China’s expanding reach is a natural and acceptable accompaniment of its growing power—but only up to a point.

Beijing is understandably challenging a century of U.S. dominance in the Pacific and the South China Sea immediately adjacent to its shores. But the aggressive effort to block Indian hegemony in South Asia, reflected in its growing ties with Pakistan and its territorial claim to the adjacent northeast state of Arunachal Pradesh (for which there is no historical basis) is more ominous.

In contrast to its studied neutrality on the Kashmir issue in past decades, Beijing is now openly supportive of Pakistan and is establishing its economic and political influence both in Pakistan-occupied Azad (Free) Kashmir and in the Himalayan state of Gilgit-Baltistan.

In Azad Kashmir, Chinese investors are taking over local business firms, and in Gilgit-Baltistan, non-combat People’s Liberation Army brigades, working closely with Pakistani engineering and development ventures, are becoming a dominant presence in local affairs. Given the undeveloped state of local social institutions, the impact of the Chinese presence is magnified.

As the supplier of nuclear reactors for the Chasma complex and of fighter aircraft for the Pakistan Air Force, Beijing increasingly rivals the U.S. as a security partner of Pakistan. This partnership is likely to grow in the wake of the CIA rupture with the Inter-Services Intelligence Directorate (ISI) resulting from the shooting of two Pakistanis by CIA operative Raymond Davis, now languishing in a Lahore prison.

The possibility of a direct armed conflict between India and China appears unlikely, and their economic interchange is growing. But China’s alignment with Pakistan on India-Pakistan issues will make a reduction in tensions between New Delhi and Islamabad more difficult than ever—at a time when the two countries have agreed to resume a dialogue between their two foreign ministers in July.

The two most obvious ways in which New Delhi and Islamabad could ease tensions would be through conventional-force reductions and increased trade. But China’s influence will clearly be on the side of a bigger and better Air Force for Pakistan; and the reversal of its position on Kashmir will further stiffen Pakistan’s resistance to an accommodation.

China does not directly support Islamist forces in Pakistan and fears the spread of Islamist influence to Sinkiang province. By fueling India-Pakistan tensions, however, Beijing plays into the hands of the growing Islamist menace in Pakistan.

To counter what China is doing in Pakistan, the United States should play hardball by supporting the movement for an independent Baluchistan along the Arabian Sea and working with Baluch insurgents to oust the Chinese from their budding naval base at Gwadar. Beijing wants its inroads into Gilgit and Baltistan to be the first step on its way to an Arabian Sea outlet at Gwadar.

The Baluch and their allies in neighboring Sind are embroiled in a bitter struggle with the Pakistan Army and its Inter-Services Intelligence Directorate (ISI), which seeks to snuff out Baluch insurgent activity by killing off or jailing known or suspected Baluch independence activities. Amnesty International reported 40 known cases of such “disappearances” in 2010, and at an earlier stage of the crisis, in 2006, 458 cases were pending before the Pakistan Supreme Court in the last days of the Pervez Musharraf regime.

China’s open support for Pakistan on India-Pakistan issues poses a growing threat to the peace in South Asia that adds to the complex dilemmas already facing the U.S. in dealing with its Islamabad “ally”.