China, already the largest power in Asia, is gradually emerging as a major global player and will acquire strong military and economic capabilities in the coming decades. This comprehensive transformation has important implications for India. India, too, is poised to emerge as a significant player in regional and global arena. What are China's interests in Indian Ocean region? What are its implications for India? Is China limiting India's options in the Indian Ocean? What would be its effect on their bilateral relations? Is there possibility for cooperation?

The Chinese concept of modernizing defence (under the 'four modernization' programme formally adopted in 1978) is no longer limited merely to the defence of territory. It has expanded to include seaboard and outer space as well. The previous strategy of coastal defence has been converted into "oceanic offensive". The Chinese argue that their initiative towards the Indian Ocean is guided by both strategic and economic compulsions and capabilities, as a significant proportion of its sea borne trade (around 85%) passes through the Indian Ocean.

As a result, China is setting up a series of military bases as a part of an incremental endeavour to build a 'string of pearls' to secure its oil shipments, and most importantly project its power. It includes Bangladesh, where China is seeking extensive naval and commercial accesses; Myanmar, where China is building naval bases and electronic intelligence gathering facilities at Grand Coco Island in the Bay of Bengal and Cambodia, where Beijing is helping to build a railway line from South China to the sea. In Thailand, China is funding the construction of a $20 billion canal across the Kra Isthmus. This would allow ships to bypass the Strait of Malacca. China is developing the strategically important port of Gwadar in Pakistan. China has set up electronic eavesdropping posts near the Persian Gulf to monitor ship traffic through the Strait of Hormuz.

Many Indians see the Indian Ocean as India's backyard and see it as both natural and desirable for India to function as the leader and predominant influence in the region. Increasing Chinese activity in the region is raising strategic concerns. India views this as "encirclement" and has sometimes objected to Chinese links - especially military security ties - with its smaller neighbouring countries. The expansion of China's influence in Myanmar is of particular concern to India as it gives China the potential to develop its sea power in the Bay of Bengal, a sensitive area of India's maritime interest. China is developing Gwadar and Pasni ports on Pakistan's Marakan coast, a move that could endanger vital Indian shipping routes in Persian Gulf. Establishment of Chinese electronic listening posts at Coco Island, military and technical assistance to the Myanmar junta to improve and develop naval ports and facilities at Arakan coast, etc has enhanced India's security concerns. Growing Chinese influences in Indian Ocean region (IOR) contributes largely towards geopolitics in the region.

India is emerging as a major power and is often regarded as a pivot in the region's geopolitics. It has established a "Far Eastern Strategic Command" headquartered in Port Blair to monitor the military situation in the region. In February 2001, Jaswant Singh, the former Foreign Minister of India formally inaugurated the 165km road in northwestern Myanmar. Built at a cost of $20 million by India's Border Roads Organizations, it was part of India's efforts to open a new channel for economic cooperation between India and Myanmar. New Delhi launched a "strategic partnership for peace and prosperity" initiative with China on 11 April 2005. The move was aimed at resolving the Sino-Indian border dispute over Aksai Chin (existing since 1962) and at boosting mutual trade and economic ties. However, in order to have a strong hold over the region, India needs more than economic assets and a strong military. India has to have access in the region of Chinese influence, by establishing political, economic, security ties with East and Southeast Asian countries. Further, attempts must be made to improve its bilateral relations with its neighbouring countries like Pakistan, Bangladesh and Nepal, to mitigate its vulnerability in the region. In addition, it has to strengthen its ties with other major regional and global forums to maintain its sphere of influence.

In an era of engagement, the two countries may seek to identify and expand areas of cooperation. It is in the mutual interest of both the countries to work towards building a strong, prosperous and self-reliant Asia. At a strategic level, India will have to endeavour to balance China's power realistically, through development of its own economic and military potential and through building strong relationships with neighbours, and the regional organisations like ASEAN.