The essential fact is that on a fundamental level two powers as big and as proximate as China and India cannot rise without competition. And in most spheres of this competition, it is India that is catching up.

Three games
There is competition for regional and global influence: China is taking leadership in regional groupings where it has been a member, and entering groupings where it has not. It is now the most important member in East and Central Asian groupings. It has secured a good foothold in South Asia. And it is knocking on the doors of Africa. India, on the other hand, has secured a greater role for itself in South East Asia, where it has been welcomed because it can help balance China's influence. Japan too has recognised that India will be a necessary element of the balance of power in East Asia.

Then there is competition in the quest for energy sources and, soon, natural resources. Here too, China is ahead, but India's has begun to up its game in energy diplomacy. The two are already competing in securing fossil fuels. With the India-US deal bringing India into the nuclear mainstream, the competition will extend to securing nuclear fuel too. This decade will also see the two countries on a worldwide hunt for natural resources as their economy develops.

And of course, there is competition for investment and trade, which will only intensify as China becomes proficient in the English language and India gets its manufacturing act together.

Perhaps the only areas where the two countries don't compete is in the sporting field: India is a nobody in all international sports save one and China has not even begun to play cricket.

...three strategies
So yes, there is a contest going on all right. This does not, however, call for visceral hostility. Each competition has its rules. They cannot be wished away. This is a moment of profound change in the global balance of power--and India would do well to play the game according to what the rules are (and not, as in the past, according to what the rules ought to be). China's objective--couched as it may be in the language of 'peaceful rise' and 'harmonious world'--is to become the pre-eminent power in Asia. It is a game that requires China to improve its relative power. There are two strategies for winning: one, for China to develop its own power; and two, for China to contain its competitors. The principal challenge for India will be to counter this. Nuclear weapons have made it unlikely that the contest will escalate to war. It is necessary to invest in maintaining the conventional and nuclear deterrence to keep it that way. They may be important in their own right, but Tibet, Tawang (i.e. the border issue) and Taiwan are both instruments and shock absorbers in this geopolitical game.

On the surface, the energy and resources game is zero-sum, and for that reason, the prudent strategy for both parties is to compete with each other. There may be scope for co-operation; but such co-operation will not be in India's favour until it is able to negotiate with China on a peer-to-peer basis. At this time, India should focus on closing the gap, though not necessarily taking the same route as China.

It is a matter of basic economics that greater trade and investment will leave both countries better off. The rules of the game here are entirely different from the rules of the geopolitical or the energy game. There is no good reason--not even national security--for restricting trade with and investment from China. Those concerned with national security must adapt to the contemporary era of information abundance. Although this is changing, the Indian government is playing the geo-economic game according to geopolitical rules (and perhaps, vice versa).

The upshot is that India will have to counter China's geopolitical moves, keep pace in the quest for natural resources and engage China in trade. There is, in the end, no simple one China policy.