NEW DELHI, India (Reuter) - Tibetan exiles in India said Friday they were "ecstatic" that Walt Disney had decided to go ahead with its film on their religious leader, the Dalai Lama, despite China's objections.

"Disney's policy of sticking to principles over trade is a rare and deeply gratifying move and has made Tibetans all over the world extremely happy," Tempa Tsering, a spokesman for the Tibetan government-in-exile, based in northern India, said.

Last week China warned Disney that it would be wrong to sing the praises of the Dalai Lama.

"To sing the praises of the Dalai Lama this kind of action does not conform with reality," Chinese Foreign Ministry spokesman Cui Tiankai said, without naming Disney.

He had been asked to comment on Disney's backing for "Kundun," a Martin Scorsese film about the life of the Dalai Lama.

The Tibetan reaction follows protest demonstrations by Tibetan exiles against Chinese President Jiang Zemin's visit to India.

"Principles have won and we are esctatic that Disney will continue its role in the production...despite threats made by China that the entertainment company's plans of expanding in China would suffer," Tsering said.

He added that the Chinese threats hit at the right to freedom of speech, the very foundation of American society.

"China fumes at attempts by western governments to link China's human rights record with trade privileges but China sees no contradiction when it always links either visits of His Holiness the Dalai Lama or films on His Holiness with business privileges a country or company might suffer in China," he said.

The Dalai Lama won the Nobel Peace Prize in 1989 for his non-violent campaign for autonomy for his homeland. He fled into exile in India in 1959 after an abortive uprising against communist rule.

About 130,000 Tibetans live in India. Around 4,000 live in the capital, New Delhi.