Hence the United States, after careful consideration, came up with a policy to balance China's growing power by developing an equally powerful nation in India. The latter in itself is an economic powerhouse, but is held back by lack of funds. It is also surrounded by unfriendly neighbors -- China in the north and Pakistan in the west. Unfortunately, the Iraq War derailed the U.S. agenda in Asia for some time.

Central to the evolution of this U.S. policy is the Indo-U.S. nuclear deal. Even though the Iraq War is still continuing, the United States has decided to push ahead with its strategy to strengthen relations with India, as evidenced by the announcement last Friday in Washington by officials of both countries that substantial progress has been made toward finalizing the nuclear deal.

India offers all the same advantages as China, and many more. It has a highly educated, English-speaking workforce, which the West could put to better use. Whereas China excels in manufacturing, India is emerging as a technology hub. The latter will excel in high-margin, high-value businesses such as information technology, business- and knowledge-processing outsourcing. It is also a center of automotive exports, pharmaceuticals, diamonds and jewelry, and a major petroleum refiner.

It is expected that China's manufacturing advantage will be nullified within 20 years, with the emergence of other manufacturing hubs elsewhere in Asia and Latin America. India's advantage as a technologically proficient nation will remain.

The Chinese know about this Indian advantage and are working hard to counter it by teaching English in schools. But they miss the point. India's English advantage dates back 200 years to 1820; the Chinese cannot gain that advantage in 15 years. Hence, if the United States has positioned India as a knowledge center of the world, it is with good reason.

There is a silver lining for China. Close to 100 million people are employed in producing its $1 trillion in manufacturing exports. In India only 25 million people are employed in providing $120 billion in exported manufactured goods and $30 billion in IT and BPO services. Hence, the advantage goes to China in this decade.

A successfully concluded Indo-U.S. nuclear deal would bring robust investment into India from the United States and elsewhere, and India would begin to catch up with China economically, and later militarily. Now it appears that the Indo-U.S. nuclear deal will in fact go ahead -- it requires only the blessing of politicians in the U.S. Congress and the Indian Parliament -- and containment of China can begin in earnest.

A few steps will hasten this process: First, the strategic dialogue between Japan, India, the United States and Australia, which began in the Philippines on May 24-25th and to which China has taken exception, should be upgraded from official-level talks to political-level talks. The basis for these quadrilateral talks has been the readiness of these countries to cooperate economically and politically in the region, against the backdrop of the China threat. Fearing that these countries were ganging up on it, China issued a formal diplomatic protest. The Chinese should know that they themselves are the cause of this fear.

Second, China's economic growth needs to slow down a bit. Companies in the West are falling over each other to place orders with the Chinese manufacturing hub. They should look elsewhere for the same products. An economic slowdown would go a long way toward moderating any belligerent attitude on the part of the Chinese. Alternatively, the Chinese currency should be revalued upward, making Chinese products a bit more expensive. That would have a definitive impact on how fast China's economy grows and how much money the country spends on defense.

Third, Japan has to grow out of its pacifist constitution and take full responsibility for its own defense. This would bring back unpleasant memories of World War II to the Chinese mind -- but that is the idea. As long as the two remain good neighbors and equal trading partners, they have nothing to fear. The flip side of this factor is that a more aggressive Japan may force the withdrawal of U.S. influence from the Pacific. But that is the price the United States may have to pay.

Fourth, India has to grow out of its non-aligned mindset. Non-alignment is an ideology with low economic returns. India has to prosper rapidly. In order to do that it has to jettison non-alignment. Later, as an economically prosperous nation, India can help the Third World much better than by being backward and non-aligned. The future of India and the rest of the non-aligned nations is bright if India becomes a bridge between the advanced nations and the backward nations.

Fifth, Russia -- although still a thorn in the U.S. side in Europe -- is willing to listen to Washington in order to contain China in the east. This is the reverse of Richard Nixon's 1973 policy, in which he reached an understanding with the Chinese to corner the Russians. In the event of a conflict, the Russians alone could tie down the bulk of Chinese forces in the north and east and prevent their mobilization elsewhere.

A belligerent China, if left unchecked, will militarily grab Taiwan sooner rather than later, and the United States will find it hard to prevent it alone. The United States cannot threaten the Chinese with nuclear weapons, because the Chinese have their own in plenty.

Also, China will threaten India and ask India to surrender whatever territory in the northeast it wants. It could also block trade with India by nations the Chinese consider within their own sphere of influence. In addition, it could threaten Russia with nuclear annihilation if it does not hand over territory east of the Ussuri River, which has huge oil potential. The Japanese may find themselves pressured by the Chinese to hand over additional technology and money as payment for World War II atrocities.

All the above actions were stated by Mao Zedong in his 1955 declaration that all treaties over the past 200 years that were forced on China when it was weak would be renegotiated and, if need be, force would be used. China, in order to grab money from abroad, merely postponed its intentions for the past 40 years. As a matter of fact, Chinese leaders never abandoned their desire to dominate Asia.

Hence, it is important that the United States, Japan, India and Australia go ahead with their alliance. The Indo-U.S. nuclear deal covers one more milestone. The remaining political steps to complete this deal are not far behind. The next logical steps, including pouring in resources to build India's infrastructure, should become a priority in the next five years.

India will become hugely prosperous and stand in a position to rival China. This, along with a coordinated economic slowdown in China and the other steps outlined above, will keep Chinese belligerence in check. If all these steps are taken now, it will prevent a bigger foreign policy disaster later.

Hari Sud is a retired vice president of C-I-L Inc., a former investment strategies analyst and international relations manager. A graduate of Punjab University and the University of Missouri, he has lived in Canada for the past 34 years.

United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interest of creating an open forum, original submissions are invited.

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