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The decision to invite US President Barack Obama to be the chief guest at the 66th Republic Day marks out in the clearest terms Prime Minister Narendra Modi's strategic outlook. Having personally had to deal with the Chumur episode during the visit of Chinese president Xi Jinping in September, Modi is familiar with just how the assertive leader of China is seeking to redraw the geopolitical landscape of Asia.

In the past year, we have seen Beijing make inroads into Sri Lanka and witnessed our old ally Russia drifting into the Chinese camp. We have also seen the PLA Navy's forays into the Indian Ocean region which are barely concealed by the mask of anti-piracy operations.

This is not a new development, but has intensified since 2010 as Xi jockeyed for power in Beijing. But now backed by the modernised PLA and the huge cash reserves accumulated by the economy, China is seeking to expand its economic and political universe.

In the past months, China has set out its ambitions through the establishment of the New Development or BRICS Bank, the Asian Infrastructure Investment Bank, and committing more than $40 billion to create transportation linkages under the aegis of its Silk Route initiative. Speaking at the BRICS CEO's meeting, earlier in November, Xi's message to the world was that in the next five years China would import goods worth $10 trillion, send outward direct investments worth $1.2 trillion, and also send out 500 million tourists.

All this was part of a more ambitious scheme for a Free Trade Area Asia Pacific (FTAAP) which China got the 21-member APEC to endorse. Economists say that the FTAAP could provide a substantial boost to world trade as compared to the two regional trade pacts that are presently under prolonged negotiation the Trans Pacific Partnership (TPP) and the Regional Economic Cooperation Partnership (RCEP).

What we are witnessing is the third surge of the Chinese economy, one aimed at even closer integration of the Asian economies, with much clearer Chinese leadership. In a range of area China seeks to move from being a low-cost manufacturer to a producer of Chinese-designed and made goods.

The other leg of this advance is political. China insists in asserting its maritime claims in Asia, even while seeking to draw it into a close economic embrace. However, in human affairs, it is well known that national pride is often a greater concern than a desire for economic benefit. As a result, many Asian countries are bandwagoning with the United States in its military "rebalance" to the region.

In the face off between China and the US, we see features of competition and cooperation. This was manifested by the FTAAP, as well as three important bilateral agreements signed in Beijing between the US and China at the sidelines of the APEC summit. The first was a bilateral agreement on climate change which could have the effect of driving the negotiations for a global climate deal. The two other military agreements that are still under negotiations that seek to manage their military competition.

But the big Chinese achievement which also played itself out on the sidelines of the APEC summit was the four-point agreement between China and Japan that enabled the Xi Jinping and Shinzo Abe to have a short, but significant summit.

In the agreement, Japan accepted the need for "facing history squarely and looking forward to the future" short-hand for its horrific wartime role in China. Further, it acknowledged that the two parties "had different views" about the issue of the Senkaku/Diayou islands. Japan may not quite have accepted that there is a dispute over the status of the islands, but it has come close to it.

What do all these developments mean for India ? First, after a period of rising tensions, countries like the US and Japan are seeking to reset their ties with a rising China. Even while standing up to China, their approach seeks to accommodate it as well. All three are densely connected with each other through trade and economic ties and are aware of the consequences of a breakdown.

Second, China is benchmarking itself against the United States. While its "new type of great power relations" seeks a non-confrontational and cooperative relationship with the US, it is bent on getting the US to accept it as an equal stake-holder in the Asia Pacific; in future, of course, it may seek to supplant it.

India's best course is the one that Prime Minister Modi is setting. This seeks to position India as a "swing state". On one hand, India has joined the New Development Bank, the AIIB and resisted American-led efforts to condemn Russia over Ukraine. On the other, it is actively wooing the US and its allies, Japan and Australia, in the Asia Pacific region.

This is also a prudent course, both the US and Japan, which have much denser relations with China are adjusting to the rise of China in a similar way competition and cooperation there is no reason why New Delhi should not. Yet, at a broad level, in the area of trade, finance, maritime security, non-proliferation and human rights, India remains broadly aligned with the western countries.

India has some sympathy with China's demand for a more equitable world order. But is also aware that Beijing, in turn, is not particularly sympathetic to India's demand for a membership in bodies like the Nuclear Suppliers Group or the UN Security Council. India remains deeply distrustful of Beijing because of the Sino-Indian border dispute, its relationship with Pakistan and its competitive efforts to displace India in its own backyard, the South Asian region and its new activities in the Indian Ocean region.

Manoj Joshi
28 November 2014
(The writer is a Distinguished Fellow at Observer Research Foundation, Delhi)

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