President George W. Bush's visit to India was basically prompted by the desire to find a counterwight to China who is seen as a great economic and military threat to the United States. India, as the world's largest democracy and growing economy, is seen as a natural balancing factor vis a vis China.

India has always been a democracy and the earlier Cold War confrontation between the U.S. and the Soviet Union prompted the Americans to court India's autocratic rival, Pakistan. But the Cold War was over almost a decade and half ago and yet the Americans were slow to recognise India's importance as a democracy. Even after 9/11, Pakistan emerged as America's main partner in the war against terrorism. Although India has been facing cross-border terrorism from Pakistan in the same way the Talibans were carrying out attacks using Pakistan as their base, the United States didn't make India as its main partner in the war against terrorism. Now, facing growing insurgency in Afghanistan and Iraq, the Americans are becoming aware of India's importance as a partner against a common threat.

But this is more than simple partnership in the war against terrorism. The United States is becoming increasingly concerned about China and its growing economic clout. During the Cold War, the United States cultivated China as a counter to the Soviet Union and President Nixon's historic visit to China stemmed from that. But it was China which used the opening to the United States to establish its presence in the world. Now the United States is cultivating India to act as a counterweight to a growing China which is seen as the future threat. But the US-China economic relations may be too deep and extensive for India to make any real difference.

Early last year, China achieved two important milestones: it surpassed Canada as America's greatest trading partner and it surpassed the United States as Japan's biggest trading partner. Although Canada regained its position by the end of the year, it is only a matter of time when China may permanently replace Canada as America's biggest trading partner. The US-China trade is also marked by a one-sided nature of the trading relation. Although the US-Canada bilateral trade is broadly balanced with the United States exporting $211.3 billion to Canada while importing $287.9 billion from Canada, creating a modest $76.6 billion trade surplus in favour of Canada, the US-China trade is a one-sided affair with the US exporting a paltry $41.8 billion to China while importing a staggering $243.5 billion, creating a huge trade surplus of $200 billion in favour of China.

Where fits India in this? Despite the hype over India's high-tech exports, bilateral US-India trades totalled less than $27 billion last year with the US exporting only $8 billion to India and importing a modest 18.8 billion. This is next to nothing compared to massive US-China trades totalling more than $300 billion. Despite the Indian economic boom, India-US trades are also only a fraction of even US-Mexico trades totalling about $270 billion or Japan-US trades totalling $290 billion. The US-India bilateral trade has also been hamstrung by India's crumbling infratsructure, red tape and corrupt bureaucracy. India's roads, ports and utilities such as electricity and telephones are in awful shape -- especially compared to the expanding infrastructure projects in China. China has undertaken a vast expansion of its roads, highways and railways unmatched anywhere in the world. Moreover, China has become an important source of credit for the United States which India can never match. China alongwith Japan are mainly financing the US ballooning budget deficits.

China has also become the main destination of the foreign investment in the world. Despite recent reforms, foreign investment in India remains limited. This fiscal year, it's expected to total just $5 billion, vs the $60 billion that flooded into China last year. Although UBS Securities say that the foreign investment in India is likely to double in the coming years, it will remain a fraction of what China is receiving today. Ambassador Masud is wrong to say that India is the world's fourth largest economy based on purchasing power parity (PPP). It is China with a $5 trillion (PPP) which is the world's fourth largest economy after the US, Japan and Germany. Moreover, China is likely to overtake both Japan and Germany as the world's second largest economy before the end of this decade. Although Indian economy is growing at a rate of 7.5 per cent, China's economy is growing at a rate of 9.5 per cent. With India lagging far behind China, the gap between China and India will only grow. Increasingly, China is becoming a supplier of high-tech electronic products at a relatively moderate price. America's retailing giant Walmart is considered actually a trade emporium for China, buying and selling high quality Chinese products at affordable prices.

With such close economic ties, it is unthinkable that US-China relations will become a military confrontation as existed between the US and the Soviet Union. The Soviet Union never enjoyed any economic clout and the US-Soviet trade was nothing compared to that with China. However, growing economic relations have brought new tensions. As China's new economic might helps it acquire geopolitical clout, its growing political power and strategic presence may also hinder the rest of the world's ability to prod China to compete on a level economic playing field. From growing economic might, the Chinese arrogance might also grow. It is China's firm declaration that it will use force against Taiwan if needed to bring it under its control that has made the United States to look for military balance in the Asia-Pacific region and the United States thinks here India can play an important role to balance China. But India is hobbled by its own nuclear confrontation with Pakistan and various insurgencies at home and can only play a limited role. In the future, we will see more US-India joint military exercises and the United States providing more military hardwares and training to India. But given its own limitations, India can play only a very limited role as a counterweight to China in the Asia-Pacific region. A remilitarised Japan will be able to play that role much better.

However, given the closer US-China economic relations with both countries becoming each other's most important trading partners, it is unlikely that China and US confrontation will ever reach the scale of the US-Soviet confrontation. President Carter's National Security Adviser Zbigniew Brezinski rightly believes that Chinese leadership is not inclined to challenge the US militarily because China's phenomenal economic growth is contingent upon good relations with the US, Japan, South Korea, and other trading partners, the US being the fourth largest trading partner and the source of largest US trade deficit.

In the future, China-US economic disputes may be the main source of tension between the two countries. China's $500 billion in US dollar reserves could serve as a war chest for the acquisition of American, Canadian and other foreign companies, especially resource and commodity firms. With so much financial resources at their disposal, China's government firms could buy up foreign firms far more easily than their overseas counterparts. The value of the Chinese currency Yuan has already become a bone of contention between the two countries. These are emerging disputes between China and the United States, as China flexes its economic and financial muscles and the United States, facing enormous budget and trade deficits, finding it difficult to challenge.

India can only play a marginal role vis a vis China as a global economic power.