Nathu La : handshake over the Himalayas

by Ajai Shukla

Business Standard: 6th June 2006

Dateline: Nathu La, Sikkim

The road starts winding upwards even before leaving Gangtok. We will climb more than 8000 feet in the 55 kilometers that separate Sikkim’s capital from the towering 14,000 foot border post of Nathu La. There was little army visible in Gangtok, but the road to the border is full of military signposts. Nathu La has long been one of the most heavily defended borders of India. It was here, in 1967, five years after the 1962 humiliation, that India signalled that it could stand up to China. When a party of Indian jawans, who were fencing the Nathu La pass, came under Chinese fire, India struck back, killing over 200 Chinese soldiers in six days of full-scale battle. The same strand of wire over which that battle was fought still separates two of the world’s major armies.

But Nathu La is increasingly a symbol of cooperation, rather than confrontation. The young Chinese post commander on the pass smilingly posed for photographs with us. A few yards away, history was being created: a single bulldozer knocked away a slim wall of frozen earth between the brand new roads that both countries had taken up to the pass, creating in one blade sweep the first road connection between India and China. Gangs of workers are fencing the 7 kilometres stretch from Nathu La to India’s newly built border trading post of Sherathang. Work has already begun on a new two-lane highway from Nathu La to Sherathang that will carry truckloads of goods to and from the Tibet Autonomous Region (TAR). Actual trading at Sherathang is scheduled to begin in July 2006.

Sherathang Border Trading Post, perched beside the high-altitude Manju Lake, was born out of China’s first concession to India on the border dispute, during Prime Minster Vajpayee’s visit to Beijing in June 2003. With typical Chinese obliqueness, Beijing proposed a trading point at Nathu La, in effect admitting that it was the border between India and China. Sikkim, thus, was recognised as a part of India. But a trading post at Sherathang had to overcome entrenched prejudices. The Indian army has long opposed the construction of roads from the Sino-Indian border into the interior. The logic: China could use them as logistics arteries for invading India. Nor has Beijing been historically enthusiastic about opening up sensitive areas like Tibet and Xinjiang to foreign trade and, by extension, meddling. 

But China, under the pragmatic Deng Xiao-ping, first saw the inevitability of border trade for these regions. Deng’s philosophy of zhoubian zhengce (periphery policy) envisaged the development of the China hinterland by developing trade linkages with the countries with whom they shared borders (zhoubian guojia, or periphery countries) rather than relying on prosperity trickling across thousands of kilometres from the prosperous eastern seaboard of China. First implemented through the South China Growth Triangle and the Greater Mekong Basin Growth Triangle, this policy is now being embraced for its western provinces --- Xinjiang and Tibet --- as well.

There was little choice for Beijing but to allow those provinces to look outwards for trade and growth. A breakdown of FDI that flowed into China from 1987-97 indicates that the inland provinces in the west got only 12.4% of the total, with a per capita FDI of just USD 3.8. Compare that with the coastal provinces that garnered as much as USD 33.5 in per capita FDI. There was clearly more danger in poverty-fuelled unrest in the inland provinces than from opening out to neighbouring countries. 

Any residual reluctance in Beijing or New Delhi was over-ridden by Gangtok’s enthusiasm. A study team constituted by the Sikkim government has projected that trade through Nathu La could cross Rs 200 crores by 2007, Rs 2200 crores by 2010, and Rs 12,000 crores by 2015. For local economies, short of manufacturing and production resources, this trade flow would have a transformative effect on both revenue and employment. And so, Gangtok has created, in a four month burst of construction, all the infrastructure required for trading to begin. In 29 spanking new administrative blocks are the immigration and customs facilities, bonded warehouses, quarantine facilities, offices for chambers of commerce, display shops, a branch of the State Bank of India, a post office, and what is touted as the highest cybercafé in the world. And RITES has been given the consultancy for planning a permanent infrastructure.

Gangtok believes that trading through Nathu La is in a different league from the other local trade agreements that India has with countries like Myanmar and Bangladesh. The only other road, the Lhasa-Kathmandu highway, is 500 km longer than the Nathu La route to the plains of India. And when trade linkages shake off the shackles of xenophobic nationalism, the road to Sherathang will also become for Lhasa, the road to Kolkata, providing the Tibet Autonomous Region with a port connection. And for the north-eastern states of India, an increasingly prosperous Tibet will be a closer and more lucrative trading market than the north Indian markets. A similar logic drives Beijing’s support for the Stillwell Road that could someday connect Kunming in China with Assam, through Myanmar.

The 1962 war had destroyed centuries-old trade linkages carrying benefits across these borders. Now, if New Delhi and Beijing handle their border areas with the confidence of major powers, these linkages could come alive again.