China opposes Indian hegemony in South Asia, but realises its own limits.
Two basic facts stand out when looking at the perceptions South Asian countries have about China. The first is that there is a sharp divide between India's perception and that of the other South Asian countries: India continues to regard China as an adversary and a long-term rival; India's neighbours, however, look upon China as a benign power, even a friend, with varying degrees of closeness. The second fact, somewhat related to the first, is that the perception of China in the eyes of other South Asian countries is shaped largely by their attitude towards India.
In this scenario, India nervously watches the progress of its neighbours' relations with China; the underlying assumption being that China wishes to drive a wedge between India and its SAARC partners. India's other assumption that the neighbours want to gang up against it is only reinforced by the China factor. Any number of Chinese protestations that Beijing wishes all the South Asian countries to live in harmony with one another invoke only cynical smiles at best and impatient dismissals at worst.
Why is China transferring all those military aircraft, tanks and other hardware to Pakistan and Bangladesh, ask Indian policy-makers and opinion leaders. Worse still, why has China been transferring technology to Pakistan for making nuclear weapons and missiles which can only be India-specific? Why egg Nepal on to become a "zone of peace" between India and China? Good questions. But most of them become meaningful only if India's above-mentioned assumptions are granted. The only exception is about the transfer of nuclear weapons technology to Pakistan. But more about that later.
Turning the issue upside down, that is, China's attitude towards South Asia, it is clear that China looks upon India as a regional power with hegemonic intentions. China's relationship with each of the other South Asian states is, therefore, governed by the aim of supporting each to resist such an assumed effort to exercise hegemony. Where it perceives the attempts at hegemony to be blatant, as in the case of Pakistan or strong as in the case of Bangladesh, the provision of countervailing power is commensurate. But there are two exceptions.