A 'soft' balance of power is developing among India, China and the United States, where each country will try to protect its own interests by aligning with each country individually on an issue-by-issue basis, a leading US-based think tank has said.

The Centre for Strategic and International Studies in its latest South Asia Monitor said that Prime Minister Atal Bihari Vajpayee's accomplishments in China suggest that India and China are headed towards 'greater pragmatic cooperation', but not towards any broader alignment on foreign policy or national strategy.

"This is good news for regional peace and stability," the report said.

Both countries' strong relations with the United States, interestingly, are likely to reinforce this process.

"The result could ideally be a kind of 'soft' balance of power between the three countries, where each country will try to protect its own interests by aligning with each country individually on an issue-by-issue basis," the report prepared by CSIS research fellow Pramita Mitra noted.

India, it said, sees China as a long-term strategic rival, the benchmark for its nuclear arsenal, and the standard for the great power status it claims.

"At present, India's fledgling nuclear and missile capability is no match for China's arsenal, but that gap is decreasing," it said.

According to intelligence reports, the report said, India is expected soon to test the Agni III missile, which will be able to target major Chinese cities.

In addition, India is developing a submarine-launched missile, dubbed Sagarika. India is also modernising its conventional capabilities by importing advanced early-warning systems such as the Phalcon airborne warning and control system (AWACS) from Israel, which is similar to the version used by the US Air Force.

The report expects strong Chinese support for Pakistan to continue, albeit more discreetly.

"China's opposition to Pakistan's incursions into Indian territory in 1999 show that there are limits to its support for Pakistan," it said.

China sees the Musharraf government as the best bet to prevent Pakistan-based Islamist terrorist groups from becoming active in Xinjiang.

China's clandestine nuclear assistance to Pakistan, the report noted, has been a major concern for Indian authorities.

According to various news and intelligence reports, China supplied Pakistan with weapons-grade uranium and the nuclear-capable M-11 missiles. China still sees Pakistan as an important ally to keep India off balance, it said.