While staking claim to some parts of Arunachal Pradesh as part of the Nyangtri or Nyingchi prefecture, the Chinese are also planning to build the largest dam in the world here, apart from diverting the Brahmaputra northwards. As per the plan, China will extend the rail link to Xigaze near Tibet’s border with Nepal south-west from Lhasa, while the line to Nyangtri will extend towards Arunachal in the south-east. While Beijing says such developments aim to encourage economic growth and raise living standards in the long-isolated region, critics point to the political benefits of cementing transportation links with an area that has been only marginally under Beijing’s control for the past four centuries, since Chinese rule was first asserted, and now virtually brings China to India’s doorstep.

China appears, in fact, to be everywhere that India is looking. It is actively engaged in Sri Lanka, Nepal, Pakistan, and Myanmar, fostering economic ties and pumping investments, much to India’s discomfort. And that’s not all. China’s policies toward Kashmir — a thorn in India’s side for years — have caused much heartburn in New Delhi. Though China has always officially maintained that Kashmir should be resolved through a dialogue between India and Pakistan, its recent moves have virtually endorsed Pakistan’s claim on Kashmir. The issue of stapled visas to the residents of Jammu & Kashmir, as well as that of Beijing aiding projects in Pakistan Occupied Kashmir (PoK), is reflective of such a stance. These issues have resulted in India putting on hold all defense exchanges barring the border personnel meeting. In addition, there are definite signs of a Sino-Pakistani nexus in northern Kashmir, with the People’s Liberation Army (PLA) reportedly taking on a larger role in maintaining the Karakoram highway, which links parts of Pakistan Occupied Kashmir with Chinese held territories.

To counter what India sees as a rapidly growing assertiveness on the part of the Chinese, India is aiming to rejuvenate its ‘Look East’ policy and strengthen ties with countries like Japan, South Korea, Malaysia and Vietnam — countries with huge resources and extensive cultural synergies. Indonesian President Susilo Bambang Yudhyono will be the chief guest at next year’s Republic Day parade in New Delhi.  Prime Minister Manmohan Singh will be going to Malaysia this month and later to Vietnam for the East Asia summit and Japan for a bilateral summit. India on Wednesday also announced a slew of measures to expand its defense ties with Vietnam, including joint training of armies and support to strengthen and upgrade the capabilities of the Vietnamese armed forces.

Defense Minister AK Antony, who is in Hanoi, met Prime Minister Nguyen Tan Dung and his Vietnamese counterpart General Phung Quang Thanh. However, Indian officials are quick to point out that they do not believe that China’s assertiveness is directed at India. India’s ambassador to the United States, Meera Shankar, said, “We are somewhat concerned over — and it’s not directed towards India — increasing Chinese assertiveness in terms of Chinese behavior vis-à-vis many issues on which it may have difference with its neighboring countries.”

However, officials within the government maintain that it is important not to draw doomsday conclusions on the relations between the two countries. The pointer here is toward the trade volume between India and China, (which is expected to touch $60 billion this year), as well as toward increasing multilateral cooperation in matters like the WTO and climate change.

So, all in all, where does this leave the two countries most wary of the rise of China? The jury’s still out on this one.

In the Obama administration, there is a definite and very lively debate raging around the question. On the one hand are those who wish to persist with cooperative strategic engagement so the international order is run by a concert of powers, with the United States and China at its heart. On the other are those who believe that, even as they cooperate, the United States will have no choice but to compete with emerging powers to shape the international order while maintaining a geopolitical advantage over its competitors.

In India, the tone is slightly more definitive. While there are challenges, India is also growing in stature as far as its role in the neighborhood is concerned, with its economy being the anchor for the region. In this context, Foreign Secretary Nirupama Rao said India aims that “the engagement quotient in the ties (with China) should go up and the confrontation quotient should come down.”

With the beginnings of a debate within China about its political future, it is widely felt that internal churning will also grow. In short, the last word is a long way from being spoken.