Europeans and Americans, who have dominated world affairs for so long, are understandably fascinated by the recent rise of China and India. It's obvious that the rapid economic resurgence of these two great Asian powers fundamentally alters the global rules of the game. China and India have built up a $60-billion-per-year trading relationship, and for years they've insisted that they want to work more closely on a variety of fronts. Yet that expressed desire for collaboration co-exists uneasily with a long-running strategic rivalry. Parts of their mutual border remain in dispute. China has long supported Pakistan, India's main enemy, while the Indians have often befriended competitors of the Chinese (be it Moscow or Washington). Lately Beijing has been cultivating relationships among countries in Southeast Asia and the Indian Ocean -- including Bangladesh, Myanmar, and Sri Lanka -- to protect the flow of commerce and access to supplies of natural resources. That has the Indians fearing encirclement. Lately, though, another element is threatening to complicate the strategic calculus: the nuclear factor. In themselves, of course, nuclear weapons are nothing new to either country. China has been a nuclear power for decades, while India conducted its first nuclear test in 1974 (though most outsiders tend to think of 1998, when New Delhi conducted a series of underground explosions designed to establish its bona fides as a genuine nuclear power). Although both countries have sworn off first use, both have built up formidable deterrents designed to retaliate against any attackers. So what's new? A lot. Concurrent with their rising economic might, China and India have set about modernizing their militaries to lend extra muscle to their growing strategic ambitions -- and given their complicated history, that can't help but spark worries. "China has the most active and diverse ballistic missile development program in the world," noted one U.S. report. "China's ballistic missile force is expanding in both size and types of missiles." China's Dongfeng long-range missiles boast independently controlled multiple warheads, mobility, and solid fuel (meaning that they can be fired with little notice). That's just one of many areas in which the Chinese have demonstrated their advanced technological capabilities. In January China shot down one of its own satellites with a missile -- once again demonstrating, as it did with a previous test in 2007, that it's well down the path toward a ballistic missile defense system. That test unnerved the Indians, who saw the prospect of Chinese space weapons as a potential threat to the credibility of their own nuclear deterrent. The Indians, meanwhile, have been hard at work on a new generation of long-range missiles of their own. The Agni-5, which is set for a test flight by the end of this year, has a projected range of 5,000 to 6,000 kilometers -- meaning that it would be able to hit even the northernmost of China's cities. The Indians are also conducting sea trials of their first ballistic missile submarine, the Arihant, which could be ready for deployment within another year or two. It is undoubtedly true that the two countries mainly have other potential enemies in mind. China is primarily concerned about deterring potential attacks by the world's leading nuclear power, the United States, while India's strategic calculations focus on the threat from Pakistan. Yet strategic logic is creating the potential for direct friction between Beijing and New Delhi on several fronts. The two countries are already engaged in a naval arms race as they jockey for influence in the waters around South Asia. Tensions have also been mounting over the two countries' border disputes -- especially the one involving the disputed area of Arunachal Pradesh (which is controlled by the Indians). The Indians complain of a rising number of Chinese incursions into the area; a remark by the Chinese ambassador to India a few years ago, when he claimed the territory as China's, stirred up public outrage. The Chinese, who regard Arunachal Pradesh as part of Tibet, worry in turn about a buildup of Indian troops in the region. Rajeswari Pillai Rajagopalan of the Observer Research Foundation in New Delhi notes one concern. Starting in 2007, the Chinese military began a major upgrade of its missile base near the city of Delingha in Qinghai province, next to Tibet. In addition to the intermediate-range missiles already stationed in the region, Rajagopalan says there are indications the Chinese may have beefed up the force with long-range DF-31s and DF-31As -- thus threatening not only northern India, including Delhi, but targets in the south as well. It's entirely possible, she acknowledges in a 2007 paper, that the Chinese move could be aimed primarily at countering Russian missiles stationed in Siberia, but warns that "what the Chinese may consider a routine exercise may send a wrong signal and have serious implications." For his part, former U.S. diplomat Charles Freeman says that he regards Indian fears of a Chinese nuclear buildup as exaggerated, but worries that a fateful mismatch of perceptions could already be spurring both countries toward a genuine nuclear arms race. The extent to which the two militaries are getting on each other's nerves became apparent in a bit of high-ranking trash-talking earlier this year. India's chief military science officer, V.K. Saraswat, declared that new advances in his country's ballistic missile technology meant that "as far as cities in China and Pakistan are concerned, there will be no target that we want to hit but can't hit." That prompted a retort from Rear Adm. Zhang Zhaozhong of China's National Defense University, who pointedly derided the "low level" of Indian technology. "In developing its military technology," Zhang said, "China has never taken India as a strategic rival, and none of its weapons were specifically designed to contain India." If that was meant to console anyone south of the border, it doesn't seem to have worked. The best time to talk about an arms race, of course, is before it really gathers steam. Krishnaswami Subrahmanyam, former chairman of India's National Security Advisory Board, says that China and India should take their nuclear concerns to the Conference on Disarmament, a multilateral negotiating forum at the United Nations. But that, of course, would require the Chinese to acknowledge that there's a problem, which they might not be willing to do. Rajagopalan notes that India and Pakistan have managed to set up some effective confidence-building measures on their common border, but that India and China have yet to do the same (aside from a few stillborn efforts in the early 1990s). Instituting mechanisms to warn each other of pending missile tests might be a start. "I think there's a great need for that," she says. "Otherwise these kinds of tensions can spiral out of control." You can say that again.