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After 44 years of closure China and India agreed on Sunday to reopen border trade through the Nathu La Pass from July 6. 

Officials from both sides ended their discussions on the issue in Lhasa, capital of Tibet Autonomous Region, and signed the agreed minutes on Sunday.

The Nathu La Pass is 4,545 meters above sea level. It's 460 kilometers from Lhasa and 550 kilometers from the Indian coastal city of Calcutta. Historically the pass had been an important trade passage between the two countries. 

The reopening is expected to be a major boost to bilateral trade between the two populous countries.

Trade through the pass accounted for 80 percent of the total border trade volume between China and India in the early 1900s. However, trading through the pass was suspended in 1962 after border conflicts.

"The reopening of border trade will help end economic isolation in this area and play a key role in boosting the market economy there," said Hao Peng, vice chairman of the autonomous region.

"It will also boost the transportation, construction and service industries, paving the way for a major trade route connecting China and South Asia to be reestablished," Hao added.

"The resumption of border trade is a great historic event, not only for increasing business, but also for improving relations between the two great countries," said Dr. Christy Fernandez, additional secretary of the Indian Department of Commerce.

The resumption of border trade reflects the improved links between China and India, said Professor Liu Jiangyong of the Institute of International Studies at Tsinghua University.

He said China and India have been exploring ways of mutual and beneficial cooperation in economic and trade fields. Professor Liu added that the accord on the guidelines for border demarcation signed in 2005 by the two countries has created a peaceful environment.

Both sides have identified 2006 as the year of Sino-Indian friendship.

More than 5,000 border residents come to Yadong County, the location of the Nathu La Pass, every year to trade, which is worth 3.6 million yuan (US$450,000), although the trading port in Yadong did not officially open, statistics from the county show.

China and India signed a Memorandum of Understanding on the resumption of border trade at the Nathu La Pass in 2004. The Chinese State Council approved the plan on the construction of border trade markets in Yadong in the following year.

"The reopening of the Nathu La Pass is a key move in strengthening economic and trade ties, which will also enhance mutual political trust," Prof. Liu said.

China and India recorded US$18.73 billion in trade volume in 2005, which is up 37.5 percent on the previous year, according to the Chinese Ministry of Commerce. The volume is expected to exceed US$20 billion this year.

Currently the majority of trade between the two countries is by sea. Tibet imports and exports to India via Tianjin -- a port city in the north, which is thousands of kilometers away.

Tibet is expected to benefit greatly from the resumption of border trade at the Nathu La Pass, Hao said. "If only 10 percent of Sino-Indian trade goes through the pass, it means at least more than US$1 billion a year," he observed.

Last year Tibet's foreign trade volume was US$200 million.

Tibet has made rapid economic progress with the annual GDP growth above 12 percent over the past five years, which is higher than the country's average, the autonomous region's chairman, Qiangba Puncog, said on Saturday when meeting the Indian commercial and trade delegation led by Christy Fernandez.

Qiangba said China and India's friendship has a long history and the economic and trade cooperation between the two nations has been close in recent years. He said the Chinese government attached great importance to bilateral economic and trade cooperation.

With the reopening of the Nathu La Pass, iron ore and livestock products from India and wool, herbs and electrical goods from China can be transported using the short cut, Hao said.

Businessmen started to show interest in the area when China approved the construction of border markets in Yadong in 2005.

Wang Ping, head of the Yadong county government, said more than 30 business people came to Yadong in the first quarter of this year for investment talks while only two or three came during the same period last year.

(Xinhua News Agency June 19, 2006)