India and China are competitors, but their difficulties in achieving long-term cooperation reflect lingering attitudes rather than conflicting strategic goals. In the emerging multi-polar world, major powers will have to come to some sort of accommodation with each other, shaped by three strategic shifts.

First, a significant shift of power is taking place from the United States to Asia as the driver of global politics. The US can no longer maintain its hegemony alone and it is therefore encouraging India to join it in securing a military balance of power in Asia. But any such treaty or understanding would be implicitly against China.

India last month rejected any notion of joining a trilateral security pact with the United States and Australia.

The policy issue before India is clear: will it work with China to decisively shape the future of Asia and become a major participant in world politics, or, will it partner with the US to contain China, so that it can become a regional power.

The unresolved question for military strategists in India is China's intentions.

Understanding the second major strategic shift now taking place in the world provides one answer to this question. The US has correctly framed the issue, by recognizing that countries are gaining influence now "less because of the size of their armies than because of the growth of their economies".

India's growth has differed from China's and the rest of Asia in its reliance on domestic demand and growth in services rather than labor-intensive manufacturing.

China is now India's biggest trading partner. Trade and business ties between China and India have increased dramatically from around $5 billion in 2002 to more than $60 billion in 2010, and the aim is to boost trade over the next five years to $100 billion annually.

The most striking difference between India and China is the demographic dividend, as a surge in Indian youth coincides with the graying of China. While India's workforce will increase by 110 million over the next decade, China's will increase by less than 20 million. This could push India's growth rate ahead of China's.

The drivers of competition between the two countries will therefore be shaped by water and energy rather than by efforts to expand trade. India has successful experience with the Indus Waters Treaty with Pakistan. The perspective that energy is a zero-sum game is a Western construct, as they are profligate users of energy and see it as an integral part of their way of life. India and China on the other hand are taking steps to curb their energy consumption. The sharing of natural resources can be managed by modifying growth pathways to provide the same level of service.

No doubt both India and China want to secure their energy supplies, and since the oil supplies for both cross the Indian Ocean the answer lies in developing a joint strategic doctrine for this zone.

The third strategic shift is taking place within the international institutions, where India and China have begun to coordinate their actions on climate change and trade negotiations, the restructuring of global economic institutions and opposition to military interventions. The foreign policy challenge for both countries is to work together to build networks of institutions and relationships that will support a new global order.

There is a need to review threat perceptions, security challenges and new opportunities by integrating the military, economic and multilateral spheres, because they interact with each other, and can no longer be considered in isolation. The boundary issue is moving towards an agreed framework, and the two countries must now develop a strategic partnership to realize the Asian century.

The author is a visiting professor at the University of International Business and Economics in Beijing.

(China Daily 01/19/2012 page8)