A Thaw That May Remake the World

NEW DELHI —  High atop a snowy Himalayan pass, a lonely road linking Asia’s two giants reopened last month after a 44-year diplomatic roadblock.

Leaders in India and China hailed the event as a sign of the growing rapprochement between neighbors that have eyed each other with distrust since a 1962 border war. Officials say the artery along the fabled Silk Road will invigorate trade between their two booming countries.

But the reopened Nathu La pass is an apt symbol of SinoIndian ties in more ways than one. The rough terrain, icy weather and extremely short list of goods approved for exchange are emblematic of the rocky path of limited engagement that Beijing and New Delhi have embarked on after decades of a political deep freeze.

Their evolving relationship may help define the 21st century as the world’s two most populous nations -- which account for one-third of humanity -- try to pull themselves out of poverty and stagnation.

By 2050, some experts predict, the United States, China and India will have the planet’s largest economies.

In a noticeable thawing of relations, New Delhi and Beijing have taken steps in recent years to reduce military tension, increase government contacts and expand trade. The two governments declared 2006 their “year of friendship,” to be marked by cultural events and a summit of Chinese President Hu Jintao and Indian Prime Minister Manmohan Singh.

But establishing a truly strategic partnership will be no mean feat. Persistent suspicion among hawks on either side, unresolved border disputes, intensified competition for resources such as oil and gas, and influence from Washington could all act as a brake on Sino-Indian cooperation, analysts say.

That both nations stand to benefit from a peaceful, improved relationship is clear.

“In the next two decades, both sides want to be a rising power,” said Hu Shiren, a South Asia expert at the China Institute of Contemporary International Relations in Beijing. “To facilitate this, you must have good, stable surroundings. Cooperation is most imperative.”

China’s communist government, in its rush to remake the country into a capitalist powerhouse, has put a premium on stabilizing relations with neighbors and settling contested borders.

India, too, after years of looking inward, is liberalizing its economy and paying more attention to the region. It’s particularly keeping an eye on China, whose economy is nearly three times the size of its own, as it begins flexing its muscles politically, militarily and economically on the global stage.

“They’ve been a rising power for 20 years, and we didn’t notice. We were so obsessed with our little world,” said Mohan Guruswamy, head of the Center for Policy Alternatives in New Delhi. “The establishment in India has begun to take note, and it’s slowly and lumberingly beginning to change its attitude.”

Mention China here and hackles still rise. Official Indian rhetoric on the behemoth to the north remains heavily colored by the 1962 border war that led to the closing of the Nathu La pass, a conflict each side accuses the other of provoking.

In 1998, India’s defense minister pointed to China as the country’s No. 1 threat. That same year, the Indian prime minister infuriated Beijing by writing a letter to President Clinton citing China as one of two reasons India was conducting nuclear weapons tests.

The other reason was archrival Pakistan, a longtime ally of China whose own nuclear buildup Beijing is accused of aiding.

The Indian military’s view of China is one of abiding mistrust.

“It’s gospel among the armed forces. It’s sacred to the hawks in this country,” said Alka Acharya, an expert on international relations at Jawaharlal Nehru University. “They don’t budge from that position.”

Large swaths of mountainous territory technically remain in dispute between Beijing and New Delhi, despite a breakthrough agreement three years ago to push for a permanent settlement. Several rounds of talks have yielded little substantive progress.

The recent completion of China’s Tibetan railway touched off warnings here of easier access to the area by People’s Liberation Army troops. China contends that the rail line was built to help develop its impoverished western provinces.

“Some Indians see an ulterior motive, but this is ridiculous,” said Hu, the South Asia expert. “If there were a war, of course the railway could serve military purposes; but its main purpose is for the economy.”

In contrast to the enduring suspicion among the Indian military’s top brass, the reality is far more relaxed. The India-China border, which stretches for more than 2,500 miles, has lain largely quiet for 25 years, to the point that soldiers on both sides of the Nathu La pass engage in friendly sporting matches, celebrate each other’s festivals and exchange gifts.

Reopening the pass July 6 represented official recognition not just of greater mutual trust but of the increasing importance of economics in Sino-Indian ties.

Last year, trade between the two nations was estimated at $18.7 billion, up by more than a third from 2004. This year, it is expected to hit $20 billion.

Pharmaceuticals, chemicals and steel flow from India to China; manufactured goods and commodities such as silk come back. Economists expect China soon to overtake the United States as India’s biggest trading partner.

In the early 1900s, the Nathu La pass, more than 14,000 feet above sea level, was the most important commercial corridor bridging the two countries, accounting for 80% of bilateral trade, according to some estimates. The land link saves thousands of miles and weeks of travel compared with shipping goods by sea.

But demonstrating the wariness with which the two sides still regard each other, Indian merchants are allowed to export only 29 items, such as rice and flour, across the pass, and their Chinese counterparts must stick to a list of 15 approved goods, including goatskins and yak tails, which are used as fly swatters.

Predictions that trade through Nathu La could reach nearly $3 billion in less than 10 years seem wildly optimistic unless the list of items is greatly expanded and better infrastructure is built.

“It will take time, but it’s better than nothing,” said Wang Jinzhen, secretary-general of the China Council for the Promotion of International Trade.

Restrictions on trade are not limited to the Nathu La pass. Chinese trade experts say China has lowered its tariffs faster than India and welcomed earlier and greater foreign participation in such important sectors as retailing and auto manufacturing.

Chinese telecommunications companies trying to invest in India complain of being made to jump through more regulatory hoops than American or European firms on the grounds of national security. For example, the Chinese telecom company ZTE’s bid to enter the Indian market has been blocked by an Indian government investigation of “safety” issues.

Clashes also have cropped up in the two countries’ scramble for sources of energy to fuel their burgeoning economies. Indian and Chinese oil companies have gone head to head several times for access to reserves around the world, including South America and Central Asia, with China almost always emerging the victor.

In January, Beijing and New Delhi agreed to work together in securing reserves abroad. Putting the deal into practice may be difficult, but analysts say both nations need to cooperate in the face of dwindling supplies.

“There isn’t enough if you just go and fight for it. We need to pool our resources,” said Acharya of Jawaharlal Nehru University.

“Competition is bound to emerge, particularly since we’re looking at the same markets, the same sources of technology and energy,” she said. “But this is precisely why [China] is the most important potential partner as well. You could clash on energy if you don’t work with China. You could clash on U.S. markets if there’s not some kind of understanding there. We are both too big to be competing for the same things, in the same neighborhoods, at the same time.”

Although the United States’ trade relationship with China, at $285 billion last year, dwarfs that with India, the Bush administration has made improving ties with New Delhi one of its top foreign policy priorities, as seen in its push for a civilian nuclear cooperation deal with India, a reversal of long-standing policy.

Senior U.S. officials have openly described improving relations with India as a way to offset China’s growing clout in Asia, and building up India’s nuclear arsenal as a way to keep Beijing worried more about New Delhi than about Washington.

That kind of talk has stoked Chinese fears of American attempts to “contain” China. At the same time, India has looked askance at Beijing’s aid to Pakistan in building a submarine base at Gwadar, in southern Pakistan.

Guruswamy, of the Center for Policy Alternatives here, said diplomacy in the region needn’t be played as a zero-sum game.

“It doesn’t mean that if you have good relations with America, you have bad relations with China,” he said. “That’s not required in the modern world.”

Establishing a deeper partnership between India and China, however, will require a concerted effort not just to overcome historical obstacles but to sell the idea to the people of both countries.

Chinese tour groups may be hitting popular destinations across the globe, but India isn’t among them, and vice versa. There is no way to fly direct between Beijing and New Delhi on any Chinese or Indian carrier; the only way to do so is on Ethiopian Airlines.

But Wang of the China trade-promotion council is hopeful.

“Both are developing countries at a stage that requires cooperation,” he said. “Closer ties are good for the region and the world.”

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Chu reported from New Delhi and Magnier from Beijing. Gu Bo in The Times’ Beijing Bureau contributed to this report.