Sino-Indian Rivalry for Pan-Asian Leadership

Publication: China Brief Volume: 6 Issue: 4

India and China are locked in a bitter struggle for Pan-Asian leadership in South, Southeast and Central Asia. Three regional economic and security organizations—South Asian Association for Regional Cooperation (SAARC), the Association for Southeast Asian Nations (ASEAN), and the Shanghai Cooperation Organization (SCO)—symbolize their jostling for power. Of these, SAARC is symbolically significant with little political or economic substance. ASEAN combines Southeast Asia’s economic concerns with its security needs, while the SCO primarily remains a security organization dominated by Beijing’s interests in Central Asia.

These organizations, however, articulate multilateral concerns, which are greatly shaped by the competing interests of Beijing and New Delhi. India and China thus build bilateral relations to influence the regional agenda. As a result, it is the economic strength and military might of each country that is fueling the drive for ascendancy in Asia. Although there are several cooperative initiatives between Beijing and New Delhi that are underway at bilateral, regional and global levels, they only fuel their competitive tensions. This analysis, however, is limited to their competitive interests for Asia-wide leadership, which assesses their intrusion into each other’s turf, and that of their neighbors’.

Since the 1980s, China has made deep inroads into South Asia to isolate New Delhi, which culminated in its triumphant entry into SAARC on November 13, 2005. Similarly, New Delhi’s presence in Southeast Asia has dramatically grown since the 1990s, when its economy began to perk up. Yet China’s domination of Southeast Asia is far from having been dented by India’s presence in that region. Also, in Central Asia, both nations are jockeying for ascendancy, but India’s goals are more modest than China’s. India’s primary quest in Central Asia is for energy. To realize this objective, India also has enlisted the West Asian countries of Afghanistan and Iran into its economic and strategic initiatives to encircle Pakistan, which it believes is China’s proxy.

China on India’s Turf

India and China have long been contending for the unrivaled leadership of South Asia. India’s geographical proximity to South Asian countries has been its perceived advantage, while China remained an “outsider.” Smaller South Asian states’ wariness of Indian domination of the region, however, turned New Delhi’s neighborly advantage into its strategic disadvantage. India was further hurt by its long-festering border disputes with its neighbors—predominantly Bangladesh, Nepal, and Pakistan—which also blame it for their respective protracted internal strife (Asia Times, March 16, 2005). Similarly, Sri Lanka, which does not have land borders abutting India’s, blames the Indian Tamils for fueling the Tamil separatist movement in its heartland (China Brief, April 25, 2005).

Wary of its domination of the region, all of India’s neighbors banded together into SAARC on December 8, 1985. China was eager to see SAARC grow into a regional organization comparable to ASEAN. In the beginning, India resisted SAARC’s creation for the same reason China encouraged it: smaller countries would impede its regional agenda. India, however, relented when its six other neighbors— Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka—accepted its precondition to govern SAARC’s affairs by unanimous vote. This arrangement virtually vested every member state with veto power. Yet India dominated SAARC simply because of its demographic, economic, military and territorial heft that all SAARC countries combined cannot match. This power imbalance drove SAARC countries, as well as Beijing, to open SAARC for Chinese membership.

Interestingly, SAARC’s founding in 1985 coincided with the rising Chinese economy. China deftly deployed its economic power to strengthen its strategic ties with South Asia. It particularly made huge economic and financial investments in Pakistan, Bangladesh, Sri Lanka and Nepal—in that order. Beijing’s investment strategy helped open up these countries for Chinese trade goods as well. By 2005, China’s bilateral trade with South Asia rose to $20 billion a year, rivaling India’s (Japan Focus, August 21, 2005). Once drawn into its economic orbit, smaller South Asian nations readily moved into Beijing’s security umbrella as well. All important South Asian countries—Pakistan, Bangladesh, Sri Lanka—are now bound with China in “defense and strategic cooperation agreements” that were further renewed during Chinese Premier Wen Jiabao’s visit to South Asia from April 5 – 12, 2005 (China Brief, April 26, 2005).

China’s economic and strategic ties contributed to isolating India on its home turf. New Delhi’s complete isolation was reached on November 13, 2005, when China made a triumphant entry into SAARC as an observer (i.e., a non-voting member). The decision was taken at the 13th SAARC summit that ironically met in the “Bangladesh-China Friendship Center” in Dhaka, Bangladesh, on November 12-13, 2005. Of all SAARC states, Bhutan, a tiny kingdom, was the only member state that sided with India to nix China’s entry into SAARC on procedural grounds (Dawn [Pakistan], November 14, 2005) India was, however, more embarrassed by neighboring Nepal’s defiance, which as the world’s only Hindu kingdom, is bonded with India’s Hindu majority and which New Delhi has propped up for decades with massive economic and financial aid. Yet it was Nepal that took the lead to move SAARC summit for China’s long-sought entry. The whole episode drove K Subrahmanyam, an Indian strategist, to suggest that “the present impasse in SAARC provides New Delhi an opportunity to review its South Asian strategy and progressively shift it away from SAARC” (The Dawn [Pakistan], April 16, 2005). Pakistan, on the other hand, saw in China’s entry into SAARC an opportunity to “counterbalance Indian designs to act as a regional power and dominate SAARC” (The Nation [Pakistan], November 10, 2005).

India on China’s Turf

India’s emergence as a potential economic powerhouse has many Southeast Asian countries rethinking their relationship with New Delhi. This rethink was amply demonstrated in India’s entry into the 10-member ASEAN that is made up of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. China was already jousting with Japan for uncontested leadership of Southeast Asia, when ASEAN took its rival India into a welcome embrace in December 1995 as its full dialogue partner (South Asia Analysis Group, December 27, 2000).

India’s entry into ASEAN was engineered by the same factors as China’s into SAARC—economic and strategic. India’s economic potential is heavily weighed in the region’s scheme of alliance-making. Yet even more important is a semblance of strategic balance in Southeast Asia that remains dominated by China’s ever-growing military might. Many Southeast Asian nations, especially Indonesia, Japan, Philippines, and Vietnam have similar territorial disputes with China, as smaller South Asian nations do with India, although with a slight variance. In the case of India, territorial conflicts are land-based; in the case of Southeast Asia, such disputes are about territorial waters, especially access to South China Sea.

Ultimately, these economic and strategic considerations shouldered India into Southeast Asia and paved its way into ASEAN. Yet India has a long way to become competitive with China, especially in economic and trade relations with the region, which are hugely tilted in Beijing’s favor. By the end of 2005, China’s trade with ASEAN stood at $130.4 billion as opposed to India’s $18 billion—which is, however, set to rise to $30 billion by 2007 (People’s Daily Online, January 18; South Asia Analysis Group, January 3). The trade between Beijing and ASEAN is equally impressive, growing at the rate of over 23% on a year-on-year basis. Within ASEAN, China has carved out the Greater Mekong Subregion (GMS) that includes, besides China, Cambodia, Laos, Myanmar, Thailand and Vietnam. China’s trade with GMS countries alone stood at $32 billion in 2005 (People’s Daily Online, January 18).

Along the same lines, India has launched a six-country Mekong-Ganga Cooperation (MGC) project that also includes Cambodia, Laos, Myanmar, Thailand, and Vietnam. Since 9/11, India’s growing economic cooperation with ASEAN and its economic and military cooperation with Japan have gained a visible strategic dimension. Tokyo, which recently has taken upon itself to challenge Beijing’s rising military power, has long been in economic and security alliance with India. As such, Tokyo will go beyond ASEAN to see India secure membership in the Asia-Pacific Economic Cooperation (APEC)—which, however, is not yet in sight. New Delhi belatedly returned Tokyo’s favor in November 2005, when it had Japan voted into SAARC as an observer, apparently to counter China’s presence in South Asia. It was, however, a great leap from India’s long-nursed ambition of keeping South Asia clear of foreign powers. As well, India’s strategic interests in Southeast Asia are growing in direct proportion to its economic ones. In 2003, New Delhi acceded to the Treaty of Amity and Cooperation (TAC) in Southeast Asia (South Asia Analysis Group, January 3). ASEAN itself is a union of economic and security cooperation of which India is poised to become a fully-fledged member.

India and China on Russian Turf

In addition to South and Southeast Asia, India and China are vying for the largest sliver of energy-rich Central Asia. Central Asian states’ wariness of Russian domination helped Chinese entry into Central Asia, which was not a smooth matter. Many Central Asian states have border disputes with China. These disputes also tend to inflame China’s Muslim-majority autonomous region of Xinjiang, with which Central Asian states share bonds of common culture, ethnicity, faith, and geography. Although Central Asian states welcomed Beijing as a countervailing force to Moscow, its unchallenged presence in the region engendered new concerns of its own.

China attempted to calm these concerns with massive economic investment in Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, and asserted its potential as a strategic counterweight to Russia, whose imperial past still haunts Central Asian Muslim republics. To strike a further balance, Central Asian countries welcomed India’s entry into the region. India’s long tradition of non-alignment and its growing economic and strategic influence were hoped to counterbalance that of China’s and Russia’s. Since 9/11, India has used post-Taliban Afghanistan—whose current leaders are beholden to New Delhi for its unswerving support in the 1990s against the Islamabad-backed Taliban and for Afghanistan’s entry into SAARC as its eighth member state—as a gateway to Central Asia. It has since set up its military base in neighboring Tajikistan, whose majority population has ethnic bonds with the Tajiks in Afghanistan, who dominate the ruling Northern Alliance of Afghanistan (Asia Times, March 16).

To neutralize India’s advantage in Afghanistan, China is building a naval port along the coast of the Arabian Sea in Gwadar, Baluchistan, which would connect the land-locked Central Asia, including Afghanistan, with the outside world. India retaliated against China’s military move with a port of its own—Chahbahar—in Iran, which would link Afghanistan and Central Asia with a shipping corridor in the Persian Gulf. Both ports are located in a highly volatile region and dangerously close to each other. To keep Central Asia free from outsiders, China launched on June 15, 2001 the Shanghai Cooperation Organization (SCO) with Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan as its founding members. Russians, themselves wary of Chinese intrusion into their backyard, invited India in July 2005 into the SCO as an observer. To counter the Indo-Russian collusion, China brought Pakistan into the SCO as its observer. In addition, Beijing took Iran into the SCO to make waves beyond the Central Asian region. Iran is, however, equally closely allied with China, India and Russia.


China’s military power is an extension of its economic strength, which it is deftly deploying to advance its strategic interests in South, Southeast, and Central Asia. By contrast, India is far from meeting China’s economic clout and military outreach. As of 2005, the Indian economy of $660 billion stood at about one-third of China’s $2.2 trillion, which has just overtaken that of the United Kingdom’s as the world’s fourth largest (South Asia Analysis Group, January 3, 2006 and December 27, 2000; Bloomberg, January 25). Similarly, Indian defense spending in 2005 remained at $19 billion, as compared to China’s officially stated $29 billion, which Rand put at between $42-51 billion for the same period (U.S. Central Intelligence Agency; BBC, March 4, 2005; Rand Corporation). India, however, has the potential to rival China’s economic and military status in the next two decades. At present, what makes India an uncontested Pan-Asian leader is its moral superiority as the world’s largest democracy.