China and India agreed on Sunday to reopen border trade at the Nathu La Pass on July 6 after 44 years' closure.

Officials from both sides ended the discussion on the issue in Lhasa, capital of Southwest China's Tibet Autonomous Region, and signed on the agreed minutes on Sunday.

The Nathu La Pass is 4,545 metres above sea level. It is 460 kilometres away from Lhasa and 550 kilometres from the Indian coastal city of Calcutta. The pass used to be an important trade passage between China and India.

The reopening of the pass is expected to give a major boost to bilateral trade between the two most populous countries.

Trade in this area accounted for 80 per cent of the total border trade volume between China and India in the early 1900s. Trade 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 that connects China and South Asia," Hao added.

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

The resumption of border trade reflects the improved ties between China and India, said Professor Liu Jiangyong with the institute of international studies of the Beijing-based Tsinghua University.

He said that China and India have been exploring opportunities for co-operation in the economic and trade fields, adding the accord on the guidelines for border demarcation signed in 2005 by the two countries created a peaceful environment.

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

More than 5,000 border residents came to Yadong County, where the Nathu La Pass is located, every year for trade of 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 ensuing 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," Liu said.

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

Currently China and India trade mostly by sea transportation. Tibet Autonomous Region imports from and exports to India via Tianjin, a port city in the north which is thousands of kilometres away.

Source: China Daily