After over two years of intense negotiations, the civilian nuclear agreement between India and the US stands today, on the cusp of full operationalization. No matter the current domestic turmoil over the deal in India, the Chinese are clearly aware that more than a contribution of about five per cent to India's overall energy requirements that nuclear energy will provide in the next two decades, it is the larger political, economic and strategic implications of the deal that they will need to take into account. The Malabar naval exercises that New Delhi has gone ahead with despite the ongoing political uncertainty are a case in point.

The Chinese realize that whether or not the Indo-US nuclear agreement goes through, India has served notice that it is becoming increasingly cognizant of and capable of leveraging its strengths to achieve its interests. Just as important, India has in the process displayed acumen for bare-knuckled negotiations and a skilful use of domestic policy levers in the US. A People's Daily (14 August 2007) commentary, concluded that "the US has made big concessions and met almost all Indian requests" and that "a substantial change has taken place in the nature of Indian-US relations despite possible turns and twists in future." It did not hesitate to accuse the US of "double standards" and agreed with the Indian Left parties saying that it was the American intention to draw "India in as a tool" for achieving its global strategic aims. The article finally referred to India's "practical political considerations" and rested its hopes on "India's DNA" that would not allow it to play second fiddle to the US.

And if the deal does somehow get through India's political maelstrom, then the onus shifts to the Nuclear Suppliers' Group (NSG) where it needs to be seen how China will react. Off-hand, the impression is that the Chinese are not happy about the deal, as indeed they well might not be, but to take the argument one step further and to say that they are implacably opposed to it, is a bit presumptuous.

The People's Daily (30 August 2007) editorial titled, "Nuclear agreement and big power's dream," has been variously interpreted by the Indian media but its main thrust is simple enough. The piece has noted that India was "extremely short of energy" and that civilian nuclear power development would help India to deal with its power shortages and allow for steady economic development. Meanwhile a majority of Indians appeared to support the deal and stood behind Prime Minister Manmohan Singh who "did not compromise" despite the Left threat of withdrawal of support to the government. By pointing out India's desire to be "a powerful nation" and the "strong symbolic significance" of the nuclear deal, the article has also acknowledged India's legitimate aspirations. However, there are also notes of worry in the Chinese commentary. Given India's desire "to become a big power," the US wish to incorporate India in its attempt to "balance the forces of Asia," is something, the editorial says, "fits in exactly with India's wishes." This last section has been interpreted to indicate Chinese opposition to the deal.

Nevertheless, the manner in which recent Chinese comments have been phrased, whether in the media or in Foreign Ministry statements, remind the observer of China's own rationale behind developing its nuclear programme and probably give an idea of how it will proceed in its reactions to the Indo-US deal. First, it is suggested - perhaps to domestic hardliners - that with needs that are similar to China's, India cannot be faulted when it adopts methods similar to what China has adopted. India is doing what it thinks is best in its national interests and this is something that the Chinese understand. Second, the Chinese seem to realize that they have nothing to gain from opposing the deal at the NSG but everything to gain in goodwill and perhaps economic bounty in the form of expanding their own civilian nuclear cooperation with other countries not least with India and the US. China has for some two years now been offering to cooperate in the civilian nuclear energy sector with India; Hu Jintao repeated the offer during his visit in November 2006. China already has ties with the US in this sector - in July this year, it signed a multi-billion dollar contract with Westinghouse for building four third-generation nuclear reactors - but seeks further relaxation of American restrictions on high-technology transfers. Were China to cooperate at the NSG, it could result in what it is fond of calling 'win-win,' all around.

Third, a positive response to the deal also allows China an increased range of responses vis-a-vis the US on North Korea, Iran and Pakistan. Thus, plans for increased Chinese nuclear cooperation with Pakistan cannot necessarily draw the condemnation of either New Delhi or Washington unless they appear to be explicitly vitiating the peace. However, the Chinese are perhaps not unaware that while they might continue supporting Pakistan's nuclear programme, it is just as likely that India could also soon be closely engaged in nuclear cooperation with Japan.

The question therefore is, if China and India will simply let things take their 'natural' course or take the bold steps necessary to ensure that the balance of forces in Asia changes to mutual advantage.