China is steadily extending its reach into South Asia with its growing economic and strategic influence in the region. China’s current trade volume with all South Asian nations reaches close to $20 billion a year. Its bilateral trade with India alone accounts for $13.6 billion a year, a number set to grow to $25 billion in 2010 . Except for New Delhi, Beijing runs trade surpluses with all other partners, including Bangladesh, Nepal, Pakistan, and Sri Lanka. But China makes up for these trade deficits with massive investment in the infrastructural development, socio-economic needs, and above all energy production of its trade partners. Fast on the heels of the U.S. offer of nuclear power plants to India, China has offered Pakistan and Bangladesh nuclear power plants of its own to meet their energy needs. Beijing also showers these nations with low-cost financial capital to help their struggling development sector. The largest beneficiaries of this economic aid are Pakistan, Bangladesh, Sri Lanka, and Nepal – in that order.
China’s Growing Strategic Influence
In keeping with its economic expansion, China has deepened its strategic influence in the region, especially with India’s immediate neighbors – Bangladesh, Nepal, Pakistan, and Sri Lanka. Beijing has long kept a close strategic partnership with Islamabad, but its overtures to the remaining countries were hobbled by the 1962 Sino-Indian war and its protracted pariah status as the “communist other,” which it endured until the early 1970s. China’s entrée in South Asia gained momentum only after its conversion to the market economy in the 1980s, which filled its coffers with trade and investment dollars. Its resultant economic strength opened the path into South Asia, beyond Pakistan. China skillfully deployed economic incentives to draw Bangladesh, Nepal, Pakistan, and Sri Lanka into its strategic orbit.
For China, Bangladesh is a doorway into India’s turbulent northeastern region, including the Indian state of Arunachal Pradesh, to which China lays territorial claims. More importantly, Bangladesh is believed to be causing a seismic demographic shift in another northeastern state, Assam, where Indian leaders claim some 20 million Bangladeshis have moved in. Indian officials fear the emergence of Assam as the second Muslim-majority state within the Indian union, after the state of Jammu and Kashmir.  Above all, China prizes Bangladesh for its immense natural gas reserves (60 trillion cubic feet) which rival those of Indonesia. Bangladesh’s geographic proximity with Myanmar makes these reserves accessible to China. India’s access to Myanmar’s gas reserves also hinges on Dhaka’s willingness to allow a passage for laying a gas pipeline – a fact not lost on Beijing.
Unlike Bangladesh, Nepal has little energy potential to tempt Beijing, but its strategic location between China and India makes it just as important. Nepal’s borders meet China’s restive western province of Tibet on the one hand, and Naxalite-dominated Indian states on the other.  Nepal’s Maoist insurgents, who control the vast swath of the countryside, have cross-border links with Naxalite Maoists in India as well. Almost 40% of India’s 593 districts are, to a degree, under Naxalite influence. As a result, both China and India vie for Katmandu’s favor. Since the replacement of Nepal’s democratic government with an absolute monarchy in February of this year, India has cold-shouldered Nepal’s King Gyanendra, while China has dismissed the seizure of power as an “internal matter”.  In return, China wants the new ruler to stay clear of any foreign (Indian or the U.S.) influence that could make trouble in Tibet. To further the goal of status quo in Tibet, China is integrating Nepal into the Tibetan economy, and laying a highway that will connect the two.
In the same way, Beijing cherishes exclusive friendly relations with Sri Lanka, which occupies a strategically important heft of the Indian Ocean stretching from the Middle East to Southeast Asia. After 9/11, the U.S. sought access to Sri Lankan ports, airfields and air space for its armed forces under the Acquisition and Cross Servicing Agreement (ACSA). The ACSA is the first such agreement between Sri Lanka and a Western power since its independence in 1948. (Though in the early 1980s, Colombo allowed a radio transmitter on its territory to beam the Voice of America broadcasts into China, Myanmar, and North Korea.) Both China and India would prefer Sri Lanka to stay out of Western alliances, as they jostle for their respective dominant positions. Sri Lanka’s prolonged ethnic conflict between its Sinhalese majority and the Tamil minority has, however, strained relations between Colombo and New Delhi. India, having a Tamil-majority state of its own, treads cautiously in mediating the conflict, which makes it suspect with Colombo. China, however, has no such concerns to balance, and as a result boldly vouches for Sri Lanka’s territorial integrity with little regard for the national aspirations of the Tamil minority.
Of all these nations, Pakistan’s strategic significance is, nevertheless, priceless for China. Although a smaller nation, Pakistan rivals India in unconventional weapons. It has long denied India access to western and Central Asian nations, while at the same time literally paving the highway – Karakoram – for Beijing’s direct access to Eurasia. Above all, it has tied down 500,000 to 700,000 Indian troops in the Kashmir Valley for the past 15 years. By keeping hundreds of thousands of Indian troops engaged in Kashmir, Pakistan indirectly helps ease India’s challenge to China’s defenses on their disputed border. More importantly, Pakistan emboldens the region’s smaller economies to stand up to India and seek Chinese patronage, which hurts India’s stature in the region.
China’s Diplomatic Triumph
Besides these strategic gains, China has also benefited diplomatically from its growing influence with Bangladesh, Nepal, Pakistan, and Sri Lanka. Today, all of these nations affirm the “one-China” policy that views Taiwan as an “inalienable” part of the People’s Republic of China (PRC). Similarly, they are aligned with Beijing on the equally sensitive issue of Tibet, with the result that they all shun the Dalai Lama to Beijing’s delight while proclaiming that Tibet is an integral part of China. In view of China’s eagerness to join the South Asia Association for Regional Cooperation (SAARC), which presently represents the seven nations of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, they speak with one voice for Beijing’s entry into the SAARC – to the palpable annoyance of New Delhi.
India, as the resident power of South Asia, considers the region its “near abroad,” and does not want Beijing to step on to its turf. What unnerves India most is China’s unblinking eye on South Asia’s biggest prize: the Indian Ocean. China has long been vying for access to this important waterway – most recently by building a deep-sea port in Gwadar, Pakistan, along the Arabian Sea coast. (see “Gwadar: China’s Naval Outpost on the Indian Ocean” in China Brief, Vol 5, Iss 4) As much as India would like to push China out of its sphere of influence, it does not have the regional or international clout to stem Beijing’s march on South Asia or the Indian Ocean.
China, however, does its part to calm the nerves in New Delhi. Prime Minister Wen Jiabao’s four-day visit this month (April 9-11) to India attests to China’s charm offensive on New Delhi. China’s major goal behind this offensive is to keep India from forging military and strategic alliances with the U.S. against Beijing’s territorial interests, i.e., reunification of Taiwan with mainland China. China, well aware of India’s historical concerns for its territorial integrity, deftly plays on its nationalist instincts and its visceral aversion to foreign powers. Therefore it comes as no surprise that Wen was able to convince New Delhi to agree to form the “India-China Strategic and Cooperative Partnership for Peace and Prosperity.” The partnership has been touted in Beijing as “the most significant achievement” of Wen’s four-nation tour (April 5-12), which took him to Bangladesh, India, Pakistan, and Sri Lanka. 
Wen Goes to New Delhi
China’s role in the treaty has been to offer New Delhi mainly symbolic concessions. First, China accepted the long-disputed territory of Sikkim as part of the Indian Union. Prime Minister Wen even presented Indian Prime Minister Man Mohan Singh with cartographic evidence of his government’s changed stance: an official map that shows Sikkim in India. In response, New Delhi has already backed off its long-held stand on Tibet, accepting it as an integral part of the People’s Republic of China (PRC). Second, New Delhi agreed to accept the status quo on their border dispute until a mutually satisfying resolution is found. China, however, wants to keep Aksai Chin, an area of 35,000 square miles in Ladakh, Kashmir, which it seized from India in 1962. Aksai Chin offers a rare strategic inroad into China’s restive western region of Xinjiang, which makes it even harder for China to let go of it. Third, China agreed to India’s bid for a United Nations Security Council (UNSC) seat, without specifying its endorsement for veto power. Fourth, China has softened its traditional commitment to Pakistan on Kashmir. Part of China’s change of heart on Kashmir also has to do with the reported infiltration of Muslim fighters from Kashmir into the Chinese Muslim-majority autonomous region of Xinjiang.
China, however, seems sincere in making these concessions, whatever their worth, to New Delhi in order to forge a “strategic partnership.” For its part, India is willing to accept this arrangement to boost bilateral trade and ensure energy security, which New Delhi views as a national security matter. Moreover, China is poised to overtake the United States, with bilateral trade of $20 billion a year, as India’s largest trading partner for the foreseeable future. India’s giant appetite for energy resources will soon rank it as the world’s third largest consumer of fossil fuels after the U.S. and China. New Delhi hopes its strategic partnership with Beijing will help sate that appetite without bidding up global energy prices.
Besides calming India, another challenge for China is to keep Pakistan on its side. Islamabad has a long history of military alliances with the U.S. starting from CENTO and SEATO in the past to its present status as the U.S.’s non-NATO ally. And unlike India, Pakistan always has been malleable to Western influence. To staunch such possibility in the future, Wen has drawn Pakistan into signing a “Treaty of Friendship, Cooperation, and Good Neighborly Relations,” which binds both signatories to desist from joining “any alliance or bloc which infringes upon the sovereignty, security, and territorial integrity of the other side” . Gen. Pervez Musharraf, Pakistan’s president, kept the contents of the Treaty under wraps by disallowing the release of its full text, which China’s People’s Daily had published anyway. Nevertheless it is obvious which of the two will have to avoid unwanted alliances, and whose interest of “sovereignty, security, and territorial integrity” will be affected.
China has invested in South Asia’s smaller economies of Bangladesh, Nepal, Pakistan, and Sri Lanka to gain a strategic foothold and build a diplomatic profile in the region. This effort has transformed the region from India’s purported “near abroad” into China’s own backyard. Its strengthened position in the region has enabled Beijing to make peace with New Delhi, drawing it out of strategic partnerships with the West. As a result, South Asia is now more likely to line up behind Beijing to defend its position on the Taiwan Strait as its “inalienable part,” while freeing up Beijing’s diplomatic and strategic resources to tame its apparently untamable Asian rival – Japan.
Tarique Niazi teaches Environmental Sociology at the University of Wisconsin, Eau Clair, specializing in resource-based conflict.
1. China’s current trade with India ($413.6 billion), Pakistan ($3.06 billion), Bangladesh ($1.14 billion), Sri Lanka ($350 million), and Nepal ($200 million) is rapidly growing. Although reliable trade figures are not known for the remaining two South Asian states of Bhutan and Maldives, the total volume of bilateral trade between China and South Asia is all set to reach $20 billion a year. For reference, see “Boost All-weather Partnership between China, Pakistan.” People’s Daily, April 5, 2005. Habib, Haroon (2005). “Bangladesh, China Sign Nine Agreements.” The Hindu, April 9, 2005.
2. Prominent among them is Mr L.K. Advani, leader of the opposition, who accuses Bangladesh of infiltration into Assam and neighboring northeastern states. For reference, see Dutta, Sreeradha (2000). “Security of India’s Northeast: External Linkage.” Strategic Analysis, vol. xxiv(8), November 2000.
3. “Naxalism” is a village-based peasant movement that is fast spreading in southern and northeastern states of India, which include Andra Pradesh, Madhya Pradesh, Uttar Pradesh, Bihar, Jarkhand, Maharashtra, Orissa, and Tamil Nadu. The Naxali movement adheres to Marxist and Maoist ideologies, which are believed to bind it with Maoists in Nepal, also.
4. The Chinese Foreign Ministry’s spokesman Kong Quan called King Gyanendra’s dismissal of the Nepalese government “an internal matter of Nepal.” see “China Hopes Nepal to Realize Social Security.” Xinhuanet, February 1, 2005.
5. See Mahmood, Afzaal 92005). “Sino-U.S. Rivalry and South Asia.” The Dawn, Karachi (Pakistan), April 16, 2005.
6. The treaty was signed on April 5, 2005 by Chinese Prime Minister Wen Jiabao and Pakistani Prime Minister, Shaukat Aziz. For reference, see “Pak, China Sign Treaty of Friendship; Beijing’s Assurance to Defend Territorial Integrity, Sovereignty.” The Dawn, Karachi (Pakistan), April 6, 2005.