In the Indian perception, there are several major areas of concern that are limiting the growth of the bilateral relationship. The foremost among these is the unresolved territorial and boundary dispute. The other major concern is the “all-weather” friendship between China and Pakistan that is, in Chinese President Hu Jintao’s words, “higher than the mountains and deeper than the oceans”. The Indian government and most Indian analysts are convinced that China has given nuclear warhead designs, fissile material and missile technology as well as fully assembled, crated M-9 and M-11 missiles to Pakistan, as has been widely reported in the international media. China and Pakistan are also known to have a joint weapons and equipment development programme that includes Al Khalid tanks, F-22 frigates and FC-1/JF-17 fighter aircraft. China’s military aid has considerably strengthened Pakistan’s war waging potential and enabled it to launch and sustain a proxy war in Jammu and Kashmir and in other parts of India. By implication, therefore, it is also China’s proxy war.

From the Indian perspective, there are several other contentious issues. These include China’s continuing opposition to India’s nuclear weapons programme; its deep inroads into Myanmar and support to its military regime; its covert assistance to the now almost defunct LTTE (Liberation Tigers of Tamil Eelam) in Sri Lanka; its increasing activities in the Bay of Bengal; its attempts to isolate India in the ASEAN Regional Forum (ARF) while keeping India out of the Shanghai Cooperation Organisation; and, its relentless efforts to increase its influence in Nepal and Bangladesh. China’s efforts to develop port facilities in Myanmar (Hangyi), Chittagong (Bangladesh), Sri Lanka (Hambantota), Maldives and at Gwadar in Pakistan are seen by many Indian analysts as forming part of a “string of pearls” strategy to contain India and develop the capacity to dominate the northern Indian Ocean region around 2015-20. Though at present the Indian Navy dominates the northern Indian Ocean, a maritime clash is possible in future as the PLA Navy begins operating in the Indian Ocean – ostensibly to safeguard its sea lanes and protect its merchant ship traffic. Hence, China’s moves are seen by Indian analysts to be part of a carefully orchestrated plan aimed at the strategic encirclement of India in the long-term to counter-balance India’s growing power and influence in Asia, even as China engages India on the political and economic fronts in the short-term.

As both China and India are nuclear-armed states, it is in the interest of both to ensure that strategic stability is maintained and that the risk of accidental or unauthorised nuclear exchanges is minimised. This would be possible only if negotiators from both the sides sit down together and discuss nuclear confidence building measures (CBMs) and nuclear risk reduction measures (NRRMs). However, China’s insistence that it cannot discuss nuclear CBMs and NRRMs with India as India is not a nuclear weapons state recognised by the NPT is proving to be a stumbling block. China’s official position is that India should cap, roll back and eliminate its nuclear weapons in terms of UNSC Resolution No 1172. That is unlikely to happen. India has been recognised as a responsible state with advanced nuclear technology and has been given a backdoor entry into the NPT through the NSG waiver and the IAEA safeguards agreement. India has also signed civil nuclear cooperation agreements with France, Russia and the United States (US). It would be in the interest of both the countries to discuss nuclear CBMs and NRRMs so as to enhance strategic stability in Southern Asia. It is also in China’s interest to enter into a nuclear trade agreement with India as India is rapidly emerging as a large market for nuclear fuel and nuclear technology.

India realises that its growing external relations with its new strategic partners are causing some concern in China. China has viewed with some suspicion India’s willingness to join Australia, Japan and the US in a “quadrilateral” engagement to promote shared common interests in South East Asia. China also wishes to reduce what it perceives as the steadily increasing influence of the US over New Delhi. China knows that the US is several years ahead of Beijing in recognising India's potential as a military and economic power and has greatly increased its cooperation with India in both spheres. China fears that the growing US-India strategic partnership is actually a loose alliance and that the two countries are ganging up against China. It should be clear that India is unlikely to ever form a military alliance with the US – unlike Pakistan, which is a Major Non-NATO Ally (MNNA) of the US and is also China’s “all weather” friend. India has always pursued an independent foreign policy and cherishes its strategic autonomy. It will be recalled that India steadfastly supported the Non-aligned Movement (NAM) for several decades during the Cold War and has never entered into a military alliance with any country. The US is an Asian country in strategic terms and it is necessary for India to maintain good relations with it. It is also India’s largest trading partner and has a large Indian Diaspora. There are major convergences of interests between India and the US. Hence, India’s newfound strategic relationship with the US need not come in the way of India-China relations, which have their own strategic significance for India.

In an article entitled “Warning to the Indian Government” (posted on the website of the China Institute of International Strategic Studies on March 26, 2008), Zhan Lue, a Communist Party member, warned India not to “walk today along the old road of resisting China” as the People’s Liberation Army is now well-entrenched in Tibet and will not repeat its mistake of withdrawing after a border war as it did in 1962. He extolled the virtues of the PLA’s newly developed capabilities and went on to advise India “not to requite kindness with ingratitude.” This surprisingly sharp attack in a scholarly journal did not appear to be an isolated piece of writing. Another Chinese scholar advised his government to engage India’s neighbours to break India into 26 parts. In the wake of the Tibetan unrest in India and across the world earlier during 2008, anti-India rhetoric in the Chinese media had been ratcheted up several notches. Analysts in India believe that such scurrilous writings could not have been published without the express sanction of the Chinese authorities as almost all Chinese media are state controlled. This type of rhetoric sets back efforts at reconciliation and mutual understanding.

China is concerned about the situation that might develop when the Dalai Lama passes away. Despite all the raving and ranting against him, the Chinese government is acutely conscious of the fact that the present Dalai Lama’s is a voice of moderation and accommodation. They know that there will be a major uprising in Tibet when he passes away as the Tibetan youth will no longer feel constrained to respect his cherished desire for peace and harmony and are likely to resort to violent attacks against the Han Chinese people and officials and state property. Despite India’s remarkable restraint over 50 years, the Chinese are not sure of how India will react to a post-Dalai Lama rebellion in Tibet. In fact, the Chinese harbour a fair deal of ill will against India for providing the Dalai Lama with sanctuary – even though India has forbidden him from any anti-China political activities from Indian soil and the Dalai Lama has honoured the restraints imposed on him by his hosts. A senior Chinese interlocutor told this analyst at a bilateral think tanks’ dialogue at Bangkok in October 2009 that relations between China and India would flourish very well if India was to hand over the Dalai Lama to China even at this belated stage. From this the depth of Chinese resentment with India for providing shelter to the Dalai Lama can be gauged. Since such a course of action would be completely out of character with India’s civilisational and spiritual values, handing over the Dalai Lama is simply out of the question. China would, therefore, do well to put this issue aside and move forward in its relationship with India.

Another area of concern for India is the rapid development of military infrastructure in Tibet by China. The Gormo-Lhasa railway line is now fully operational. The rail network is proposed to be extended towards Shigatse and then into Nepal. China has recently developed a road network of 58,000 km and five new air bases. New military camps have come up close to the border with India. Telephone and radio communication infrastructure has been considerably improved. China has been practicing the rapid induction of airborne divisions into Tibet. Some Indian analysts have estimated that China is now capable of inducting and sustaining about 25 to 30 divisions in Tibet in a single campaign season. Short range ballistic missiles (SRBMs), some of them nuclear tipped, are also known to be deployed in Tibet. Surely, all these developments are not for sustaining Tibet’s fledgling economy. The continuing improvement of military infrastructure in Tibet does not augur well for future peace and stability between the two nations in the light of an unresolved territorial and boundary dispute.