Category: India vs China

China’s growing focus on Indian Ocean irks India

Reuters | Aug 31, 2010 | 5:15pm IST

India China relations India expressed concerns on Tuesday about China’s influence in the Indian Ocean region, the latest sign of tension between the Asian giants who are competing for resources and geopolitical power in the region. India’s Foreign Minister S.M. Krishna’s comments to parliament follows a row between the two countries over China’s denial of a visa to an Indian army general that angered New Delhi and clouded their slowly improving military ties. "The government of India has come to realise that China has been showing more than the normal interest in Indian Ocean affairs," Krishna told lawmakers. "We are closely monitoring the Chinese intentions. We are closely monitoring the developments in the Indian Ocean."

India worries that China’s military is seeking to extend influence over countries such as Sri Lanka that New Delhi has traditionally counted within its sphere of influence. Beijing’s territorial claims this year over the South China Sea have only bolstered such fears. While trade has grown 30-fold since 2000, the tension highlights how economic ties alone may not be enough to resolve the two countries growing friction over their disputed borders and role as emerging global powers. China has invested in the Gwadar port in Pakistan, the Sri Lankan port of Hambantota and the mining and energy sectors in Myanmar, part of a strategy to protect shipping lanes in a region that feeds 80 percent of China’s and 65 percent of India’s oil needs.

Continue reading

China: India military ties on track despite visa row

Reuters | Aug 28, 2010 | 9:56am IST

China said on Saturday that military ties with India remained on track, despite a visa row that some reports said led to a freeze in defence contacts between the two big neighbours. An Indian defence source and some Indian news media said on Friday that defence ties with China were suspended after Beijing refused a visa to an Indian general from disputed Kashmir, where Pakistan and China also hold territory. But the Indian Defence Minister A.K. Antony said "ties with China will continue", and now China’s Ministry of Defence has also denied any freeze in ties with the Indian military. "China has not suspended military exchanges with India, and nor has it received any notification from India of any such suspension," the press office of the Chinese ministry said in a statement faxed to Reuters.

India and China have limited military ties, focused on visits by military chiefs and defence officials and occasional, small joint exercises. But the official Chinese statement indicated that Beijing did not want the quarrel to curtail those contacts or seriously damage the overall relationship. China is now India’s biggest trade partner and the spat, one of several over the last few years, is unlikely to snowball. Friction is, however, also unlikely to abate entirely. Border disputes and mutual wariness remain. India holds 45 percent of the disputed Himalayan region of Kashmir, while Pakistan controls a third. China holds the rest.

Continue reading

India approves Chinese telco gear orders -Reuters

Reuters | Aug 20, 2010 | 5:36pm IST

India has allowed two telecoms firms to buy equipment from China’s Huawei and ZTE after the Chinese firms agreed to New Delhi’s tighter rules to address security concerns, sources said on Friday. This year, India barred some local mobile phone operators from placing orders with Huawei and ZTE on security concerns, resulting from its suspicion that Chinese equipment might have spying technology embedded to intercept sensitive conversations and government communications. A source with direct knowledge said Tata Teleservices, which had applied for government approval to buy telecoms gear from Huawei and ZTE, received the goahead after the Chinese firms accepted all the conditions set by India. “They (Huawei and ZTE) have said they agree with all the new terms and conditions, after which the government cleared applications,” the source said.

Last month, India tightened rules for telecom gear imports, saying vendors must allow inspection of their equipment and share design and source codes in escrow accounts. Separately, an application by Reliance Communications, India’s second-biggest mobile operator, to order equipment from ZTE has also been approved, another source said. The Indian government’s move to bar the Chinese firms had hit their growth in a booming market that is the world’s fastest-growing by subscribers and is getting ready for rollout of 3G and broadband networks. ZTE’s second-quarter profit fell below market expectations after the Indian restrictions. Continue reading

Q+A – India confronts land grabs in industrialisation push

Reuters | Aug 19, 2010 | 5:53pm IST

The government is trying to strike a balance between farm interests and industry as it faces a series of violent protests against attempts to take over land, a debate that has consequences for investment and internal security.


For many Indians, land is the only asset or social security that they possess and is a mark of social standing. Nearly 60 percent of India’s 1.2 billion citizens depend on farming for a living and each hectare of farmland supports five people. Most projects require huge amounts of land. South Korea’s POSCO’s proposed steel mill in Orissa will be built on 1,600 hectares. A six-lane highway between the Taj Mahal city of Agra with New Delhi will require 43,000 hectares. Compensation ranges from between $4,300 a hectare, in the case of top steelmaker ArcelorMittal’s proposed plant of over 4,400 hectares in Jharkhand, to $14,600 per hectare, offered to farmers displaced by POSCO’s Orissa mill. Despite the seemingly attractive prices, farmers have few other livelihood options and land taken over for industrialisation has been blamed for displacing hundreds of thousands of people. Protests against land being taken over have become more visible as the economy expands and the rich-poor gap widens.


India’s century-old land acquisition law gives the state the right to take over land for public purposes with little compensation. Critics say the government interprets “public” to include private investments and this amounts to land-grabbing. They want private firms to buy the land from the owners at market rates. India is considering a new law which would guarantee market or higher rates.


Analysts cite problems in acquiring land as the biggest hindrance to rapid industrialisation of Asia’s third-largest economy, pointing out to several stalled highways, power utilities and factories. Prominent amongst these are multi-billion dollar investments by top steelmakers like ArcelorMittal, South Korea’s POSCO and Tata Steel. Protests over mining on tribal land in Orissa have stalled plans of British-based mining group Vedanta Resources Plc to extract bauxite. Continue reading

RBI policy mopping excess liquidity – Mukherjee

RBI policy mopping excess liquidity – Mukherjee | Reuters

The Reserve Bank of India’s (RBI) “appropriate monetary policy” is absorbing excess liquidity and helping efforts to tame inflation, the finance minister told parliament on Wednesday. Pranab Mukherjee, responding to an opposition-sponsored debate on inflation, also said rising prices were a cost of rapid expansion of Asia’s third-largest economy. “If I want to compromise with growth rate of 5 percent, or 5.5 percent, if I want to compromise with my export growth, if I want to do that, I can surely control the inflation,” he said. Wholesale price index, India’s most closely watched inflation measure, have risen more than 10 percent from a year earlier for the past five months. The index rose 10.55 percent in June and is expected to record a double-digit rise in July.

Spiralling prices have led to street protests against the Congress party-led government, and the opposition parties have accused it of not doing enough to control prices. “Appropriate monetary policy is mopping up excess liquidity,” Mukherjee said. “We have ensured the excess liquidity in the market has been mopped … The Reserve Bank is keeping its eye constantly on that.” The RBI has said it will manage liquidity to ensure an excess does not prevent policy signals from being transmitted to the monetary system.  Continue reading

No plan to curb India iron ore exports now – official

Reuters | Mon Jul 19, 2010 | 5:55pm IST

The government has no plans to curb iron ore exports, a senior government official said on Monday, easing concerns of an imminent hike in export duty. "At the moment there is no such formal proposal," said the official, who is close to formulating policies in the mining sector and who declined to be named. "After the last hike (in April), there is nothing on the table." Steel Minister Virbhadra Singh said last Friday India’s export tax on iron ore should be raised to at least 20 percent, as more of the non-renewable resource should be conserved for domestic steelmakers. However, an iron ore analyst with a foreign institutional investor said the possibility of a hike in iron ore export taxes in future could not be ruled out. "The trend in mining levies is higher – if you look at royalties, transport fees and taxes," the analyst said. "It is possible that on iron ore lump exports there could be a hike to 20 percent." The analyst said iron ore fines could also be subject to an upward revision, although the government is unlikely to cease exports altogether.

India’s steel industry has been lobbying for curbs on iron ore exports so that more of the resource is available to them at low prices. India last raised the export duty on iron ore lumps in April to 15 percent from 10 percent. Last December, it introduced a 5 percent export duty on iron ore fines. The government official said curbs on iron ore fines, the powdery byproduct of mining iron ore lumps, was not feasible due to a lack of demand in the domestic market. Over 70 percent of India’s iron ore exports comprise fines that are mostly bought by China, which has the technology to blend it with high-grade ores procured from Australia and Brazil. "We feel if there is a complete ban there may not be full utilisation of the fines and that could lead to other problems," the official said.  

Continue reading

European central banks buy bonds; stocks, euro surge

Reuters | Mon May 10, 2010 | 3:49pm IST

European central banks began buying euro zone government bonds under a $1 trillion global emergency rescue package agreed on Monday, sending the euro and European stocks and bonds surging on relieved markets. The "shock and awe" plan — the biggest since G20 leaders threw money at the global economy following the collapse of Lehman Brothers in 2008 — triggered a global stock market rally after panic selling last week. But it left longer-term questions about whether Europe’s weakest economies can manage their debt and how the European Union can develop more coherent economic and fiscal policies to underpin the single currency. The European Central Bank immediately began implementing its part of a deal hammered out by EU finance ministers, central bankers and the IMF in marathon weekend negotiations.

The package of standby funds and loan guarantees that could be tapped by euro zone governments shut out of credit markets, plus central bank liquidity measures and bond purchases to steady markets surprised financial analysts by its sheer scale. The euro rose by more than 3 percent to above $1.30 and the FTSEurofirst 300 index of top European shares surged by 5.6 percent by 0900 GMT, after falling 8.9 percent last week to a seven-month low on Friday. "The euro zone is certainly regaining confidence," European Commission President Jose Manuel Barroso told reporters, hours after an 11-hour meeting of EU finance ministers ended in the early hours of Monday as Asian markets opened. Risk premiums on peripheral euro zone sovereign bonds plummeted, as did the price of insuring them against default on the volatile credit default swap market, while German bund futures tumbled by a two full percentage points as investors sold safe-haven debt. "The EU has taken a decisive action to stamp out the speculative attack against the euro and this should be sufficient to bring some calm into the market," said Klaus Wiener, head of research at Generali Investments.       

Continue reading

Japan PM to pursue thaw in India ties, boost trade

Reuters | NEW DELHI | Mon Dec 28, 2009 | 2:58pm IST

Japan’s prime minister, who has promised to forge a new place for East Asia in international diplomacy, opened three days of talks in India on Monday focusing on engineering a further thaw in relations and boosting trade. Yukio Hatoyama took office in September after 50 years of almost uninterrupted rule by the conservative, pro-U.S. Liberal Democratic Party, but has since seen his popularity ratings slide to 50 percent in a survey published on Monday. Japan and India, Asia’s largest and third largest economies, have been working at improving ties since Japan slapped sanctions on India in response to its 1998 nuclear tests.

Hatoyama launched his visit by meeting Indian industrialists, including Tata group chairman Ratan Tata and Reliance Industries head Mukesh Ambani, at a Mumbai hotel which was one of the targets attacked by gunmen in November 2008. He was due later to hold talks with his Indian opposite number, Manmohan Singh. India, long a top recipient of Japanese aid, wants details of Hatoyama’s foreign policy, particularly Tokyo’s attempts to pursue a foreign policy more “independent” of Washington and improve ties with China, New Delhi’s longtime rival. New Delhi will want to know more about India’s place in Hatoyama’s proposed East Asian community with a single currency, inspired by the 27-nation European Union. “Yukio Hatoyama … is unlike any other Japanese leader     Continue reading

China eyes India’s spot as top gold consumer

Reuters | Tue Dec 8, 2009 | 4:39pm IST

(Click to enlarge)

It’s taken all of recorded history, but this year China finally looks set to overtake India as the world’s number one gold consumer. It may struggle to hold that position in the short term, as the one-off factors that have slowed India’s gold demand fade, but in the long term China’s rapidly growing economy and investment demand could see it add gold to the long list of commodities where it is the world’s largest buyer. The story this year is mostly about falling demand in India — down by more than half in the nine months to end-September, according to the World Gold Council. Gold’s record-breaking run, that has lifted prices 28 percent this year in rupee terms, saw Indians cashing in jewellery and gold bars, while the weakest monsoon in nearly 40 years knocked incomes in the rural sector that is the bedrock of consumer purchases. In contrast, China’s demand is up 8 percent in the same period. “India has been the world’s largest gold consumer since time immemorial. In the Roman era, Indians bartered spices, cotton, jute for gold and precious stones,” Ajay Mitra, Indian subcontinent managing director of the WGC, said. “China could be buying gold as they are not sure what the value of their currency would be against the dollar. But gold is not intrinsic to them as it is to Indians.” Metals consultancy GFMS sees China’s gold demand at 432 tonnes this year, and India’s at 422 tonnes.


A severe monsoon and record prices were behind the drop in Indian consumption this year, while loose liquidity in China has driven a buying spree across a range of resources. These factors could easily reverse, allowing India’s broad base of jewellery demand to once again offset lagging investment demand. “China may temporarily surpass India as the world’s largest gold consumer but it’s questionable whether that can      Continue reading

India to tell US no role for China in South Asia

ANI | Sun, Nov 22 | 10:45 AM

The Prime Minister, Dr. Manmohan Singh, is likely to use his four-day visit to Washington commencing from today, to firmly and emphatically reiterate and re-emphasise to the American leadership, that New Delhi does not see a role for China in South Asia, nor will it tolerate attempted third party guardianship initiatives in the region by Beijing. Placing its strong objection to the reference made to South Asia in the joint statement issued by Presidents Barack Obama and Hu Jintao in Beijing this week, the Indian Government has ensured that both the United States and China retreat from their proposed mediating efforts on ties between India and Pakistan. According to sources, China has indicated its appreciation and respect for the Indian position for only having bilateral and direct talks with Pakistan and brooking no interference from outside. “On China, we have a bilateral relationship with countries and we are not interested in a guardianship role with any, and nor will we accept a guardianship role by any country,” said a source. Foreign Secretary Nirupama Rao has said: “The Chinese have said that they respect our position and support direct talks between India and Pakistan.” The Chinese establishment seems to have been told that India will not accept any “guardianship role” by any country.                 Continue reading

Lama fallout – China’s Red daily talks of 1962 war

Indian Express | 10/11/2009

A day after the Dalai Lama reached Tawang, the Chinese Communist Party’s mouthpiece, People’s Daily, quoting an “anonymous” scholar, said that India “may have forgotten the lesson of 1962” and is “on the wrong track again.” In a provocative article titled “India covets Dalai Lama’s visit,” the state-run paper said that the presence of the spiritual leader in the “disputed region” is a “double insult” for China. “India may have forgotten the lesson of 1962, when its repeated provocation resulted in military clashes. India is on this wrong track again, “the article, which was first carried in the Chinese Global Times, said, quoting an anonymous scholar. The article claims that India is using the Dalai Lama to “solve” the border dispute in Tawang and has asked him to visit the region. “The Dalai Lama went to southern Tibet at this critical moment probably because of pressure from India. By doing so, he can please the country that has hosted him for years,” the newspaper quotes Hu Shisheng, a researcher of Southern Asian studies at the China Institute of Contemporary International Relations, as saying. While the Chinese government has not made any official comment on the article, India, for its part, said that the Dalai Lama visited Tawang on his own and there was no suggestion from the government to do so. “The suggestion has not come from us, because we do not deal with the spiritual travels of a spiritual leader. He has to visit his flock as he deems fit. As far as I am aware, the initiative would have come from him and the government would have been informed about it,” Minister of State for External Affairs Shashi Tharoor said.

The Chinese article said: “When the conflict gets sharper and sharper, the Chinese government will have to face it and solve it in a way India has designed.” Meanwhile, Finance Minister Pranab Mukherjee struck a note of caution. “I do not visualize any conflict on border dispute between India and China. We have an institutional arrangement, though there are divergences of views,” he told reporters in London.

China production and retail rise

BBC News | Shanghai | 06:33 GMT, Wednesday, 11 November 2009

The latest economic data from China suggests that industrial production grew year on year at a level faster than expected. Retail sales also rose by more than analysts had predicted, while consumer prices continued to fall. China’s National Bureau of Statistics says the country’s latest economic data shows it is well on track to meet its target of 8% growth this year. The government’s huge economic stimulus package is likely to have helped a lot. The data indicates that activity in factories and workshops increased by 16.1% in October compared to a year ago.

Increase in Optimism

That is the highest level of growth since March last year. China’s statisticians are starting to sound more optimistic than they have done in a while. Importantly, they see evidence in this latest data that Chinese consumers are starting to make more of a contribution to economic growth here. Retail sales were higher in October than September. China needs consumers to spend more to spur domestic demand for the goods its factories produce, as it is unlikely to be able to rely on US consumers in the years ahead in the same way that it could before the financial crisis. The growth in activity in the country’s factories and workshops beat analysts’ forecasts too. There was better news in October’s trade figures though – the rate of decline in exports last month as the smallest in 10 months, supporting anecdotal evidence from producers that orders from customers abroad have been picking up for several weeks now. China has been trying to boost domestic demand for the goods its factories make, as exports have been declining for 12 months now. The supply of new loans was markedly lower than many analysts had expected suggesting that banks had listened to concerns that the easy access to credit here was creating the risk of asset bubbles and put in place more stringent conditions for those trying to borrow money.

China voices concern over India’s visa policy

MNS via IANS | 03/11/2009

China’s commerce ministry has voiced concern over New Delhi’s reported insistence that only those with employment visa can work in India, a move a newspaper said had hurt Chinese workers badly. China Daily reported that the government had received several complaints from Chinese companies in India. “We hope India will be considerate of the circumstances of Chinese firms there and provide more convenience for Chinese labourers and firms,” an official was quoted as saying. The foreign ministry Monday also warned Chinese citizens heading to work in India to acquire employment visas first. “Citizens can’t be engaged in works that doesn’t match with their visa category,” said a notice posted on the ministry’s website. China Daily said that the India visa policy, issued in mid-July, mainly affected expatriates working in India on business visa. Jiang, a manager with Huaxia Outbound Labour Service in Jiangsu province, where the largest numbers of workers go abroad for work, told the daily that about 20 native workers to India were on their way back. “We are confident of their skills, but they had to return as they were not able to get a visa,” he said. Pan Xiaoyong, a technician with Huawei Technologies, a major Chinese telecommunications equipment supplier based in Shenzhen, said the firm was currently staging an urgent hunt for technicians holding India business visas to fill up the vacancies created by the new visa policy.

Chinese businesses in South Asia generated $18 billion in 2008, mostly in India, according to Chinese experts. Hu Shisheng, scholar on South Asia Studies from China Institute of Contemporary International Relations, said the financial crisis that affected India’s labour-intensive industries was what compelled New Delhi to tighten its labour policy. “India has a huge population of young illiterates. They can depend on nothing but their labour to earn a living. So it’s conceivable that the Indian government would want to protect its own labour force,” Hu was quoted as saying. Those who fail to meet the government’s new criteria for the business visa had a deadline of Oct 31 to leave the country. Many Chinese workers in India hold six-month visas called “Multiple Entry Business Visa”. About 25,000 Chinese workers in sectors such as power generation, communication and petroleum in India will be affected by the clampdown. Under the amended rules, foreign clerical, secretarial and unskilled workers will not be given work visas in India.

Chinese participation in PoK projects illegal: India

PTI | MSN News | 28/10/2009 

We are insisting that there should be a uniform visa norm for Indian nationals,” Krishna said. To a poser about India not being seen as assertive vis-a-vis China, he said New Delhi seeks relations with everyone as equal and based on mutual respect, regardless of any nation”s economic or military might. India today made clear its opposition to China”s participation in projects in Pakistan-occupied Kashmir, saying it treats any such activity as “illegal”. External Affairs Minister S M Krishna said India has also taken up with China the matter relating to issuance of visas to Kashmiris on loose sheets instead of passports and asked it to apply uniform visa norm for all Indian nationals. “Jammu and Kashmir is an integral part of India. Any activity by any country in Jammu and Kashmir is illegal and this has been made known to all concerned,” Krishna told reporters here in response to a question about Chinese participation in developmental projects in PoK.

China is assisting Pakistan in building a mega power project and construction of a highway in Karakoram range in PoK. Chinese President Hu Jintao, during his meeting with Pakistan Prime Minister Yusuf Raza Gilani in Beijing recently, emphasised his country”s commitment to these projects. Krishna, who held talks with his Chinese counterpart Yang Jiechi here yesterday, said the matter relating to issuance of visas to Kashmiris was discussed. “They (Chinese side) said they made no discrimination. We are insisting that there should be a uniform visa norm for Indian nationals,” Krishna said. To a poser about India not being seen as assertive vis-a-vis China, he said New Delhi seeks relations with everyone as equal and based on mutual respect, regardless of any nation”s economic or military might.


Assam, Arunachal Pradesh worry about Chinese Dam on Brahmaputra

17/10/2009 | 9:12pm GMT+5.30 | vijay s

According to media reports, China was planning to divert 200 billion cubic metres of water to feed the Yellow River in an attempt at easing acute water shortage in Shaanxi, Hebel, Beijing and Tianjin. The 2,906-km long Brahmaputra is one of Asia’s largest rivers that flows the first stretch of 1,625 km in Tibet region, the next 918 km in India and the remaining 363 km through Bangladesh before converging into the Bay of Bengal. Experts feel that a dam on the Brahmaputra would have a cascading impact in the northeast and even in Bangladesh. “We are worried as many areas in Assam and Arunachal Pradesh and even Bangladesh would go dry if the Chinese went ahead with their plans. This move would severely affect water flow to the region which in turn would adversely affect agriculture,” said Sapna Devi, a geologist. China’s reported plans to build a dam across the Brahmaputra River and divert water to its arid provinces have been opposed by the Assam and Arunachal Pradesh governments.   Continue reading