A couple of articles discussing the Chinese thrust into the Indian Ocean, starting with China: Boosting Maritime Capabilities in the Indian Ocean:
In the recent years, a new great game has begun between India and China to bring the Maldives and Sri Lanka under their respective sphere of influence in the Indian Ocean Region (I.O.R.). After Myanmar and Bangladesh, to complete the "arc of influence" in South Asia, China is determined to enhance military and economic cooperation with the Maldives and Sri Lanka. China's ambition to build a naval base at Marao in the Maldives, its recent entry into the oil exploration business in Sri Lanka, the development of port and bunker facilities at Hambantota, the strengthening military cooperation and boosting bilateral trade with Colombo, are all against Indian interests and ambitions in the region.And following with Wary of Beijing, US views India as a 'natural partner':
Although China claims that its bases are only for securing energy supplies to feed its growing economy, the Chinese base in the Maldives is motivated by Beijing's determination to contain and encircle India and thereby limit the growing influence of the Indian Navy in the region. The Marao base deal was finalized after two years of negotiations, when Chinese Prime minister Zhu Rongzi visited Male' in May 2001. Once Marao comes up as the new Chinese "pearl," Beijing's power projection in the Indian Ocean would be augmented.
Recently, Sri Lanka allocated an exploration block in the Mannar Basin to China for petroleum exploration. This allocation would connote a Chinese presence just a few miles from India's southern tip, thus causing strategic discomfort. In economic terms, it could also mean the end of the monopoly held by Indian oil companies in this realm, putting them into direct and stiff competition from Chinese oil companies. At Hambantota, on the southern coast of Sri Lanka where Beijing is building bunkering facilities and an oil tank farm. This infrastructure will help service hundreds of ships that traverse the sea lanes of commerce off Sri Lanka. The Chinese presence in Hambantota would be another vital element in its strategic circle already enhanced through its projects in Pakistan, Myanmar and Bangladesh.
It is Sri Lanka's strategic location that has prompted Beijing to aim for a strategic relationship with Colombo. Beijing is concerned about the growing United States presence in the region as well as about increasing Indo-U.S. naval cooperation in the Indian Ocean. China looks at using the partnership with Sri Lanka to enhance its influence over strategic sea lanes of communication from Europe to East Asia and oil tanker routes from the Middle East to the Malacca Straits. China has been consolidating its access to the Indian Ocean through the Karakoram Highway and Karachi, through the China-Burma road to Burmese ports and through the Malacca Straits, especially once they have established their supremacy over the South China Sea.
China's Indian Ocean policy has been clearly influenced by its ties with the other major powers. Its interest in the Indian Ocean started partly as a reaction to its perception that increasing United States presence there was aimed at encircling China. The policy has also been directly linked to its problems with New Delhi. China feels India is facilitating the American presence in the Indian Ocean region as a means of countering Beijing.
Wary of China's long-term intentions and its rapidly expanding military capabilities, the US sees India as a 'natural partner' in the region and is keen to further enhance 'interoperability' with the Indian armed forces.
Beijing has already expressed its anger at what it feels is an emerging quadrilateral strategic arrangement - as exemplified by the Malabar naval war games scheduled between September 4-9 in the Bay of Bengal - to ‘contain’ it in the Asia-Pacific region.
In the backdrop of vitriolic protests by the Left against the Indo-US civil nuclear deal as well as the Malabar exercise, the UPA government chose to keep Admiral Keating's visit a low-profile one.
But the US four-star general, who commands all American forces in Asia-Pacific, was more forthcoming. While admitting Malabar was a reflection of the "shared interests" of US, India, Japan and Australia, he said, "We want to minimise the potential areas of misunderstanding and confusion between all of us and China."
"Let me emphasise there is no effort on our part or any of these other countries to isolate China or put Beijing in a closet," Admiral Keating told reporters.