NEW YORK: Two giant Asian neighbours, together accounting for one-third of the world’s people, are taking tentative steps to form a formidable trading bloc, in defiance of the historic ‘triangle’ theory that has kept them warily watching the ‘other’ under Washington’s shadow.

Today, India and China reflect buoyancy, confidence and engagement, says Jairam Ramesh, a prominent Indian political analyst and the secretary of economic affairs of the opposition Congress Party in New Delhi.

“India and China are not a threat to each other. Over the last two to three years, there has been a huge shift in collaboration between the two,” he told the Asia Society in New York last week.

Ramesh was dismissing political strategists’ favourite India-China-US-triangle theory — that Washington, Beijing and New Delhi believe their national interests would be harmed by an alignment of any two against one — at about the same time that senior officials from the Asian giants were meeting at world trade talks in Cancun, Mexico.

Chinese Trade Minister Lu Fuyuan is reported to have told Indian Commerce Minister Arun Jaitley: “In areas where we have a common consensus, we should offer support to each other.”

But one observer says it is too early to talk about a Sino- Indian alliance.

“Initial steps are being made that reflect the need for emerging middle powers like India, China, and Brazil to come together as a means of building some kind of bulwark against the hyper power status of the US,” says John Gershman, co-director of US-based Foreign Policy in Focus.

But he adds, “It’s not so clear that the Bush administration has actually agreed to not look at the three as a triangle.”

“While in the short term the priority is clearly the war on terrorism and India and China remain supporters of that effort, there are still those that would like for the US to strengthen ties with India as part of a longer-term strategy of containing China, which some see as a potential strategic competitor of the US and whose efforts to enshrine China as the key security threat facing the US were derailed by the 9/11 attacks,” Gershman told IPS. But he agrees with Ramesh that India must not become a US pawn that is used to contain Chinese expansionism.

Students of international relations maintain that although the possibility of a China-India bloc has never been explicitly mentioned in US strategy papers, it is clear that such a partnership would diminish Washington’s influence in Asia.

China and India have their own bones to pick, including, says Ramesh: the India-China border dispute, establishing nuclear deterrence, the war on terrorism, relations with Pakistan, and political and economic influence in the South Asia-Indian Ocean region.

Despite those roadblocks, the two nations “need to open windows of engagement”, he argues.

India and China have sought to solve some of the problems, particularly the border dispute, which dates back to the end of the 1962 Indo-Sino war. The main difference has concerned the alignment of the Line of Actual Control (LAC) between India’s states of Himachal Pradesh and Uttar Pradesh and Tibet.

Recent visits to China by Indian Prime Minister A.B. Vajpayee and Defence Minister George Fernandes helped ease the hangover of this dispute and elevated the border issue to the political level from a military one. Each side also made significant concessions, with India acknowledging for the first time in writing that Tibet was part of China.

In the economic sphere, Indo-China trade has grown substantially in recent years. In 2002, bilateral trade was valued at five billion US dollars. It is expected to grow to eight billion dollars this year.

Ramesh says the investment relationship between the neighbours is less developed. “On the one hand, the IT (information technology) industry is reluctant to go to China because they don’t want to divulge their knowledge. On the other hand, many pharmaceutical and tire companies have invested in Chinese ventures.”

Indian companies that have set up base in China include Reliance Industries, Aditya Birla group, Sundram Fasteners and Essel Packaging.

Firms sourcing from China include Videocon, Onida, Apollo Tyres, JK Tyres, TVS Motors, Hero Cycles, and Bajaj Electricals, while major exporters include Bharat Forge, Reliance Industries, Steel Authority of India, Ispat Industries, and Indo Rama Synthetics.

Chinese players in India include big names like Shandong Electric Power Construction Corp. and Hutchinson, while “made in China” labels can be seen on products ranging from toys, fans, and locks to watches, bicycles, and batteries.

India’s investment in China in 2002 equalled 35 million dollars, while China’s investment in India was 150 million dollars.

Ramesh is optimistic that the economic partnership can grow, suggesting that China’s labour-intensive, mass manufacturing expertise could be a perfect fit with India’s value-added and service-based industries.

According to Gershman: “The challenge will be sustaining this alliance, which at this point is really focused around a common ‘enemy’ — unwillingness to comply with US and EU demands for greater market liberalisation.”

“The challenge to test if this really is the foundation of a broader strategic alliance is actually doing things together with respect to other non-economic issues, i.e. security,” he adds. —Dawn/InterPress News Service.