Anyone over the age of 62 in the town of Tawang has a unique claim to fame: they have lived under four national flags — British, Tibetan, Indian and Chinese.

The tiny outpost in northeastern India repeatedly changed hands in the chaos that accompanied the birth of Communist China and independent India. The last time was in 1962, when Chinese troops briefly overran the Himalayan town and the surrounding area, known today as the Indian state of Arunachal Pradesh.

Today Tawang is once again the focus of a border dispute between the world’s two most populous countries, now both nuclear armed, and competing for superpower status.

The Dalai Lama, Tibet’s spiritual leader, will begin a visit tomorrow to Arunachal; an event that is expected to push relations between Delhi and Beijing to their lowest level in a decade. He has been here before but this visit has added significance because China is reasserting its claim to Arunachal and this year is the 50th anniversary of the Dalai Lama’s escape to India — via Tawang.

It follows months of increasing tensions between the two economic giants over natural resources in Africa, naval control of the Indian Ocean and even space.

China has expressed its “grave concerns” about the visit. “We believe this once again exposes the nature of the Dalai Lama as anti-China,” said Ma Zhaoxu, a foreign ministry official.

China says Tibet is an integral part of its territory and sees the Dalai Lama as a dangerous separatist. India, however, allows him to run a government-in-exile from a north Indian hill station and says he is free to travel wherever he likes. Manmohan Singh, the Prime Minister, made that clear to China’s Premier, Wen Jiabao, when they met in Thailand last month. “I explained to Premier Wen that the Dalai Lama is our honoured guest,” Mr Singh said.

The Dalai Lama has tried to downplay the visit’s significance. “The Chinese Government politicises too much wherever I go,” he said. “Where I go is not political.”

Few analysts agree, however. Tawang is the most contentious point along the eastern border, known as the McMahon Line, after Sir Henry McMahon, the British official who drew it on the map.

In 1914 he negotiated the Simla Accord, under which the Tibetan Government ceded what is now Arunachal to British India. In practice, the McMahon Line was never enforced until 1951, when Indian troops took control of Tawang. China, however, never accepted the accord nor the line, and continues to claim Arunachal as “South Tibet”. India, for its part, claims 15,000 sq miles of Chinese-held territory in the Aksai Chin area bordering Kashmir.

For 47 years, the dispute has quietly simmered through 12 rounds of fruitless negotiations. This year, however, it has bubbled to the surface.

In March China tried to block a $2.9 billion (£1.7 billion) Asian Development Bank loan for India because part of it was earmarked for Arunachal. In June J. J. Singh, Arunachal’s governor, infuriated China by saying that 60,000 more Indian soldiers were being sent to the region.

The same month India deployed four Sukhoi jets capable of carrying nuclear weapons in Assam and stopped issuing visas to non-skilled Chinese workers last month. China began issuing visas on separate pieces of paper to Indians from Kashmir.

Analysts are divided on which side is to blame for the growing tension. Some say Indian hawks are fuelling the controversy because they want their Government to invest more in border infrastructure and weaponry. Most agree, however, that war is unlikely — but they also agree that both sides increasingly see each other as military and economic rivals.

“India is sending the message: enough is enough,” said Bharat Verma, editor of the Indian Defence Review, who predicted recently that China would attack India by 2012. “Indian policy on China has been meek until now. The reality is that China has succeeded in encircling India. New Delhi is waking up to that.”

Rivals on the global stage

In September 2008 Chinese astronauts walked in space for the first time. India officially joined the space race a month later, sending its first unmanned mission into orbit to broadcast live on television — to the backing of the Star Wars soundtrack

The two countries are competing to invest in Afghanistan. India joined the top tier of donors in August, pledging $1.2 billion (£720m) in assistance. China has invested $3.5 billion in an oilfield, the largest investment in Afghanistan

China is developing a deep-water harbour for its expanding fleet of nuclear submarines in Gwadar, Pakistan, and is establishing ports in Sri Lanka and Bangladesh. India plans to counter the Chinese “string of pearls” by establishing a naval base and listening post in the Maldives, integrating the islands into its own coastguard system

China’s two-way trade flow with Africa has grown tenfold since 2000, to a total of $107 billion last year. Indian trade with the continent is put at about $30 billion

Sources: Times database, Mail and Guardian

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