July 5, 2006

War long forgotten, India and China reopen Silk Road

By Y.P. Rajesh

GANGTOK, India (Reuters) - Asian giants India and China
resume border trade through a Himalayan pass on Thursday,
hoping to build on warming relations and curb smuggling, 44
years after a brutal border war closed the ancient route.

Businessmen from Tibet and the tiny northeastern Indian
state of Sikkim will cross over into each other's territory
through the border post at Nathu La pass -- which means the
pass of the listening ear -- and trade at newly built marts on
either side.

The reopening of the pass, part of the historic Silk Road
-- a network of trails that connected ancient China with India,
Western Asia and Europe -- takes place on the birthday of the
Dalai Lama, the Tibetan leader who lives in exile in India.

It comes days after Beijing linked the Tibetan capital of
Lhasa with a railway and is seen as another move by China to
help modernise the long-isolated region.

"This is a major event for the China-India relationship,"
Sun Yuxi, Beijing's envoy to New Delhi, told Reuters ahead of
the inauguration.

"Nathu La border trade markets will not only benefit border
inhabitants in both countries and promote local openness and
development, but also further motivate and open up a new
channel for the blooming China-India trade relations," he said.

Ties between India and China, the world's two most
populated nations, were marked by mutual suspicion for nearly
three decades after their border war in 1962 until a surge in
trade and economic ties pushed political disputes onto the

Although the two countries have agreed to resolve their
border row politically, talks have made slow progress and much
of their 3,500-km (2,200-mile) frontier remains disputed.


Trade, on the other hand, has soared. It touched $18.7
billion in 2005, a growth of 37.5 percent over the previous
year. This year, it is expected to reach $22-23 billion.

Nathu La, at an altitude of 4,310 metres (14,200 feet), is
the third border trading point to be opened by the two sides.

But it is considered the most significant as it controlled
almost 80 percent of the entire trade between India and China
before it was closed in 1962.

Today, border exchanges accounts for a paltry $100 million
of total trade with the rest being accounted for by sea and

However, border smuggling is about 10 times the official
border trade, mostly through the Himalayan region of Ladakh in
Indian Kashmir, experts said.

Official border trade could touch $3 billion by 2015
through Nathu La alone if the two countries build good roads,
develop infrastructure in the region and lift restrictions on
goods that can be traded through the route, they said.

"Before, bilateral trade had to be sea-borne and the costs
were high. In recent years, bilateral trade has developed
rapidly, and now we can shrink costs," said Zhang Guihong, an
expert on China-South Asian ties at Zhejiang University in
eastern China.

Some analysts feel that closer economic bonding would also
eventually help the two countries leave the border row behind.

"Initiatives like these will slowly change the perception
of our two peoples about the border dispute, which has remained
the most vexed problem," Sudheendra Kulkarni, a senior official
in previous Indian Prime Minister Atal Behari Vajpayee's
office, wrote in the Sunday Express this week.

"In hostility-free relations between two neighbours,
borders unite -- not divide -- markets and peoples," he said.

(Additional reporting by Chris Buckley in Beijing)