.

What about their border dispute?

While a new war is very unlikely, the unsettled border between the world`s two most populous countries remains the biggest single impediment to better relations. The Asian giants still claim vast swathes of each other`s territories along their 3,500 km (2,173 mile) Himalayan border.

But isn`t their trade booming?

Yes it is, but India frets that the trade is greatly skewed.

Despite decades of mistrust, China is now India`s biggest trade partner. The value of bilateral deals is expected to pass USD 60 billion next year, a 30-fold increase since 2000.

But the balance of trade is heavily in China`s favour. India`s trade deficit with China rose from USD 1 billion in 2001-2 to USD 16 billion in 2007-8.

No other country has initiated more anti-dumping complaints with the World Trade Organisation against China than India.

India seeks to diversify its trade basket, but raw materials and other low-end commodities such as iron ore still make up about 60 percent of India`s exports to China. By contrast, high-value manufactured goods form the bulk of Chinese exports. As an example of how India is still heavily dependent on Chinese equipment, Chinese power equipment maker Shanghai Electric Group Co. in late October agreed to sell power equipment and related service contracts worth USD 8.29 billion to India`s Reliance Power over a 10-year period.

That dependence also saw India put aside initial worries that Chinese telecoms network equipment can be used for spying or loaded with "malware", and allowed its imports after securing security guarantees. But Indian suspicion lingers.

India is the biggest overseas market for China telecoms gear firm ZTE Corp, which has a market share of about 15 percent and sold USD 750 million worth of equipment last year.

What is the current state of play?

In recent years Beijing and New Delhi have mostly managed to compartmentalise their differences.

The relationship has matured to the point that, while they can jointly advocate for the interests of emerging economies through forums such as the Group of 20 and climate talks, India has the confidence to attend the Nobel Peace Prize awarding ceremony for a jailed Chinese dissident.

Bureau Report

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