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| Decentralised trade | | Nathu la and China’s “local integration” strategy | | by Mahendra P Lama
IN the reopening of the Nathu la trade route between Sikkim and the Tibet Autonomous Region (TAR) in July 2006, China’s local integration strategy has again come to the fore. China has been consciously trying to make economic “dents” at the local level in all its neighbour countries in South East, Central and East Asia.
It has extensively used economic instruments like border trade, cross border infrastructure projects and investment ventures as its main instruments to realise this goal. It is broadly estimated that border trade through its 120 inland towns and ports constitute nearly half of China’s total foreign trade of over $ 1 trillion. This has been largely supported and regulated by specific and comprehensive policy documents.
On the India-China borders the examples include the Lipulekh pass trade route that connects Dharchula-Pithoragrah, the route between Uttaranchal and Taklakot in Purang county of TAR in China, and the Shipkila pass that connects Namgya-Kinnaur, Himachal Pradesh, and Jiuba in Zada County in TAR. The last two trade routes are in difficult and rugged terrain and are highly seasonal. Trade volumes have been hardly Rs 36 lakhs in 2002-03 in Shipkila.
Though a significant section of the policy echelon in India considers the reopening of Nathu la in Sikkim as a mere symbolic border trade venture, China, at least in the long run, looks at it as a vital, physical economic entry into the 1.3 billion people market of South Asia.
In terms of feasibility this is arguably the shortest route (roughly 590 kms between Lhasa, Tibet and Gangtok, Sikkim) to reach the ever-bourgeoning middle class in the Indian mainland, Bangladesh, Bhutan and Nepal. The completion of the 1142 km railway line from Golmud city in Qinghai province to Lhasa in Tibet, and the refurbishing of the overland access through the Sichuan-Tibet Highway, could transform the entire physical accessibility to and from mainland China for not only Tibet, but the neighbouring provinces and the neighboring countries.
The domestic impulse in China is that the resulting gains and prosperity could trigger a major development action in the otherwise backward and frigid Western China. The western region covers two-thirds of the nation’s territory with the population making up nearly 23 percent of the national total. This may ultimately provide succour in positively dealing with traditional and emerging pockets of discontentment in the region, including Tibet.
China has a history of using other countries as a base for exporting their goods. In the case of South East Asia, it has used Singapore as a base to tap the markets of Thailand, Malaysia, Indonesia and even far off Australia. Hong Kong too is used as a base to export its goods to European and American markets.
The Chinese pattern of executing these strategies is much in contrast to that of India. For instance, there have been several visits by the trade, development and investment officials and private sector from Yunan Province to West Bengal and North Eastern States. Their single point agenda is to establish trade and investment linkages with the vast untapped market of eastern India.
These delegates give an impression that they have been given a ‘free hand’ by their federal government to negotiate the larger process of the “Kunming Initiative”. Yunan already contributes over one-fourth of the total border trade of China and is deeply involvement another provincial level initiative at the Greater Mekong Sub-region (GMS).
These delegations have been actively promoting the reopening of the Stilwell Road built by the US forces during the Second World War that connects Assam with Kunming via Myanmar. This is certainly a successful sequel of the decentralising strategy China has followed since 1979. Then, the Party Central Committee had allowed the Guangdong and Fujian provinces to adopt “special policies and flexible measures” particularly with regard to investment and trade in the Special Economic Zones (SEZs).
The provinces are no longer confined to their administrative role and have increasingly adopted economic functions. The Centre has voluntarily reduced its own role. Preferential policies have made the provinces major economic actors in the coastal regions. They have their own economic policies. Even the inland provinces are moving in the same directions. In 1995, the state transferred one of its key powers, grain (food-security) policy, to the provinces. This new role of provinces is expected to change China politically and economically.
There are several arguments extended to explain the Centre’s liberal policy vis-à-vis the provinces in China. The very nature and structure of decision making and political system at the Centre’s level ensures a high degree of political compliance and vertical accountability thereby reassuring the Centre that these provinces will not go astray in their decisions and actions.
Perhaps the most plausible argument for extending such autonomy emanates from the ‘the province at the provincial level’ paradigm that exists in today’s China. This paradigm has been primarily an outcome of the reforms-led growth, and the country’s development needs.
On the other hand, India traditionally maintains foreign trade and investment as an exclusive domain of the Union Government wherein the relevant constituent states are only ‘consulted’. An initiative like Kunming fits well into India’s ‘Look East’ policy and its participation in the Bay of Bengal Initiative for Multi-Sectoral Techno-Economic Cooperation (BIMSTEC). But this primary notion of ‘local engagements’ and using trans-local actors inherent in the geo-economics like that of Kunming initiative, are something new that the Indian Government is trying to cope with.
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