China’s intentions for India are twofold. On the one hand it wants to improve trade relations but on the other, it wishes to have India boxed in in South Asia while continuing to fund its ally in Pakistan. Premier Wen Jiabao’s visit to India this week was a reminder of these dual objectives.

Wen’s India trip may have been more appropriate labeled the visit of China’s chief executive officer to New Delhi rather than its premier’s. In his tail some four hundred businessman crossed the Himalayas, the largest Chinese trade delegation ever to visit India.

Economically, both Asian giants are poised to dominate world affairs for the decades ahead. Each managed to weather the global recession with continued growth rates while bilateral trade is approaching $60 billion annually. Indian exports amounted to $17 billion up to October of this year while China exported more than $30 billion worth of goods to India during the same period.

Wen Jiabao understands that the world has changed since his last visit to India in 2005. China perceives America as a superpower in decline and it recognizes the need for greater cooperation with India, at least in Asia. At the same time the Sino-American relationship remains pivotal.

In the last two years there was occasionally talk of a G2 in which China and the United States would share world power. That has changed as the United States are unwilling to vacate their primary position and China is becoming more assertive, prompting the Americans to try to “check” its ambitions. Both are courting India in order to improve their clout in this threesome.

The border disputes between China and India are largely a thing of the past. It is understood that both are prepared to accept the present status quo in the Arunachal Pradesh region and in Jammu Kashmir’s Ladakh. The Chinese know that if they push India in this regard, it might not hesitate to decisively side with the United States.

This was evident from the words of China’s assistant foreign minister this week. China and India are both “emerging economies and major developing countries,” he pointed out. “Their relationship is one of the most important bilateral relationships of the two countries. Leaders of both the countries have agreed that there is enough space in the world for China and India to develop together and enough areas for them to cooperate with each other.”

Even if these words were draped in diplomatic niceties it is clear that China nor India is interested in reviving decade-old border disputes. Both are looking to the rest of the world instead for markets.

As far as India is concerned, its best days are ahead in this century. The world order of the near future looks to be one of Sino-American rivalry with India caught in between. Economically, strong ties with China are vital but politically, it is more inclined to side with the United States. In either event, it’s not ready to antagonize either.

India’s policy toward China was in a way articulated by its Foreign Secretary Nirumapa Rao in her speech to a think tank on December 3. “The view that India and China are rivals to me is an overgeneralization,” she said, “as well as oversimplification of a complex relationship which encompasses so many diverse issues.”

What worries the Indian leadership about China is its encirclement policy. China has actively courted Nepal, Bangladesh, Sri Lanka, the Maldives and Pakistan, apparently trying to surround India with pro-China regimes. India has responded with a similar diplomacy, improving relations with both its neighbors and countries in East Asia, including Taiwan, South Korea and Vietnam — which feeds existing Chinese anxieties about being “boxed in” from the Pacific by an array of American-allied nations.

Diplomatically, Wen has played a good guest in India so far and his hosts have naturally reciprocated. His visit seems more of a courtesy call from across the Himalayas however before the unfolding of a new era in international relations that will inevitably pit China and India against one another occasionally.