Deutsche Welle: It is not to far fetched to say that the future of Asia will be shaped by the future of Indian-Chinese relations. But the history of those relations has been rocky, to say the least, with an armed conflict in the 60's and a kind of cold war since then. Now the two sides are etching towards each other. What are the biggest stepping stones in Indian Chinese relations?

Jagannath Panda: I think if you look at the history of Chinese-Indian relations, it is the economic and trade relations that have always been the stabilizing factor. Since '88, when the normalization process started between China and India, since that time, trade and economic contacts have been the core issue in the bilateral relationship. And for that reason, the relationship has over the years been stabilized. But today we are entering into a new phase, when China has become the number two power, number two economy of the world. India equally has gone to the next level. It successfully held the Commonwealth Games. It is now in a position, where it could eye becoming a global power. So we are entering into a new phase, where the perception of China and India towards each other is going to be different.

… Both have their global ambitions … in the next five to ten years, we are going to see intense competition between the two at the regional level. Therefore, multilateral organizations, which are there at different levels are going to play a major role, for example, SCO, ASEAN and SAARC. How these two powers are going to see each other in these multilateral organizations, is going to be a key factor in the relationship.

The second issue is how India is going to see China's massive military modernization and China's rise as an economic power and how China is going to see India’s political progress and soft power image at global level, that is going to be another deciding factor. More than this two factor the third element which is going to play a significant factor - that is the role of the US. Given the stake the US is having in Asia, it is not easy to write off the US so easily. And we have seen that on the one hand, India has gone in the US way by signing the Indo-US nuclear deal. So therefore, we are going to see a massive Chinese reaction to this moment in the next five to ten years. The Chinese are already eying a nuclear agreement with Pakistan and with so many other powers. So the Chinese are also playing their own game.

What is going to happen with the unresolved border issue?

The boundary issue was always there, from 1962 onwards, when the border-war happened. Since that time, both powers have always talked about the boundary-issues. But we are entering into a phase, where both these powers have realized that there is nothing much we can discuss about the borer issues, because the boundary and border issues can only be resolved at a fundamental level. And that fundamental level is that you should have political will from both sides. And despite of all this diplomatic initiatives, the political will at the greater level from both the sides is missing. So border problems are going to be there for some time to come, may be 15 to 20 years. But the border problem has become secondary and all the issues have come to the forefront, for example: energy and the Indian Ocean.

And the water issue. India suspecting China is diverting water from the Himalayas. What kind of leverage does India have to negotiate with China?

Yes, it is a very interesting issue coming up between India and China. The water issue was missing earlier in the bilateral relations. It was never a problem. Recently what we are seeing is that water is going to become a key problem between China and India. And the Chinese are very vocal, that at one hand, they are rejecting the
thesis that they are looking to divert the water. But on the other hand we know that they are engaged with water diversion projects. Whereas on the Indian part, we still have to come to a conclusion on how to approach the whole issue and how to talk to the Chinese. We are not really sure whether we should talk to the Chinese bilaterally or approach the whole issue at the regional level. So there is a bit of problematic, a bit of confusion from both sides. And this issue has not been addressed adequately either at the bilateral level or at the regional level.

How do you judge the role of China when it comes to security in South Asia, including Afghanistan? What do you see are the Chinese doing to enhance a stable environment in South Asia?

As far as Afghanistan is concerned, I think the Chinese are quite happy with the way things are going in Afghanistan. And we all know that they are there in a big way. Perhaps there is a competition even between India and China in Afghanistan. But more than that, what really bothers me is that China is eying becoming a South Asian power. China wants to come to South Asia in a big way. It is not about Afghanistan. It is not about India. It is about the entire region of South Asia. For example, in the last SAARC Conference in Bhutan, the Chinese for the first time articulated the want to be a full member of SAARC, South Asian Association for Regional Cooperation. That gives you an indication what is their real ultimate goal and objective, when it comes to South Asia. In fact South Asia was never a priority in Chinese foreign policy. It was Southeast Asia which was always a priority in China's foreign policy. But now, slowly, South Asia is coming into China’s foreign policy priorities. So in that context, they are eying the South Asian economy, the smaller neighbors of India, like Pakistan, Bangladesh, Nepal and Sri Lanka. They are trying to expand the trade and economic contacts and also they are going to have close political and military contacts. So slowly what we are seeing is in the next 5 to 10 years, China will slowly become a South Asian power, though we all know that China is not a South Asian power. But the Chinese ambition and objective is to integrate the South Asian region with China as a whole, so that it can call itself a South Asian power at some level.

Dr. Jagannath Panda is an expert on Sino-Indian relations at the Institute of Defense Studies & Analysis in New Delhi. His book, "China's Path to Power: Party, Military and the Politics of State Transition" was published in 2010.