Wed, Oct 05, 2005 - Page 9 News List

Silk Road to riches for China and India

Continued growth at present rates will see China and India make up half of the global economy by 2050



Tracing a route through the folds of the eastern Himalayas, Motilall Lakhotia is explaining how Indian trade caravans used to ply the scenic Chumbi valley into Tibet.

"It was a big trade even then. The Tibetans sold us Indians silver, raw wool and Chinese silk. We had manufactured goods and cotton. Especially blue cotton, because that is what everyone wore those days. You remember ... they called them Mao suits," says the dapper Lakhotia.

The 80-year-old businessman is one of a dying breed of Indians who once traded across the mountains. Many in Gangtok, the capital of India's Sikkim state, which nestles in the foothills of the Himalayas, remember a flourishing cross-border trade in wool, machine parts and tea carried by mules that were supervised by resident trade commissioners on either side.

The mountain kingdom of Sikkim was a pit stop on one of Asia's main arterial routes linking Tibet to the nearest ports on the Bay of Bengal. Goods were unloaded in Calcutta, driven 600km and then carried over mountain passes into Tibet before being taken as far again to Lhasa. A small Chinese community sprang up in Calcutta.

Indian businessmen began buying homes and warehouses in Yadong in China.

In 1962 all this came to an end. The frontier was sealed after a short, bloody border conflict between Nehru's India and Mao's China.

The Silk Road -- or to give it its Chinese name, the Tea Horse route -- which carried three-quarters of Sino-Indo border trade, worth hundreds of millions of silver dollars, was closed overnight. "When the war happened, it all disappeared. It was a good business and everything I had built up in seven years was gone," Lakhotia said.

The hostility continued until early this decade when business ties began to ease the wariness between the world's two most populous nations. The value of the two-way trade has risen from a few hundred million dollars in the mid-1990s to US$13 billion last year.

Gangtok is likely to be one of the first beneficiaries of this rapprochement. By March the first direct trade link between India and China will be re-opened. Perched at 4,500m, Nathu La pass will resume business as the world's highest customs post.

Karma Gyatso, industrial secretary in Sikkim, points out that a recent report by the Confederation of Indian Industry said the potential for cross-border trade could reach US$10 billion within a decade.

"It will be a big boost to us. We have to tackle high levels of unemployment in the state and trade will provide opportunities for a lot of people here," Gyatso said.

What's happening in Sikkim is only part of what is now being called the "Chindia effect," a phrase that has gained currency as it dawned on analysts that if the current growth rate persists in China and India, by 2050 the two nations will account for roughly half of global output. The "Chindia" region's potential of huge domestic markets -- encompassing a third of humanity -- cheap highly skilled labor and governments pursuing capital-friendly policies have led many to conclude that the world is at a tipping point in history.

In Mapping the Global Future, a report by the National Intelligence Council, a division of the CIA, analysts concluded: "In the same way that commentators refer to the 1900s as the `American Century,' the 21st century may be seen as the time when Asia, led by China and India, comes into its own."

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