July 6, 2006

Hostility put aside, India and China reopen Silk Road

By Y.P. Rajesh

NATHU LA, China-India Border (Reuters) - Asian giants India
and China opened a Himalayan pass to border trade on Thursday,
44 years after a brutal frontier war shut down the ancient

Senior officials from Tibet and the tiny northeastern
Indian state of Sikkim cut a ribbon marking the border at the
Nathu La pass as freezing rain poured down.

Soldiers held up umbrellas instead of the automatic rifles
they usually carry. A thick mist obscured visibility.

Scores of businessmen queued to complete formalities before
crossing into each other's territory through the border post at
Nathu La pass -- which means the pass of the listening ear --
to visit newly built markets on either side.

"Today is a historic day," said Pawan Chamling, chief
minister of India's Sikkim state.

"A contact that started centuries back between our two
civilizations is being re-established today. The formal
re-opening of this trade route will be a win-win situation for
both countries."

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

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 -- took place on the birthday of the
Dalai Lama, the Tibetan leader who lives in exile in India.

It came days after Beijing linked the Tibetan capital of
Lhasa with a railway and is seen as another move by China to
help modernize 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.

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


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

At an altitude of 4,310 meters (14,200 feet), Nathu La is
the third border trading point to be opened by India and China
but is considered the most significant as it controlled almost
80 percent of their entire trade before it was closed in 1962.

Today, border exchanges account 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 neighbors, borders
unite -- not divide -- markets and peoples," he said.

(Additional reporting by Chris Buckley in Beijing)