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India - China: Relations And Developments-2 - Guest - 04-28-2008

<!--QuoteBegin-"Mudy"+-->QUOTE("Mudy")<!--QuoteEBegin-->BZ or west strategic think-tank future strategy is to create war between India and China; war should be of maximum attrition, more the causality better future for west.<!--QuoteEnd--><!--QuoteEEnd-->
The chances of a war between China-Taiwan and China-Vietnam are more likely than say India-China.

<!--QuoteBegin-"Mudy"+-->QUOTE("Mudy")<!--QuoteEBegin-->Pressure of huge population of these two countries will be or already started showing sign on world resources and quality of life in west.<!--QuoteEnd--><!--QuoteEEnd-->
This huge population is an market for the western products. If Say India banned MNC's like pepsi then imagine the millions dollar losses that they will suffer. The huge population is an asset rather an liablity. The high standards of life in western countries today is because china can provide them with cheap labour while india provides high quality IT products at low prices.

<!--QuoteBegin-"Mudy"+-->QUOTE("Mudy")<!--QuoteEBegin-->Food shortage because Indians and Chinese are eating more<!--QuoteEnd--><!--QuoteEEnd-->
If the above statement is true then logically there should be food shortages in India and china, but food shortages are occuring in haiti,bangladesh and pakistan. The increase in prices of rice is due to the cyclone Sidr in bangladesh which destroyed standing crops there and the reasons for crop failure in pakisatan are well documented in the TWIRP thread.

<!--QuoteBegin-"Mudy"+-->QUOTE("Mudy")<!--QuoteEBegin-->oil prices are high because they started consuming more.<!--QuoteEnd--><!--QuoteEEnd-->
IMHO it is not so. On the contrary the world oil output is decreasing. The oil cartel OPEC can easily rectify the situation by increasing the output but why will they care since high oil prices is beneficial for them.

<!--QuoteBegin-"Mudy"+-->QUOTE("Mudy")<!--QuoteEBegin-->For a state to get involved is not religion first but resources first and religion as a tool they use on other. Religion softens the cause and gives them less causality.<!--QuoteEnd--><!--QuoteEEnd-->
Religion is the force that drives the western nations to war. The iraq war would not have taken place if god had not "told" bush to attack Iraq. Some say that Iraq war took place since America wanted to control Iraqi oil. If that is true how much of the iraqi oil is finding it's way into the international market? The quantum of iraqi oil entering world markets today is less than what it was during the days of saddam.

India - China: Relations And Developments-2 - Guest - 04-28-2008

Read these book.
Why I am worried about BZ, because he is main adviser to Obama. War between China and India is his latest theory. I will try to locate his recent paper.

The Grand Chessboard: American Primacy And Its Geostrategic Imperatives (ISBN 0-465-02726-1) - Zbigniew Brzezinski

<b>The USA's Global Resource War - "The Epic Struggle for World Hegemony"</b>
by Nigel Maund

Resource Wars by Michael Klare

here are some very interesting list -

India - China: Relations And Developments-2 - Guest - 04-28-2008

Mudy, here is an interesting report from Nobel prize winning agriculture scientist on the global food crisis. Today when the stem rust is affecting wheat crop worldwide, america is reducing funding to combat this menace.

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Wheat production: Need for research
By Norman E Borlaug
Stem rust that affects wheat crop can reduce global wheat production by 60 m tonnes.

With food prices soaring throughout Asia, Africa and Latin America, and shortages threatening hunger and political chaos, the time could not be worse for an epidemic of stem rust in the world’s wheat crops. Yet millions of wheat farmers, small and large, face this spreading and deadly crop infection.

The looming catastrophe can be avoided if the world’s wheat scientists pull together to develop a new generation of stem-rust-resistant varieties of wheat. But scientists must quickly turn their attention to replacing almost all of the commercial wheat grown in the world today. This will require a commitment from many nations, especially the United States, which has lately neglected its role as a leader in agricultural science.

<b>Stem rust, the most feared of all wheat diseases, can turn a healthy crop of wheat into a tangled mass of stems that produce little or no grain. The fungus spores travel in the wind, causing the infection to spread quickly. It has caused major famines since the beginning of history. In North America, huge grain losses occurred in 1903 and 1905 and from 1950 to ‘54.

During the 1950s, scientists, first in North America and later throughout the world, developed high-yielding wheat varieties that were resistant to stem rust and other diseases. These improved seeds not only enabled farmers around the world to hold stem rust at bay for more than 50 years but also allowed for greater and more dependable yields. Indeed, with this work, global food supplies rapidly increased and prices dropped.

From 1965 to 1985, the heydays of the green revolution, world production of cereal grains – wheat, rice, corn, barley and sorghum – nearly doubled, from 1 billion to 1.8 billion metric tonnes, and cereal prices dropped by 40 per cent. Today, wheat provides about 20 per cent of the food calories for the world’s people. The world wheat harvest now stands at about 600 million metric tonnes.

In the last decade, global wheat production has not kept pace with rising population, or the increasing per capita demand for wheat products in newly industrialising countries. At the same time, international support for wheat research has declined significantly. And as a consequence, in 2007-08, world wheat stocks (as a percentage of demand) dropped to their lowest level since 1947-48. And prices have steadily climbed to the highest level in 25 years.

[b]The new strains of stem rust, called Ug99 because they were discovered in Uganda in 1999, are much more dangerous than those that, 50 years ago, destroyed as much as 20 per cent of the American wheat crop.</b> Today’s lush, high-yielding wheat fields on vast irrigated tracts are ideal environments for the fungus to multiply, so the potential for crop loss is greater than ever.

If publicly financed international researchers move together aggressively and systematically, high-yielding replacement wheat varieties can be developed and made available to farmers before stem rust disease becomes a global epidemic.

The Bush administration was initially quick to grasp Ug99’s threat to American wheat production. In 2005, Mike Johanns, then secretary of agriculture, instructed the federal agriculture research service to take the lead in developing an international strategy to deal with stem rust. In 2006, the Agency for International Development mobilised emergency financing to help African and Asian countries accelerate needed wheat research.

<b>But more recently, the administration has begun reversing direction. The State Department is recommending ending American support for the international agricultural research centers that helped start the green revolution, including all money for wheat research. And significant financial cuts have been proposed for important research centers, including the Department of Agriculture’s essential rust research laboratory in St Paul.

This shocking short-sightedness goes against the interests not only of American wheat farmers and consumers but of all humanity. It is tantamount to the United States abandoning its pledge to help halve world hunger by 2015.</b>

If millions of small-scale farmers see their wheat crops wiped out for want of new disease-resistant varieties, the problem will not be confined to any one country. Rust spores move long distances in the jet streams and know no political boundaries. Widespread failures in global wheat production will push the prices of all foods higher, causing new misery for the world’s poor.

Ug99 could reduce world wheat production by 60 million tons. But a global crop failure of this magnitude can be avoided. Before it is too late, America must rebuild, not destroy, the collaborative systems of international agricultural research that were so effective in starting the Green Revolution.

– The New York Times (The writer is a Nobel laureate, and a professor of international agriculture at Texas A&M University.)<!--QuoteEnd--><!--QuoteEEnd-->

India - China: Relations And Developments-2 - Guest - 04-28-2008

<!--QuoteBegin-"Mudy"+-->QUOTE("Mudy")<!--QuoteEBegin-->Harshvardan,Read these book.
Why I am worried about BZ, because he is main adviser to Obama. War between China and India is his latest theory. I will try to locate his recent paper.<!--QuoteEnd--><!--QuoteEEnd-->
Mudy, today the likelihood of China clashing with America is more than a war between India-china. The borders of India-china are mountainous and china cant deployed large armoured forces along this border while if an china-US clash occurs it is most likely to be an naval war and china is investing heavily in building naval warships and submarines. A recent janes report even says china is building an secret sub base very near to vietnam coast. This base will be used in either Chinese wars against Vietnam and US. Therefore the likelihood of wars between China with either US or Vietnam are more vis-a-vis India.

Some interesting news on how the depreciating US dollar is majorly hurting chinese economy. This could also be one of the reason which may fuel US-China war.

The enormous amount China has lent to the US -- a total that the US data (which tends to underestimate Chinese holdings) now puts above $1 trillion -- will, according to this view, prevent other sources of conflict from getting out of hand.

Mei Xinyu, a senior researcher under the Chinese commerce ministry writing in a personal capacity for the Shanghai Daily, argues that China needs to put pressure on the US at the Strategic Economic Dialogue to do more defend the dollar. With the dollar at 1.60 against the euro, it isn't hard to see why.

Mei goes on to argue that if the US doesn't do more to defend the dollar, it is effectively defaulting on China.
"The negative results of the US dollar's decline are evident: the rising prices of all primary products, the intensified pressure on inflation globally, the confusion in the settlement of international transactions, etc. Worst of all, this is the US' disguised way of avoiding paying off its debts to foreign countries.
It should be noted that the US is the biggest debtor country in the world.
... By the end of 2006, the US' accumulated net debt overseas hit US$16 trillion. As most of the debts were calculated in US dollars, the US is actually welshing on its debts malignantly by allowing the devaluation of US dollars. Since China is the country with the world's biggest foreign exchange reserves, most of which are calculated in US dollars, China thus is hurt most greatly from the US dollar devaluation." Laughing

What's more, Mei Xinyu's argument isn't entirely wrong. <b>The value of China's investment in the US -- an investment that is probably roughly equal to a third of China's GDP</b> (assuming the US data slightly understates China's true holdings) -- will almost certainly fall in RMB terms. And unless something changes, <b>the US isn't going to direct its macroeconomic policies towards maintaining the dollar's external value. Bernanke's job is price stability and full employment in the US -- not protecting the Chinese purchasing power of the dollars that China has lent to the US.</b>

But Mei Xinyu's argment is still a bit off. China invested in the US knowing quite well that the US wasn't committed to defending the dollar's external value. It invested in the US even though the US had a large trade deficit. It invested in the US even though the IMF indicated the dollar was overvalued and would tend to depreciate over time. It invested in the US even though a gloomy American academic and a former Treasury staff economist quite explicitly warned that China would lose money on dollar holdings back in 2004.

Mei's complaint, in other words, should be directed in part at China's own policy makers. When they bought long-term US dollar-denominated debt they took the risk that the dollar would depreciate over time. They effectively gave the US the option to pay China back in depreciated dollars. What's more, they didn't charge a premium for the option. That was China's own choice. China wanted to keep the RMB down even if that meant over-paying for US assets.
It has proved to be quite a consequential choice.

Measured by the funds it has available to lend abroad ever year, China is now the world's biggest creditor. Most creditors tend to lend to the rest of the world in their own currency. That is what the US historically did, back when it was a creditor. Latin countries seeking financing from US investors promised to repay in dollars, not pesos (a promise that created problems of its own, problems well-documented by Dr. Hausmann). That is what Europe does as well -- an awful lot of the external debt of the Eastern European countries is denominated in euros. China, for complicated reasons, has decided to lend to the US in US dollars and to lend to Europe in euros and pounds. China's European lending - incidentally -- could prove to be as risky as lending to the US in dollars; SAFE and the CIC are really over paying for euros.
As a result, China is bearing the exchange rate risk. And the size of China's fx position is now quite large.

This exposure was a consequence of China's decision to hold more foreign currency reserves than it needs in an effort to hold its currency down. It was China's own choice. Still, I suspect that as the financial costs of China's policy become more apparent, more and more Chinese commentators will argue that the US -- and perhaps in time Europe -- have failed to live up to their side of the bargain by failing to do enough to defend their respective currencies.

That strikes me as a recipe for future trouble. <!--QuoteEnd--><!--QuoteEEnd-->

India - China: Relations And Developments-2 - Guest - 04-28-2008

<b>No room for complacency on Chinese Border : Antony</b>

Apr 28, 2008,New Delhi

Defence Minister A K Antony today said there was "no room for complacency" on the Sino-Indian Border while maintaining that India would abide by the bilateral confidence building measures with China. "We have to constantly upgrade our military and economic capabilities," the minister told Army commanders while referring to relations with China as he opened the five-day top army commanders bi-annual conference here.

His remarks are significant as the minister has just undertaken a major tour of the Sino-Indian frontier in Arunachal Pradesh. The defence minister also said that Pakistan was continuing to provide covert support to perpetrators of the cross border terrorism and hoped for a "more meaningful engagement with the newly elected Government in Islamabad".

Hoping that Islamabad would take steps to curb cross border terrorism effectively, Antony said on its part Indian forces would have to be vigilant on all fronts. Antony remarks on terrorism came as the main focus of the annual commanders conference is on terrorism specially the recent attempts to rake up an upsurge in Jammu and Kashmir.

In his first comment on Nepal, Antony said winds of political change were sweeping the Himalayan country. Describing the changes taking place in Nepal as a "defining moment" for the country, he said India was committed to help Kathmandu in every way to ensure an orderly and constitutional transition to multi-party democracy.

On the opening day, the Army Commanders dwelt on the subject specially the recent conference held in Pakistan Occupied Kashmir, which vowed to raise the militancy pitch in Jammu and Kashmir.<!--QuoteEnd--><!--QuoteEEnd-->

India - China: Relations And Developments-2 - Guest - 04-29-2008

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Mudy, today the likelihood of China clashing with America is more than a war between India-china. The borders of India-china are mountainous and china cant deployed large armoured forces along this border while if an china-US clash occurs it is most likely to be an naval war and china is investing heavily in building naval warships and submarines. A recent janes report even says china is building an secret sub base very near to vietnam coast. This base will be used in either Chinese wars against Vietnam and US. Therefore the likelihood of wars between China with either US or Vietnam are more vis-a-vis India<!--QuoteEnd--><!--QuoteEEnd-->
If you check last 7-8 years of chess game between US and China it will give you some hint what is going on.
US will never go direct with China. What they are doing or intent to do is create unrest, conflict with neighbors. China is already working on different strategy and even implemented some. Only Indian media kept this under wrap and hiding failed leadership e.g China had exact replica of Askin chin are for its battle training, same they had for Arunachal Pradesh. They blasted dam to create flood in AP and Assam. In last 5-6 years, we know atleast 2-3 incidence when they opened dam flood gate to create floods in India. Lot of Indians lost life and massive infrastructure and natural resources lost.
Now China had free ride in India, they were able to open offices in India to monitor India, even after raising red flag by Army and security think tank, great mms gave permission so that they can stay in power.
China is using Pakistan and Burma to create problem in border area. Pakistan is using BD to do rest of work.
For war of attrition China is doing work from every corner.

India - China: Relations And Developments-2 - Guest - 04-29-2008

<b>Chinese children sold 'like cabbages' into slavery</b>

India - China: Relations And Developments-2 - Guest - 04-30-2008

<b>Turf wars hobble China's financial markets</b>

If institutional infighting were an Olympic sport, China would sweep the medals at August's Games.

Turf battles in the financial sector have erupted over everything from beefing up the bond market to diversifying the government's currency reserves and allowing people to invest directly in Hong Kong shares.The received wisdom that China is a political monolith that can't put a policy foot wrong has been shown to be wrong.

China does not have a lock on poor inter-agency cooperation: witness the U.S. subprime debacle and the failure of a trio of regulators in Britain to spot looming trouble at Northern Rock, a home-loan lender that had to be bailed out by the government.

But the cost of inadequate regulatory teamwork is rising as the economy becomes more complex, said Stephen Green, head of China research at Standard Chartered Bank in Shanghai.

"We are moving to the stage where we do need more coordination, but we get more competition instead. You can see that across the environment sector and energy policy as well. It's at the stage where it's holding back reforms," he said.

Take the market in corporate bonds, a mainstay of any advanced economy, where institutional investors ensure capital is allocated efficiently by passing judgment on the profit prospects of firms before deciding whether to buy their paper.

In China, the corporate bond market is tiny and tangled up in red tape. If a firm needs money, it usually turns instead to state-owned banks, which are still dogged by a reputation for lending for political patronage, not profit.

"Why don't we introduce more market discipline into financing? Why do we rely on the banks so much? That's an inefficiency which is holding the economy back," Green said.


Prospects for the bond market brightened last year when the securities regulator was empowered to authorize listed firms to issue bonds. Previously, the economic planning agency had been the gatekeeper, imposing strict quotas and a thicket of conditions that kept issuance to a minimum.

But then things got messy.

The banking regulator, worried that banks were being exposed to undue risk, ordered them to stop guaranteeing corporate bonds -- standard practice hitherto.

The insurance regulator concluded that if banks had to be shielded from risk, so did insurers. So it barred them from buying bonds issued without a bank guarantee.

The result? Still next to no corporate bond issues.
Frustrated at the deadlock, the People's Bank of China took matters into its own hands. Earlier this month the central bank created a new bond market at the stroke of a pen by extending, to five years, the maximum 12-month tenor of short-term commercial bills traded among banks.

The PBOC had set up this commercial paper market in the first place in 2005 to break the direct-financing logjam.

Seven Chinese companies duly sold an initial batch of 39.2 billion yuan ($5.6 billion) of medium-term notes last Tuesday.

But fund management companies were not among the investors: they were prohibited from buying the paper by the securities regulator, which, according to market sources, said it needed time to evaluate the liquidity of the fledgling market.

A senior PBOC official, clearly unhappy, told Reuters the central bank would be "resolute" in promoting the new notes.


To be sure, the squabbling has not prevented China from clocking up five straight years of double-digit economic growth.

But the lack of transparency, and the broad discretionary powers that regulators enjoy, means China is missing an opportunity to build a more efficient financial system.

"Financial market innovation requires clear rules, and China's in desperate need of financial market innovation," said Michael Pettis, a finance professor at Peking University.

The repercussions of Beijing's turf wars are also being felt globally as rival managers of China's currency reserves slug it out for supremacy.

It was no surprise when China Investment Corp (CIC), the $200 billion sovereign wealth fund set up last September, bought into U.S. private equity giant Blackstone and investment bank Morgan Stanley. CIC's mandate, after all, is to take more risk to earn higher returns on a chunk of China's vast reserves.

What was a surprise was when the State Administration of Foreign Exchange (SAFE), an arm of the central bank that separately manages $1.68 trillion of China's reserves, showed up on the share registers of a trio of Australian banks and of Western oil majors Total SA (TOTF.PA: Quote, Profile, Research) and BP Plc (BP.L: Quote, Profile, Research).
The investments have raised eyebrows because SAFE has up to now invested mainly in low-risk, low-yielding bonds.

By buying equities, SAFE is encroaching on CIC territory. Word has it in Beijing financial circles that CIC is furious.

Handled clumsily, SAFE's purchases could drive up the price of assets CIC wants to buy. Moreover, by drawing a veil over its investments, the agency has fed Western concerns about the opacity and motives of sovereign wealth funds.

Perhaps these and other episodes show that competition between fund managers and among regulators is healthy.

But so is joined-up government: a senior official, who declined to be named, said that, owing to a communications gaffe, the first Premier Wen Jiabao knew of CIC's $5 billion stake in Morgan Stanley was when he heard about it on the television news.

Wen, the official said, was not amused.

India - China: Relations And Developments-2 - dhu - 05-02-2008

<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>The Fall of the Dragon</b>
By Ashish Puntambekar


What  has  the  western world  to  gain by allowing this global financial crisis  to develop? If they really wanted to, they could have  easily tightened lending regulations to ensure that the  subprime problem did not happen in the  first place. Anyone who has any experience with government knows that this statement is true.

It therefore appears that the forces of globalization will be unleashed only when the strategic drivers behind the current market conditions allow the market to drop to a point where  the  prize  would  be  big  enough  to  put together a comprehensive rescue package to revive the world economy.

The South East Asian currency crisis of 1997-98 gives us some indication of where we are headed. The  crisis started out as a property market bubble in the beginning, and we saw the price of Dubai crude going  below  $ 10 per  barrel. Asset  prices  also  crashed  and there was huge unemployment. Finally, the situation was retrieved, but only when the West & Japan went in with huge amounts of money to buy cheap assets  in  South East Asia. The recovery  came,  but outsiders  ended  up controlling a substantial portion of the economy in the ASEAN region.

This time around, the triad countries (the US, EU and Japan) have a lot  to gain  by  letting  the  subprime problem get  so  big,  that  it  creates  a global systemic problem in the markets which needs  policy intervention at the  highest levels  in the Government. But the money bags  will not come  in  and  mount  a rescue attempt till. China is taken out.<!--QuoteEnd--><!--QuoteEEnd-->

India - China: Relations And Developments-2 - shamu - 05-04-2008

I would like to add one more data point to the above article. Recently we are seeing an increase in apartment rents in US. In bay area, apartment rents are increasing even though a lot of apartments are vacant. Property owners are adding more features to the apartments such as internal washer-dryer, new floorings, landscaping etc. to justify the rent hike. If I connect the dots, this takes away more disposable income from the residents and could be part of the strategy described in the article.

India - China: Relations And Developments-2 - Guest - 05-04-2008

Increase in rent is due to demand, lot of people just walk away from their house and now renting place. Lot of H1B visa crowd is back.

India - China: Relations And Developments-2 - Guest - 05-04-2008

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->China is taken out.<!--QuoteEnd--><!--QuoteEEnd-->
From Dhu article.
I am saying this for last four-five years. Couple of things had happened, both side are playing chess. I think we may see big problem in Chinese economy after Olympics. Olympics is not a profit making venture. Tibet issue will make headache and extra expense on China.
China is unable to make entry in Middle East;
They are trying foot in Africa, not very successful.
Food grain shortage, oil, bank failures will create riots in China and may be India.
China is working with Chavez, not sure whether that will work, because I can bet west will create situation that oil transport from Venezuela to China will become very expensive.
Today my friend in Singapore were discussing food grain prices, rice is now double, same is happening in Philippines and Vietnam.
Pawar and Paswan are still playing with grains market and fake shortage created by them had already increased price in international market and encouraged inside India to horde grains for rat.
Price of Gold is another piece of puzzle.
We have to watch how much bank writeoff due to subprime loan comes from China. Till now it is upto 12+ Billion dollar

India - China: Relations And Developments-2 - dhu - 05-04-2008

So what is all the collapse of western economic system hysterics from Chalmers Johnson and Engdahl about? Is it a diversion? They are going to leverage their trillions dollar debt and weakening dollar to disable asian rise.

India - China: Relations And Developments-2 - shamu - 05-04-2008

<!--QuoteBegin-Mudy+May 4 2008, 04:15 AM-->QUOTE(Mudy @ May 4 2008, 04:15 AM)<!--QuoteEBegin-->ashyam,
Increase in rent is due to demand, lot of people just walk away from their house and now renting place. Lot of H1B visa crowd is back.
I don't see that increase in occupancy. If you drive through apartment complexes you will see a lot of vacancy boards. H1Bs are already in after October. There weren't many foreclosures in bay area. I heard from friends who were looking for homes that people are over bidding for homes in this area.

India - China: Relations And Developments-2 - Guest - 05-04-2008

Atleast, 3 people I know just walk away from their home. One person bought house in Cupertino paying 1.4 m and tried to sell it for 1.2m, finally sold it 1.1m and took loos within 18 months.
Somebody I know, whose house is for forecloure , he listed for 5.5 million, couldn't sell it, tried at 4.5 m, now just heard now transfered to bank.
In CA, it is after 6 month default, forclousre process starts, We will see effect end of this year.
In Bay Area, people had dropped half million to 1.5 million and still unable to sell house. (House between 4-5 million)
Here is some foreclosure link, (after process starts) Some banks don't even list on Yahoo and normally bank start selling them after 12 months.
Palo Alto - 62
Sunnyvale -202
Cupertino - 25
Saratoga -25
Santa Clara - 227
San Jose -5346

India - China: Relations And Developments-2 - Shambhu - 05-06-2008

Shameless mofo chicoms say Tibetian outfit in India has AlQaida links
F*** this country of idiots

India - China: Relations And Developments-2 - Guest - 05-09-2008

<b>China's submarine progress alarms India</b>
By Siddharth Srivastava

NEW DELHI - Recent reports about China's nuclear-powered submarine and naval capabilities are raising concern in New Delhi. It has also drawn attention to India's failure to effectively implement an elaborate naval expansion plan that stands significantly delayed.

According to reports, commercial satellite images indicate that the Chinese are building a massive strategic naval base on Hainan island, in the South China Sea, south of Hong Kong. This confirms suspicions of several Asian nations since 2002 about the underground submarine base.

A reputed British daily has described the base as a "vast, James Bond-style edifice capable of concealing up to 20 nuclear-powered submarines and which will enable China to project its power across the region".

Nuclear submarines can remain under water longer than conventional diesel-electric submarines and are thus difficult to detect. They are also capable of firing nuclear warheads.

Refusing to confirm or deny the base, a Chinese Foreign Ministry spokesperson said, "There is no need for the Western countries to be worried, or concerned, or make any irresponsible accusations. We have a vast territorial sea. It is the sacred duty of the Chinese army to safeguard our security on sea," he said.

Indian Prime Minister Manmohan Singh and Defense Minister A K Antony have said that all steps are being taken to protect India's security interests and sea lanes.

In a more detailed reaction, India's navy chief Admiral Sureesh Mehta said India has been aware of the base and would like to avoid a situation where it faces the prospect of a large number of nuclear submarines in its neighborhood.

"Though India is not worried about Beijing building a strategic naval base on Hainan Island in the South China Sea, it is concerned about the numbers. Nuclear submarines have long legs [traversing anywhere between 7,000-15,000 kilometers] it is immaterial where they are based," Mehta said.

The latest reports will only deepen the already heightened China focus of India's ongoing US$50 billion defense modernization exercise. This week, India tested for the third time the 3,500 kilometer-range Agni III ballistic missile that would be capable of hitting Beijing and Shanghai. New Delhi has said that the Agni III is now ready for induction. China's capabilities are of course far advanced, with its missiles capable of hitting over 11,000 kilometers.

India has been developing a ballistic missile defense program as well.

With India and China sharing the same strategic space in the Indian Ocean region, Indian defense experts view China as a long-term military threat, instead of Pakistan.

China is already beefing up bilateral ties with Pakistan, via involvement in projects such as the Gwadar port in Balochistan province, Sri Lanka and Myanmar to deepen its hold over the inter-linked complex energy-security picture in the area.

<b>Quest for a nuclear submarine</b>

Although India possesses air and land-based nuclear delivery platforms in the form of ballistic missiles (Agni, Prithvi) and fighter jets (Mirages), an undersea platform such as a nuclear submarine, the third leg of a nuclear triad, is absent. The Indian navy's nuclear experience is limited to a nuclear submarine leased from Russia from 1988-91.

Given the huge volumes of oil movement between the Persian Gulf and the Malacca Strait towards North Asia, the Indian navy has been looking to plug the deficiency.

China reportedly possesses five nuclear submarines and is looking to double the fleet. Not to be left behind, Pakistan is looking to equip its Agosta submarines with Babur cruise missiles.

India is planning an initial fleet of three nuclear submarines.

India's indigenous Advanced Technology Vessel (ATV), a nuclear-backed ballistic missile submarine project, began in the 1970s. Trials of the ATV are supposed to begin next year. This year, India underlined its submarine missile launch capabilities by test-firing the K-15, code name Sagarika.

But, given India's notoriously delayed defense programs, no one is sure when or whether the K-15-integrated ATV will actually be delivered.

However, India is due to receive its first leased nuclear submarine, capable of firing such missiles, from Russia. This is a 12,000 ton Akula-II class nuclear-powered attack submarine, which was commissioned following a $650-million secret pact. Reports say New Delhi recently begun quiet discussions with Moscow for a second advanced Akula-class nuclear submarine.

<b>Powering the seas</b>

With significant delays now expected in acquiring aircraft carriers - the Admiral Gorskov from Russia and the two that are being indigenously developed - other options are being aggressively probed.

India has a long way to go before it can match China's arsenal. Efforts are thus focused on an effective deterrence.

A key difference from an earlier Indian obsession of indigenous development has been co-opting foreign partners with developed expertise and also allowing the private sector increased play.

India has taken possession of the 36-year-old warship USS Trenton (re-christened INS Jalashwa) with a 16,900 gross tonnage. Trenton is the first-ever warship for the navy from the US and the second-biggest that India now possesses after the aircraft carrier INS Viraat

Recently, New Delhi announced a submarine-launched supersonic missile, a modification of the India-Russia BrahMos cruise missiles, a capability limited to advanced nations such as the US, France, Russia and a few more.

Antony said trials of the underwater missiles are awaiting the necessary platform that will be identified soon.

Ship and land-launched versions of the BrahMos are being inducted into the navy and army, while the air versions are being currently developed.

The state-controlled Defense Research and Development Organization is also undertaking a joint development project with Israel Aerospace Industries for a surface-to-air-missile using it from land and ship.

Last year, the construction of the highly advanced Scorpene submarine began at the upgraded Mazgon Dock (Mumbai) under a $3.5 billion deal for six such French submarines. The Indian navy is gearing to bring in 40 new warships over the next 15 years. The government plans to invest over $12 billion in this.

Given government encouragement to the private sector to play a role in defense, India's largest engineering and construction firm, Larsen and Toubro (L&T), has announced plans to build defense warships at its proposed shipyard-cum-port facility in the south Indian state of Tamil Nadu.

L&T has been keen to bid for Project 75 and 76 of the Indian navy that entails the production of 24 underwater vessels valued at $14-16 billion to meet challenges across the Indian Ocean region.

Ramping up the arsenal is being backed by strategic moves. The massive Malabar naval exercise held last September in the Bay of Bengal is a case in point. Navies of the US, Australia, Japan, Singapore and India participated.

India has established a listening post that reportedly began operations early last July in northern Madagascar, a large island off Africa's east coast. The station is India's first in the southern Indian Ocean and is significant due to the increasing oil traffic around the Cape of Good Hope and the Mozambique Channel.

<i>Siddharth Srivastava is a New Delhi-based journalist.

(Copyright 2008 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .) </i>

India - China: Relations And Developments-2 - Shambhu - 05-12-2008

The Party will never admit anything, but any rumors of aircraft factories etc being destroyed in the Chengdu quake?

India - China: Relations And Developments-2 - Guest - 05-12-2008

Amonia factory, school and other factories are down. Atleast 1000 students are trapped and unknown number are trapped in factories.
Area is very populous part of CHina
7.8 is big earth quake.

The official Xinhua News Agency said 80 percent of the buildings had collapsed in Beichuan county in Sichuan province after the 7.8-magnitude quake.

India - China: Relations And Developments-2 - Shambhu - 05-14-2008

Dam near YinXiu develops cracks. PRC army scrambled to fix. Tens of thousands of army and tens of thousands of civilians under threat of being trapped in dam breaks..