From Overseas Press

India security jitters rattle growing China ties

(Agencies)
Updated: 2010-05-18 09:51

LONG RIVALRY

Tensions between Asia's two rising powers have simmered since their border war in 1962, but in recent years Beijing and New Delhi have mostly managed to compartmentalise their differences.

The relationship has matured to the point that while they can jointly advocate for the interests of emerging economies through forums such as the Group of 20, India has the confidence to criticise Beijing's currency policy.

Still, India remains deeply wary of its bigger and more powerful neighbour. China, a long-time ally of India's bitter rival Pakistan, is feared to be encircling India in a "string of pearls" by investing in its neighbours such as Sri Lanka.

Navy officials say increasing numbers of Chinese ships are sailing just outside Indian waters, and the two still spar over their disputed Himalayan border.

And while China is India's biggest trading partner, the balance is heavily in China's favour. India's trade deficit with China rose from $1 billion in 2001-2 to $16 billion in 2007-8, according to Indian central bank data.

CHEAP GEAR OR SPYWARE?

India worries that Chinese telecoms network equipment can be used for spying or loaded with "malware". It is also worried a rival could shut down telecoms service during a time of crisis.

A series of attacks on Indian government websites by suspected Chinese hackers has also hardened the authorities' position on importing potentially sensitive equipment from China.

"At any time we don't want anyone to be able to pull the plug in terms of a crisis. And that means anyone, not just China," U.K. Bansal, India's internal security chief told Reuters.

Last year, India directed state telecoms operator Bharat Sanchar Nigam not to procure equipment from Chinese vendors in 15 border provinces, citing national security.

Still, bilateral relations between the world's two most populous countries had been improving until recently.

A ban on China's telecoms equipment, which costs about one-third less than Western gear, would raise the cost and slow the buildout of mobile networks in India.

India is the biggest overseas market for ZTE, where its market share is about 15 percent and it sold $750 million worth of equipment last year. Huawei, the global No. 2, sold about $1.4 billion in equipment in India in the year to March 2009.

"There is no doubt that any kind of ban will impact the business cases of mobile operators, particularly the new entrants, who will be forced to look at more expensive alternatives from Western companies," said Ovum's Putcha.

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