China would like to have a foothold in South Asia and we have to reflect on this reality. There is a new assertiveness among the Chinese. It is difficult to tell which way it will go. So it's important to be prepared. Statements like these are common in India, but to hear them now from the mild-mannered Indian Premier Manmohan Singh proves how much Asia is still mired in strategic distrust. Peace cannot be taken for granted. In many ways, the rise of China and India increasingly challenges one of the core assumptions in contemporary inter-national politics, namely that the aspiration to pro-mote domestic development leads to interdependence and peace. When the European leaders gather to discuss cooperation with the two juggernauts later this week, they better gear for a turbulent Asian Century.

Besides the debate over whether Asias ascent is good or bad for commerce, there has never been a deep strategic reflection in Europe about how the interaction among the Asian protagonists would influence our security. Most pundits in Brussels seemed to have implicitly assumed that economic growth is a catalyst for cooperation, and that, eventually, the European Union could gain soft power as an example for regional integration. Growing tensions between China and India show that such optimism might be premature.

Despite growing economic interdependence, China and India have never ceased to counter-balance each other. China clings to Pakistan as a second front in case relations with India turn violent. India is remilitarizing the Chinese border by deploying more troops, new battle tanks, aircraft, and missiles. It is shifting its naval presence from the Arabian Sea to the Andaman Sea, Chinas gateway to the Middle East and Africa. Fixation with domestic development and expanding bilateral trade have thus not abated the pressing security dilemma that has been haunting China and India since 1962.

It is also doubtful that the two countries will ever be able to develop a division of labour that leads to mutually beneficial cooperation. As much as China tries to challenge Indias leadership in IT, India badly needs manufacturing for absorbing its demographic growth. It is nonsense to assume that China, which still has to lift millions out of poverty, soon gives up its role as factory hall of the world. Both countries, one more successful than the other, have a tendency to build catch-all economies that are dominated by strong national champions.

Such economic nationalism, however, is also driving China and India into a vulnerability trap. It all started with creating a positive climate for foreign investors. Lest these companies become too dominant, national industries have subsequently been supported to take over. Outgrowing the domestic market, these industries now need to be backed for gaining access to consumers, knowhow, and raw materials overseas. And steadily we are arriving at a stage where the state needs to protect these newly gained assets abroad, even with military means when necessary.

Economic nationalism unavoidably complicates bilateral trade relations and leads to competition for influence in neighboring countries. The military security dilemma will be aggravated as China gradually steps up its military presence beyond the Strait of Malacca and India positions itself as the maritime gatekeeper of the Indian Ocean. Indeed, the rise of new trading nations tends to lead to greater rivalry instead of collaboration, even if the two countries have a common interest in regional stability. The situation can even become more perilous if economic nationalism fails to produce the gains in wealth that were promised and political elites seek to shore up their esteem at home by standing strong abroad. In that regard, it should not come as a surprise that troubled Indian politicians like Singh seek refuge to sturdy diplomatic discourses.

This will be Asias Century, for sure, but the tense relations between India and China show that this could be another era of great power rivalry, driven by economic zero-sum thinking. For Europe it is time to develop a plan B in case things go wrong in Asia. The most plausible option would be to trail in the wake of Washington, and rely on the US as offshore balancer in the region. Yet, Europe and America have diverging geopolitical concerns. America will inevitably focus its strained hard power east of the Strait of Hormuz, whereas for Europe the challenge will be to prevent a spillover of rivalry into the interface between Europe and Asia that runs from the Caspian Sea, via the Arabian Peninsula to the African continent. It is here that Europe should try to expand its influence. But even more so, Europe needs to demonstrate that it is a player instead of a playground and that it can shape its own future instead of becoming dependent on the unpredictable development of Asia. Even should Asia overcome a new episode of rivalry, Europe will only wield soft power if it cracks the hard nut of inertia and self-indulgence.


Jonathan Holslag is a research fellow at the Brussels Institute of Contemporary China Studies. He is the author of China and India: Prospects of Peace (Columbia University Press, 2010) and The Price of Fear (Forthcoming in the IISS Adelphi Series).