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 own
2,000-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 percent 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 62-mile (100-kilometer) road that connects
Gangtok, the capital of the northeastern Indian state of Sikkim, to the Tibetan
town of Yatung in China's southwest involves subtle shifts in foreign policy
that neither country acknowledges publicly.
Trade Versus Territory
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.
As part of the grand bargain, India, too, has decided to soften its stance on
Tibet.
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.
With territorial politics largely out of the way, economic forces can finally
take over.
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 even as coastal regions in the east have benefited from investments
and jobs in trade-linked manufacturing.
Southwest China, Northeast India
India's northeast has similarly suffered because of its geographic isolation.
If the two contiguous regions were developed in sync, they could become an
economic powerhouse together, trading not just with each other but also with
Bangladesh, Bhutan, Myanmar and Nepal.
China's southwest and India's northeast have 200 billion cubic meters of
natural gas, 1.5 billion tons of crude oil and 900 million tons of coal
reserves, according to economists Biswa Bhattacharyay at the Asian Development
Bank in Manila and Prabir De at the Research and Information System for
Developing Countries in New Delhi.
The Ganges and Brahmaputra rivers, which flow through India's east and
northeast, have the potential to generate 90,000 megawatts of electricity
annually. Only a fraction of this potential is being exploited because it is too
expensive to transport the power to industrial centers in northern India.
A New Equation
The economics can change with trade.
``Massive investments are required for the development of the hydropower
resources of the Ganges-Brahmaputra basin and can be productive with enhanced
cooperation between China and India,'' Bhattacharyay and De say. ``Hydropower in
India's northeast can be marketed in the southwest provinces of Bangladesh,
China and Myanmar.''
Natural resources are becoming increasingly vital for both China and India.
At the same time, policy makers in both countries are aware of the need to
reduce regional economic disparities to preserve social harmony.
For six years now, China has been urging international enterprises to look
beyond coastal China. The Chinese government's ``Go West'' policy has prompted
companies such as Motorola Inc. and Intel Corp. to set up units in Chengdu, the
capital of the western Sichuan province. With a matching ``Go East'' policy in
India, China will find it easier to take investors further into the Chinese
hinterland, into Yunnan and Tibet.
Early Days
The Indian port city of Calcutta is about 700 miles from Lhasa, the Tibetan
capital. And Nathula is one of several links that can be prepared to handle
efficient motorized cargo transportation between Calcutta and Tibet.
Cooperation between the world's two fastest-growing major economies is still
nascent: It was only four years ago that China and India got their first direct
flight between the two countries.
Since then, progress has been rapid. From April to December 2005, China and
India traded goods valued at $12 billion, a 55 percent increase from a year
earlier. In the next four years, Tata Consultancy Services Ltd. and Infosys
Technologies Ltd., the two biggest Indian software companies, plan to have at
least 15,000 employees in China between them.
To most analysts, China and India appear to be engaged in a race to
prosperity. In reality, the two economies are quietly finding ways to work
together, including making joint bids for oil assets to control acquisition
costs.
