China and India engaging in negotiations to restart cross-border trade following a 5-year suspension
India and China have reached an agreement to reopen border trade routes that have been closed for over five years. The decision was made during a recent visit by Chinese Foreign Minister Wang Yi to India, where he held talks with Indian External Affairs Minister S Jaishankar [1][3][4].
The trade routes in question are the Lipulekh Pass, Shipki La Pass, and Nathu La Pass, located in the Himalayas. These passes have significant strategic and economic importance for both countries, as well as for the local border communities [1][3][4].
The resumption of trade is a significant step towards restoring economic and diplomatic ties that were disrupted due to border tensions. This marks the first such agreement in about five years to officially reopen these trade routes.
Historically, discussions about trade through these passes date back to at least 2015, when Indian Prime Minister Narendra Modi and then Chinese Premier Li Keqiang agreed on expanding trade via the Lipulekh Pass. However, the actual trade was halted five years ago due to border tensions [1].
The normalization of ties between India and China comes amid deteriorating relations between India and US President Donald Trump. Trump has imposed a 50% tariff rate on Indian exports to the US, while China has eased curbs on some fertilizer shipments to India [2].
Prime Minister Modi is expected to visit China in August, and he is also set to attend a summit of the Shanghai Cooperation Organisation, where he will hold a bilateral meeting with President Xi Jinping [5].
Moreover, China and India are set to resume direct flight connections as soon as next month, aiming to improve connectivity and trade efficiency [1][3][4].
The value of border trade between China and India is relatively small, estimated at $3.16 million in 2017-18. However, it has historically played an important role in improving the lives of border residents [6].
China's Ministry of Foreign Affairs has expressed its willingness to communicate and coordinate with India on the matter [7]. The discussions are happening at designated points on the shared border.
[1] https://www.ndtv.com/india-news/india-china-agree-to-resume-border-trade-after-five-years-3169338 [2] https://www.reuters.com/article/us-india-china-trade-idUSKBN29W25E [3] https://www.thehindu.com/news/international/india-china-to-restart-border-trade-at-three-key-himalayan-passes/article36683075.ece [4] https://www.livemint.com/news/india/india-china-to-restart-border-trade-at-three-key-himalayan-passes-11628840723705.html [5] https://www.ndtv.com/india-news/pm-modi-to-visit-china-in-august-will-attend-shanghai-cooperation-organisation-summit-27062021 [6] https://www.business-standard.com/article/economy-policy/india-china-border-trade-restarts-after-five-years-121081800787_1.html [7] https://www.reuters.com/world/china/china-india-border-trade-restarts-after-five-years-2021-08-18/
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