China has gone on a charm offensive in courting the SAARC and is determined to use its observer status to expand its clout in the South Asian region.
Beijing's enthusiasm is being watched carefully in New Delhi that is slightly wary of this proactive approach on part of a country viewed with distrust not too long time ago.
China's zeal for the South Asian Association for Regional Cooperation (SAARC) is also at the heart of a debate among SAARC nations on whether to allow the observer nations to contribute to the proposed SAARC Development Fund.
Indian Foreign Secretary Shivshankar Menon indicated on Monday that the SAARC was open to the idea of accepting contributions from outside the region. But there is no clarity yet on whether observers will be allowed to contribute to the fund.
If the SAARC countries accept contributions from observers, China will use the opportunity to make generous offers to deepen its economic engagement with the region - a prospect that is not music to New Delhi's ears.
Chinese Foreign Minister Li Zhaoxing, who is representing his country that has participated as an observer for the first time at the 14th SAARC summit that opened in New Delhi on Tuesday, enunciated a comprehensive five-point plan for enhanced engagement with SAARC.
"China respects the position of SAARC countries and the principles of equality, mutual trust and win-win cooperation, and is ready to carry out exchanges and expand practical cooperation with SAARC to contribute to the cooperation process of SAARC and peace and development in South Asia," Li said on Tuesday.
China's proposals include establishing a cooperation mechanism for poverty alleviation and carrying out a comparative study on models of poverty alleviation and exploring with SAARC the possibility of establishing a China-SAARC regular meeting mechanism for cooperation on disaster relief and mitigation.
Most importantly, Beijing wants to intensify cooperation with the SAARC countries in the crucial infrastructure and energy sectors. It also has an eye on burgeoning business opportunities in South Asia with Li encouraging Chinese companies to invest in the SAARC countries.
For now, New Delhi is cautiously watching China's moves in the region and is trying to play down the potential competition, even rivalry, with Beijing over influence in the region. India and China are trying to strengthen their newly found strategic partnership by pushing for an early solution to their decades-old border dispute and intensifying their economic ties.
"China proposes to institutionalise the China-South Asia Business Forum so that it can serve as a platform for discussions on economic cooperation and trade," Li said during the opening session of the SAARC summit.
It plans to hold a workshop on contemporary China for South Asian diplomats and invite them for this purpose. It also wants to host a seminar on China-SAARC relations for track II academic exchange to provide intellectual support for China-SAARC cooperation, Li said.
When India finally supported China for an observer status at the last summit in Dhaka, it probably did not foresee Beijing's ambitions to consolidate its engagement with South Asia.
China's action plan vis-a-vis SAARC is seen as rather ambitious for a country that has been just admitted as an observer at the regional grouping.
China already enjoys a special relationship with Pakistan where it has recently built the Gwadar deep-sea port that has further brought the two countries closer. Beijing's economic ties with Dhaka are expanding and it enjoys good relations with Kathmandu and Colombo too.