SPY EYES

“Beware India!” shouts the headline in one Indian paper.

“China to open first military base in Indian Ocean.”

Nothing to worry about, says the defence ministry in Beijing. The base – in the Seychelles – is just for supplying passing Chinese navy ships.

But seen from Delhi, it is another move in what a former Indian defence minister has called China’s policy of “strategic encirclement”.

Even as Indian diplomats insist they want “cordial ties”, tensions are rising everywhere between the two giant Asian neighbours, in what looks increasingly like a new “great game” – with the US and other powers upping their stakes.

Willliam Burns, America’s number two diplomat, is in Delhi this week to try to rekindle relations after a period of stagnation, and a stalled deal on nuclear co-operation.

Next week, Washington hosts diplomats from India and Japan for a first ever “trilateral dialogue” of the “three leading Pacific democracies”.

An increasingly assertive China is clearly their main focus.

The Great Game was a term coined for the shadowy battle for influence and control in central Asia between Russia and the British empire.

Yet even as the latest round plays out in Afghanistan, this new and less-noticed Asian great game could be of far greater global importance – and pose more dangers.

It is already provoking regular media hostilities, the Chinese papers lashing out at India as “jealous” of China’s success, after the former Indian defence minister’s broadside.

While playing down the chances of real conflict, a senior Indian diplomat admits: “There is a trust and a perception deficit” between the two.

Nearly 50 years after they fought a brief border war, Delhi and Beijing still cannot agree on much of their nearly 4,000km (2,500 miles) of frontier, with an arms race happening on both sides.

A regular border meeting was recently cancelled because of disagreements over another frequent irritant in the relationship – the Tibetan spiritual leader, the Dalai Lama, who lives under Indian protection.

This is bound to be an “adversarial” relationship, says Shyam Saran, India’s foreign secretary until last year.

But what he calls China’s “hierarchical’ outlook” makes it more difficult.

“It wants to be on top, maybe not to dominate territory, but to have veto power over any of its neighbours’ policies it doesn’t like.”

Just like the original great game, this is a battle on many fronts, being fought with aid, investment, politics and culture – from Pakistan (a long-time Chinese ally) to Nepal, and across South East Asia.

But paradoxically, part of the reason for relations “getting more complicated” is “because they are getting closer”, says Jonathan Holslag, a China expert at the Brussels Institute of Contemporary Studies.

Trade between India and China is expanding, but it is imbalanced in China’s favour.

And with its greater economic weight, it is going “all out in its cheque-book diplomacy”, says Mr Holslag, with India struggling to compete.

But while it could not stop the Seychelles hosting China’s new base, India drew the line earlier this year when Nepal – landlocked between the two giants – contemplated accepting $3bn (£2bn) worth of Chinese investment.

But China already has firm foundations there, recently upgrading the Friendship Highway across the Himalayas between Kathmandu and Lhasa in Tibet.

Work is now under way on a railway link, with nothing comparable from the Indian side.

China is years ahead of India in building up transport links along their disputed frontier, giving it a head start in moving troops if there is another war.

Yet from Beijing’s point of view, India is helping in what it perceives as an emerging US policy of containment.

Next week’s meeting will only heighten these suspicions, coming soon after US President Barack Obama’s announced plans to send US marines to Australia’s northern coast – facing China.

Beijing chafes at Indian oil companies encroaching on what it regards as its backyard in the South China sea.

Indian officials though play down an incident in the summer when a Chinese ship is reported to have warned an Indian ship to leave the area.

There is no question of India being used as “a cat’s paw” by the US, according to the senior Indian diplomat.

And despite better ties, India remains cautious about how close it gets to Washington, says Mr Saran, because of a perception that it is still not willing to share enough.

“The US still appears unable to decide whether to treat India as a partner… as far as technology matters are concerned,” he says.

Watering down nationalism

That both India and China are now nuclear-armed helps concentrate minds against war.

Along their border, the most likely flashpoint, things have been quiet for more than 30 years – despite or perhaps because of the military build-up

“Not a bullet has been fired, not a soldier lost,” says Indian foreign ministry spokesman Vishnu Prakash.

Yet some see dangers in the continuing war of words in the Indian and Chinese media.

Jonathan Holslag says that although it is only “25% real, it plays up nationalist sentiment and reduces the scope for making compromises”.

If economic growth slows much more in either India or China – and there are already signs – that could spell trouble, encouraging nationalism that could turn “nasty”.