With the increasing impact of China in South Asia, Bhutan has begun to enhance its ties with China, as the two countries agreed Thursday to establish diplomatic relations, stirring a new round of geopolitical concerns for India – the traditional power of the sub-continent.

Bhutan’s move came at Thursday’s meeting between Chinese Premier Wen Jiabao and his Bhutanese counterpart, Jigmi Y. Thinley, on the sidelines of the Rio+20 summit, according to the Xinhua News Agency.

Wen said “China is willing to complete border demarcation with Bhutan at an early date and strengthen exchanges in various fields so as to push bilateral ties to a higher level.”

In the past two decades, many South Asian nations have been stuck in the throes of economic recession, natural disasters and political frictions. With many Western countries suffering a financial crisis, small South Asian nations have had to seek economic engagements with China.

The trade volume between China and South Asian countries soared to $97.43 billion in 2011, witnessing a 20.9 percent rise year on year, Xinhua reported on June 6.

Alerted by the upward trend of China’s influence in the region, Indian Prime Minister Manmohan Singh has said, “China would like to have a foothold in South Asia.”

But analysts noted that China’s economic engagements in South Asia have not only contributed to economic growth, but also focused India’s attention on repairing its relationship with other South Asian nations.

China’s presence concerns India

About two weeks after Sri Lanka opened its $1.5 billion deep sea port in the southern district of Hambantota on June 6, funded by Chinese investment, Bhutan said it plans to establish full diplomatic ties with China.

Throughout South Asia, China has been extending financial aid, such as investment, project aid, and infrastructure financing. Such projects include the building of port facilities in Pakistan, vital bridges across rivers in Bangladesh and planned construction of railroad lines in Nepal.

Speaking at an international forum in Australia a year ago, Chandan Mitra, the opposition BJP member for Madhya Pradesh in the upper house of the Indian Parliament, said India was concerned about China’s support for Pakistan and its “string of pearls” policy – the establishment of diplomatic ties and bases in close proximity to the shipping lanes and oil supply routes across the Indian Ocean.

For the Indian media and experts, the gradual spread of Chinese investment is seen as a way to expand China’s clout.

Swaran Singh, general secretary at the Indian Congress of Asian & Pacific Studies, told the Global Times that “China’s expanded economic leverages therefore are proving to be a useful tool for Beijing to increase its political influence in the region.”

Worries unnecessary

Madhav Nalapat, director of the School of Geopolitics at Manipal University in India, noted that “China has a geopolitical weight greater than that of the US in Sri Lanka and Nepal, second only to that of India. In Pakistan, the influence of China is equal to that of the US.”

However, Yang Xiaoping, an expert on Indian studies at the Chinese Academy of Social Sciences, said India’s concerns are understandable, but unnecessary.

“Historically, India has wielded a strong political influence unmatched by any other county in this region, so it is worried that China’s involvement will shake its status,” she said.

She added China’s expansion is focused only on financial cooperation. China loaned money for the construction of Sri Lanka’s port, but the facility is managed solely by Sri Lankans.

Because most of the conflicts between China and the US occur in Northeast Asia and Southeast Asia, South Asia will not top China’s diplomatic agenda in coming decades, and India’s sense of insecurity also comes from its economic downturn, she said.

As of 2011, India’s public debts stood at 62.43 percent of its GDP, which is the highest among the emerging economies, according to statistics from the state Labor Bureau.

Cai Xiaoyi, a manager working at the Indian subsidiary of a Chinese pipe metallurgical company, told the Global Times that foreign investors in India face cumbersome procedures.

“Our company needed 2,000 Chinese workers in India for our first steel project, but India’s Ministry of Labour and Home Affairs only approved 20 percent of our applications,” he said.

After holding negotiations with India’s local government, the company agreed to sub-contract some parts of the project to Indian companies in order to ensure job opportunities for local residents, Cai added.

In contrast, an employee surnamed Qu, who works at a Chinese vehicle manufacturing company, told the Global Times that his company did not encounter any problems when it entered Sri Lanka’s market in 2007.

Expansion strategies

Last year, India expressed alarm over China’s establishment of a full-fledged embassy in the Maldives, which India has long seen as part of its “backyard.”

Indian officials have said that this is part of a Chinese policy to throw a circle of influence around India.

Despite Maldives President Mohammed Waheed assuring India of its strategic stake in Maldives, the Indian navy has deployed its warships in Maldives in the Indian Ocean Region, according to India-based ZeeNews.

India has for too long relied on the historical links it has with the region, especially when South Asia was part of the British Empire, Nalapat said. “China uses its economic strength and diplomatic support to improve its relations with South Asian countries.”

However, experts from both India and China stressed that the continuing mistrust between the two countries will trigger more conflicts.

“Rather than seek to confront and challenge each other, it would be best for the 2.5 billion people of the two countries if China and India were to be partners,” Nalapat said.

Yang also urged China to understand India’s concerns, saying that the two sides have complementary strengths, and they can help ensure regional stability.

By Jia Cheng