The symphony of South-South cooperation at the recent conclave of foreign ministers of BRIC (Brazil, Russia, India and China) at Yekaterinburg was jarred by China's refusal to endorse India's bid for a permanent seat in the UN Security Council (UNSC). In the joint communiqu' issued at the end of the meeting, Chinese delegates scotched Russian proposals of supporting India's cause of entering the elite league at the UNSC.

There are two ways of interpreting the latest Chinese attempt to cut India down to size and remind it of the hurdles facing its global ambitions. One reaction is of dismay that China went back on a prior commitment to recommend India for a permanent seat at the UNSC. In November 2006, Indian Foreign Minister Pranab Mukherjee claimed that Chinese President Hu Jintao had "reiterated" that Beijing was in favour of New Delhi's inclusion as a permanent member of the UNSC. Thus, the Yekaterinburg drama could be seen as a volte-face act of backtracking by China.

The second, more realistic, reading of the situation is that Indian officials have been applying a glossy spin to the chameleonic Chinese positions of the past, which never overtly pledged approval of a permanent UNSC seat for New Delhi. It is worth recalling that Chinese Premier Wen Jiabao's 2005 visit to India did not yield any definitive comment that China would be happy to second India's goal of bagging a permanent seat at the UNSC.

Likewise, despite the assertion of Indian Foreign Secretary Shivshankar Menon that President Hu had "assured" India on a bilateral visit in 2006 that China "would not be an obstacle" to New Delhi's push for permanent membership of the UNSC, no concrete guarantee was given in writing at the Joint Declaration.

Thus, the firm refusal of China to sign a communiqu' at Yekaterinburg that unambiguously championed a permanent seat for India at the UNSC is actually consistent with Beijing's hide-and-seek strategy on the issue. More than China deluding India by rescinding on its past promises, it appears to be a case of India allowing itself to be deluded by building make-believe castles.

The last few years have witnessed numerous summits and governmental exchanges between India and China. China is now India's largest trading partner, with the annual volume of trade standing at $40 billion and expected to touch $60 billion by 2010. The political side of the relationship has also improved, with usage of phrases like 'strategic partnership' by both sides. India's containment of the Tibetan upsurge in March 2008 was applauded by China with appreciative pats. The fact that China even accepted relief aid from India for rehabilitating earthquake victims in Sichuan earlier this month suggests that Asia's giants are getting along, if not cavorting together. 

Yet, in a puzzling disconnect with these trends, the military competition between the two countries is intensifying. India has been noting with great concern China's rapidly expanding space weapons programme. The discovery of a secret Chinese nuclear submarine base on the Hainan Island and the exposure of a massive nuclear missile site in central China remind New Delhi of its vulnerability to overwhelming attack. The continuing impasse over the disputed border between the two countries stands in sharp relief to the expansion of commercial goods traffic across the Nathu La pass that had been closed since the 1962 war.

These contradictory logics in the India-China relationship are fuelled by the disentanglement of the private sector from the state in both countries. The enormous corporate interests of India and China view their counterparts across the McMahon Line as compatriots with whom business can be done for mutual benefit. Economic liberalisation and private sector booms in both countries have unleashed an appetite for economic interaction that does not have to wait for resolution of military and strategic conflicts. Whether or not China is sympathetic to India becoming a permanent member of the UNSC is immaterial to exporters and importers of the two countries, as long as their profits flow.

Although states disallow the gains of trade from getting lost in the acrimony of military-strategic rivalry, they are essentially political actors with political ends. So, even as the Indian and Chinese chambers of commerce may raise toasts to each other, the standoff over a permanent seat for India at the Security Council will dog its relations with China.

New Delhi needs to drop its blinkers and openly admit that China is not sanguine about India joining the P-5 at the Security Council. Optimistic Indian diplomats argue that China has indicated in private settings that its main objection is that India's bid is knotted with Japan's attempt to garner a permanent seat. This is a red herring, because Chinese military journals and think tanks are closely monitoring India's economic, technological and military advances. To assume that China's strategic planning is Taiwan- or Japan-centric misses the changing reality of New Delhi's rise and the discomfort it is generating in Beijing.

From 1955, when Indian prime minister Jawaharlal Nehru conceded an offer for a permanent seat at the UNSC to China, New Delhi has permitted itself to be outsmarted by Beijing on this contentious issue. It is now high time to stop living in illusions and to acknowledge that China is one of the obstacles to India's quest for global stature.