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India, China Open Nathua-la
pass in Sikkim
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India says it is a great step
forward, China says it is good business
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China wants shortcut to sell
its manufactured goods and import raw materials
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India and China have agreed to open the old silk route through Nathu-la pass
in Sikkim
for trade after 44 years and re-establish direct trade links to trade 28 items
including blankets, agro-chemicals, dry fruits, beverages, canned food, and
farm implements. These were the items covered in the border trade agreements of
1991, 1992, and 2003 by the two nations. Nathu-la is located 4545 meter above
sea level and is located 460 km from Lhasa and 550 km from Calcutta.
While the border trade will immediately benefit the local economies of Tibet
and Sikkim, it is also considered an implicit acceptance by China of Sikkim as
being part of India. This is a fruition of a process started in 2003 by former
Prime Minister Atal Bihari Vajpayee’s visit to China in 2003.
Historically, the Nathu-la accounted for 80 per cent of the border trade
between India and China at the start of the previous century but was shut down
after the 1962 border war although trade had traditionally been through sea as
was the case after the pass was closed.
The Indian official who negotiated the deal with China said that “The
resumption of (Sino-Indian) border trade is a great historic event, not only
for enlarging trade, but also for greater relations between the two great
countries.” The Chinese official who led negotiations did not have such lofty
conclusions. He said that “The reopening of border trade will help end economic
isolation in this area and play a key role in boosting market economy there. It
will also boost the transportation, construction and service industries, paving
the way for a major trade route that connects China and South Asia.” The
official said that given that the foreign trade volume of Tibet was only USD
200 million, “If only 10% of Sino-Indian trade goes through the pass it means
at least more than $1bn.” However, Beijing-based Qinghua University Institute
of International studies Professor Liu Jiangyong said “The reopening of the
Nathu La Pass is a key move in strengthening economic and trade ties, which
will also enhance mutual political trust.” India and China are celebrating 2006
as year of friendship.
China and India signed a memorandum of understanding on the resumption of
border trade at the Nathu La Pass in 2004 and The State Council, Chinese
cabinet, approved the plan on the construction of border trade markets at
Dongginggang in Yadong in 2005.
Reports in the Indian press glorified the decision using adjectives such as
“historic” and that reopening the Nathu La border trade route, the two
neighbors have attempted to discard their diplomatic mistrust. Some even say
that “weighty addition to a series of confidence building measures” and that
this has contributed to “collectively ensured a steady warming of bilateral
ties despite complicating issues such as China's continued military support to
Pakistan.”
Chinese Ministry of Commerce says that the two countries recorded USD18.73
billion in trade 2005, up 37.5% from the previous year and is expected to
exceed USD20 billion this year. With this pass being opened and after the
construction of the market, border businessmen are showing more interest.
However, what China really wants is a short cut to have raw materials from
India and finished products from China to India. The Chinese delegation leader
said the reopened Nathu La Pass will allow iron ore and livestock products from
India and wool, herbs and electric appliances from China can be transported
into the other country through the short cut.
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