In recent years, guided by its ‘good-neighbour policy’, China has established good contact with all SAARC members. Since it borders five of the eight member states of the SAARC, its influence in South Asia continues to grow. At the 2005 Dhaka summit China was given the observer status. India’s small neighbours want to see China playing a larger role in the economic development of the region and the SAARC process, whereas India is very sceptical towards China’s affiliation to SAARC and perceives China’s South Asia networking as yet another form of Sino-Indian rivalry on the sub-continent. The paper will examine China’s role in SAARC, its practices of multilateralism in the context of existing power dynamics and discuss the prospects for SAARC with China as an extra-regional power, also with regard to its potential for stability in the region, and SAARC’s institutional development.
