The recent agreement between President Bush and Prime Minister Manmohan Singh, on nuclear energy programme has a definite China angle and the Americans have entered into it with the intention to counterbalance China in the region. Interestingly, some days before this historic deal, the Indian and Chinese Army, which had fought a border war four decades ago, had finalized plans to hold joint counter-terrorism and peacekeeping training programmes.

It is paradoxical that China always gets factored into any American security discourse relating to the Indian subcontinent, but the ground reality indicates that India and China are getting nearer to defend themselves against adversaries. The military and the governments in both countries recognize that the best way to defend themselves is by sharing joint strategies and military infrastructure. This was mentioned during the visit of Chinese Chief of General Staff, General Liang Guanglie, to India recently. The warming of Sino-Indian defence relations started with their November 2003 joint naval exercises off the Shanghai coast. This exercise may be small but was a milestone as it marked a dramatic improvement in defence relations between the two countries.

Technically, Sino-Indian defence ties, particularly naval cooperation, have a long history dating back before 1962. The first visit of an Indian naval ship INS Delhi, to China was in 1958 and the next was in 1995 when two naval ships visited China. On September 15, 2000, the two navies conducted their first joint exercise, but it only comprised an exchange of personnel and basic manoeuvres, lasting for about eight hours. The recent dialogue between the Indian Army Chief and Chinese Chief of General Staff indicates that both countries are willing now to take their defence relations beyond symbolism.

The Indian Army has invited China to witness exercise "Sudarshan Chakra Prahar" which would take place in the Rajasthan deserts in the middle of November 2005. Chinese officers and soldiers would be witnessing a live firepower demonstration. An Indian armoured brigade would also be participating in the exercise. The Chinese side would witness the manoeuvres of T-72 and T-90 tanks. This exercise is part of efforts to implement confidence-building measures between the Indian Armed forces and the PLA.

Future Indo-China military-to-military cooperation includes joint exercises related to counter terrorism and collaboration in UN missions. During Liang's talks in Delhi, it was agreed that both navies would hold joint exercises off the Indian coast, the second such drill after the two fleets conducted manoeuvres off the Shanghai coast in 2003. Such military confidence-building measures are expected to yield dividends in terms of reducing tensions, which may eventually result in reducing the number of troops deployed along the borders.

However, it would be premature to read too much into this warming up of Sino-Indian relations on the strategic front. In the last few years, China has displayed a proactive military diplomacy by conducting joint military exercises with many countries, including Pakistan, to evolve a pattern of security cooperation in the Asia-Pacific region. Last year they had held a joint military exercise codenamed 'Friendship 2004' with Pakistan near Xinjiang province, bordering Afghanistan and Pakistan. Interestingly, it was held for improving their joint capacity towards combating terrorism.

Sino-Indian relations are at the crossroads. China knows the US is engaging India to counter its growing influence. At the same time, China understands the limited utility of engaging Pakistan in the region (so does the US!). China is currently preoccupied with building its trade, industry, social infrastructure and economic base. At the same time, it is exploring the strategic dimension in its overall nation building process. The Chinese 21st century 'cultural revolution' is trying to achieve the process of state building by concentrating on economic and military reforms.

For India and China, the most pragmatic geo-strategic outlook would be the establishment of a China-India axis. The two Asian giants have much to lose by confronting each other. The differences amongst them are not likely to vanish overnight but efforts to moderate their relations would help them to iron out their differences over the longer term. Confidence building measures in the defence field by conducting joint military manoeuvres could be a first step forward.