27 October 2011

China in the Indian Ocean: Impacts, Prospects, Opportunities

Nathaniel Barber, Kieran Coe, Victoria Steffes, and Jennifer Winter, China in the Indian Ocean: Impacts, Prospects, Opportunities, Prepared for U.S. government’s Office of South Asia Policy (Madison, WI: Robert M. LaFollette School of Public Affairs, University of Wisconsin-Madison, 2011).

Mainland China has increased its activities in the Indian Ocean region by investing in local states, building ports and infrastructure, and acquiring energy resources. We analyze the impact of these activities on overall regional stability and security, as well as the impact on relevant regional players, especially India. We also assess trends and prospects for the region’s future. Evaluation of prospects occurs under two diametric assumptions: an expansionist China and a nonexpansionist China. Finally, we discuss opportunities created for U.S. government action in the South Asia.

We analyze the impact of Chinese activities on 14 matters in three broad issue areas: regional security, nonenergy economic relations, and energy security. We find that smaller relevant regional players win across all 14 issues, but that India and China rarely experience wins simultaneously. In fact, in most matters, China wins at India’s expense.

We view the assumptions of China as expansionist or nonexpansionist as equally plausible. For this reason, our analysis of prospects presents predictions in four categories: the short term and the long term for both expansionist and non-expansionist China. For example, in the regional security issue area, we predict that stronger ChinaIndia security partnerships are very unlikely assuming an expansionist China, but much more likely if we assume a nonexpansionist China. Our predictions range in probability from very unlikely to very likely.

Regardless of Chinese government intentions, the current and future situation in the Indian Ocean region presents opportunities for U.S. government action to further its strategic interests. In order of importance, we propose five policy tools: strengthening relations with India, expanding relations with Chinese-courted states, maintaining naval superiority in the area, ensuring energy security for smaller South Asian states, and pursuing closer diplomatic relations and a less unequal trade balance with China. …