Silk Route reopens way to riches

The Nathula Pass connects Gangtok (in north-east India, pictured) with Yatung in Tibet. Picture / Reuters.

SINGAPORE - The Western world's rediscovery of China and India has produced an important side effect: it has become a trigger for the two rising Asian superpowers to renew their 2000-year-old acquaintance.

It's still early days in the courtship, though if it continues, 2050 may not look much different from 1750 when the two nations together controlled as much as 57 per cent of the world's manufacturing output.

This month, China and India will reopen the only all-weather overland trade route joining them through the Himalayas at 14,500 feet above sea level. The Nathula Pass was once part of the thriving Silk Route, connecting ancient China with India, the Middle East and Europe.

Nathula is still a work in progress: The crossing, in its present form, is suitable for mules, not big trucks. The more important point about the reopening of the pass - it was closed after China and India fought a brief but bitter war in 1962 - lies in the political symbolism of the move.

By opening Nathula, the two countries will be shaking off the diplomatic mistrust - and the resulting economic constraints - that has hindered the development of China's southwest and India's northeast and prevented the nations from tapping a reservoir of power, gas and oil in their backyards.

The resumption of trade along the 100km road that connects Gangtok, the capital of the north-eastern Indian state of Sikkim to the Tibetan town of Yatung in China's southwest involves shifts in foreign policy that neither country acknowledges publicly.

The reopening of Nathula will underscore the Chinese Government's abandonment of its policy treating the erstwhile Himalayan kingdom of Sikkim as an independent nation "annexed" by India in 1975.

Even as it continues to host Tibet's spiritual leader, the Dalai Lama, who has lived in exile in India since 1959, the Indian government has unequivocally accepted China's sovereignty over Tibet and agreed to forbid Tibetan settlers in India from carrying out anti-China activities.

The scope for trade is immense. Landlocked parts of China's southwest, comprising the autonomous regions of Tibet and Guangxi and the provinces of Sichuan, Guizhou and Yunnan, have been left behind by coastal regions in the east.

India's northeast has similarly suffered because of its isolation.

If development of the two contiguous regions was synchronised the areas could become an economic powerhouse, trading with each other and with Bangladesh, Bhutan, Myanmar and Nepal.

Economists say China's southwest and India's northeast have 200 billion cubic metres of natural gas, 1.5 billion tonnes of crude oil and 900 million tonnes of coal reserves.

It was only four years ago that China and India got their first direct flight between the two countries. However from April to December last year, China and India traded goods valued at US$12 billion ($19.35 billion), 55 per cent more than a year earlier.

Most analysts see India and China as competitors but the two are quietly finding ways to work together - and a modern version of the Silk Route is being built.

- BLOOMBERG