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Economy Jan 23, 2013

Is China resorting to ‘string of pearls’ in telecom too?

By Firstbiz Staff

Based on China's technological prowess, India has once again raised the 'red scare' over the former's growing spying abilities.

Months after the department of telecommunication asked telecom companies to avoid using Chinese-made telecommunications equipment in a closed-door meeting, fearing that it may have spy capabilities embedded within it, India's external intelligence agency Research & Analysis Wing has raised alarm bells over China's growing tech deals with India's neighboring countries.

According to a report in the Economic Times, the telecom ministry wants India to counter China's move by making competing offers for technological expertise and financing in its neighbourhood countries such as Nepal and Maldives.

China has already developed diplomatic, economic and military relations with Indian Ocean countries. Chinese focus on the strategic sector of transportation can be seen in Bangladesh, Nepal, Bhutan, Burma, Sri Lanka and Pakistan. All of these countries surround India. In a region where it has always been very influential, the Indian government was quick to suspect the Chinese expansion of hiding an "encirclement" strategy.

Even as Pakistan diplomatic isolation grew in recent months, China's support to the country has been steadfast. As Firstpost noted earlier, "Pakistan is a Chinese pawn cultivated by the latter to keep us tied down to the sub-continent. This is to prevent India from realising its full potential, fulfil its global ambitions or be a competitor to China. It also compels India to prepare for a multi-front theatre in the event of war with either country."

It is a known fact that China has been eyeing a greater presence in the Maldives for quite some time. Beijing is reportedly wooing Male to pre-empt a US move to set up a new military base in the Maldives' southernmost island of Gan. The increasing Chinese footprint in the Maldives was evident when it was allotted prime land to open its embassy in Male last year. A massive $500 million loan was extended by the Chinese around the same time.

Then as relations between India and Maldives soured over the GMR row, Maldives foreign affairs ministry approached China for "concessional financing" of $60 million from its Export Import Bank to develop the island nation's IT infrastructure.

"The Sri Lankan subsidiary of Chinese telecom equipment-maker Huawei Technologies has already signed an agreement with Maldives' National Centre of Information Technologies to develop IT infrastructure under the 'Smart Maldives Project', according to this Hindu report.

Reuters

Reuters

In order to counter this move, Indian ministry of communications and IT suggested substantial investment in similar projects in Maldives to ensure telecom traffic between India and the Maldives is handled through equipment installed and commissioned by companies in which the government has confidence in, the report added.

According to the ET report, the R&AW report on Maldives seeking Chinese funding came just days after India's ties with the island nation nose-dived.

India's Research and Analysis Wing also believes that China is using dozens of study centers that it has set up in Nepal near the Indian border in part for the purposes of spying on India.China has gone out of its way to present itself before Nepal as an alternative to India in the last three years and has promoted multi-level interactions with Nepal and its people.

Chinese vendors Huawei and ZTE, which are reported to have close links to People's Liberation Army, the unified military organisation, (according to security assessments of Huawei put together by R&AW, it not only shares ties with the Chinese security establishment but is also suspected to be a part of its intelligence set-up) have also installed next-gen networks for Nepal Telecom.

The EU too was considering tariff actions against the two companies on allegations of dumping their products below cost. However no action was taken in the end. In Australia too, Huawei suffered a setback in 2011 when the government barred it from bidding to work on a national broadband network.

In fact in October 2012, even the US Congressional committees raised concerns about alleged spying from Chinese telecom gear makers and Chinese state influence on Huawei and ZTE. The report recommended that US government systems, particularly sensitive systems, should not include Huawei or ZTE equipment, including in component parts, following which, India too decided to tighten noose against the two telecom equipment providers.

However, Indian companies are unlikely to stop buying telecom gear from these companies since demand for cheap telecom equipment is likely to trump security concerns.

by Firstbiz Staff

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