Geopolitical impact on regional economic development

The core conflict between India and China will continue and any appeasement or compromise on the surface may receive acquiescence from the ruling elites, but chances of a political or strategic flare-up between them will always remain a possibility.
Robert D. Kaplan, the author of Asia's Cauldron: the South China Sea and the End of a Stable Pacific, writes: "The single geographical fact about Indians and Chinese is that the impassable wall of the Himalayas separates them. Buddhism spread in varying forms from India, via Sri Lanka and Myanmar, to Yunnan in southern China in the third century B.C., but this kind of profound cultural interaction was the exception more than the rule.
"Moreover, the dispute over the demarcation of their common frontier in the Himalayan foothills, from Kashmir in the west to Arunachal Pradesh in the east, while a source of serious tension in its own right, is not especially the cause of the new rivalry. The cause of the new rivalry is the collapse of distance brought about by the advance of military technology.
"Indeed, the theoretical arc of operations of Chinese fighter jets at Tibetan airfields includes India. Indian space satellites are able to do surveillance on China. In addition, India is able to send warships into the South China Sea, even as China helps develop state-of-the-art ports in the Indian Ocean. And so, India and China are eyeing each other warily. The whole map of Asia now spreads out in front of defense planners in New Delhi and Beijing, as it becomes apparent that the two nations with the largest populations in the world (even as both are undergoing rapid military buildups) are encroaching upon each other's spheres of influence -- spheres of influence that exist in concrete terms today in a way they did not in an earlier era of technology.
"Partly because the India-China rivalry carries nothing like this degree of long-standing passion, it serves the interests of the elite policy community in New Delhi very well. A rivalry with China in and of itself raises the stature of India because China is a great power with which India can now be compared with. Indian elites hate when India is hyphenated with Pakistan, a poor and semi-chaotic state; they much prefer to be hyphenated with China. Indian elites can be obsessed with China, even as Chinese elites think much less about India. This is normal. In an unequal rivalry, it is the lesser power that always demonstrates the greater degree of obsession."
GEOPOLITICAL INTEREST OF THE UNITED STATES: India and the United States are not formal allies. The Indian political establishment, with its nationalistic and leftist characteristics, would never allow that. Yet, merely because of its location astride the Indian Ocean in the heart of maritime Eurasia, the growth of Indian military and economic power benefits the United States since it acts as a counter-balance to a rising Chinese power. The United States never wants to see a power as dominant in the Eastern Hemisphere as it itself is in the Western Hemisphere. India-China rivalry serves well geopolitical interest of the United States: India balancing against China, and thus relieving the United States of some of the burden of being the world's dominant power.
US strategic analyst Jeff M. Smiths in his book, Cold Peace, writes: "Chinese perceptions of India appeared to be coloured by two distinct themes - disdain and disinterest - and Chinese threat perceptions towards India focused around four areas: Tibet, the Indo-US relationship, India's military modernisation and India's Look East policy."
"In East Asia, Delhi is broadening its strategic engagement with the US-allied countries of the Western Pacific. The changes have been most profound with regard to Japan, which is fast becoming one of India's closest partners in the region," says Smith. India has found common ground with regional capitals alarmed by China's claims in the South China Sea, and Delhi has become a vocal proponent of 'Freedom of Navigation there'.
"Thirteen years into the new century, the strategic gap between China and India is as large, or larger, than the gap between China and the US," notes Smith. In 2013 China's official military budget of $119 billion was over three times larger than India's $38 billion defense budget. China and India are likely to witness continued friction across the geopolitical spectrum for the foreseeable future, even if outright conflict remains unlikely. Perhaps that should be expected from two powers so large, rising so fast, in such close proximity. And perhaps the Chinese and Indian leadership should be given credit for pursuing mutual cooperation despite their litany of differences.
India's prime working-age population will overtake China's in 2028, but China has advantages in science, technology, and national defence capabilities. However, India's more open and flexible political and economic systems provide increased opportunities for better political performance and economic growth, giving it a potential advantage over China.
Small and medium states of the region have received some advantages from India-China rivalry but they have also suffered some pain. India has opened up its tight-fisted manner to compete with Chinese aggressive financial support to the regional states and many countries in the region are now getting Indian offers of generous financial packages. It may be too late for India as most countries in the region have crossed over the economic threshold and broke through the state of stagnant economy. This is mainly due to rising demand and rationalisation of competitiveness in markets of Europe, USA, Canada and Japan. These markets have also developed a demand for skilled and semi-skilled manpower, which compelled them to adopt a liberal and economically balanced immigration policy framework. This has created an opportunity for expanding the individual horizon and developing an aspiration as well which will be difficult to stifle by external influence either from India or China. In addition, liberalised aviation services around the world, electronic media and instant connectivity by telecommunication have made every citizen more conscious, aware, informed and protected by a powerful international community. This has reduced China's role in the spheres of influence and made them to focus more on economic gain than on strategic one.  
Neither India nor China has sufficient intellectual research for long-term geopolitical and strategic planning. In addition, both countries have yet to achieve self-sufficiency in economic resource to meet their domestic demand. The size of the population, which has established their claim on the status of  regional powers, will become their biggest disadvantage in the long run.  
Smaller states will always get better treatment from the Western hegemon which will manoeuvre to contain both India and China. The much-talked-about plan to develop faster domestic demand for economic growth will only make both India and China more dependent on the Western Alliances for capital, technology and innovation.
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