Saturday, November 18, 2017

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN

About discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.

India and China Developing Cross-Border Trade Links

Dec. 3 – We’ve had a lot of emails about the event we held last week in Beijing and specifically the content about the new air, rail and road links that China and India are currently developing. Here we present some of the data for you in this thread, which includes parts of his debate.

Chris started off by going through a fair amount of China-India trade history, from ancient silk road routes, Roman times to WWII. Part of this was the point made that Chinese-Indian trade has been going on for centuries, and that the slow down over the past 60 years due to war and political problems is now coming to an end, and normality of trade between the two countries is in the ascendancy. To demonstrate this he provided copies of old trade routes.

China to Rome

The Overland Silk Road, with its spurs into India - the Uttarapatha route across Northern India and West China, through Bactria and onto Constantinople, and the Dashinpatha Route, which connected from this and brought goods down to the Western ports of India, and then to Arabia and Africa, thus providing a steady stream of Chinese and Indian products to the Roman Empire 2,000 years ago.

As part of this, samples of 1,500 year old Chinese silk were shown, from sites in Northwest Europe that traveled the Silk Road, in addition to ancient paintings showing Chinese, Indian Buddhist and Muslim traders riding on horseback together.

Old Sea Routes

The Sea Route, showing how the trade of goods extended from China's Han Dynasty through the old spice routes and the Straits of Malacca, around Sri Lanka and Western India, both delivering and collecting cargo, then across the Arabian sea to the Middle East and East Africa. Java, Sumatra, Malaysia and the ancient Khmer, Thai, Lao Viet and Burmese civilizations all grew wealthy from the Sino-Indian and were settled by Indian and Chinese merchants.

Trade with China also came via Tibet, and Lhasa specifically, which was a wealthy silk road trading city, with it’s borders protected by both the Mongolians and the Chinese at various times. Trade from Lhasa, some of which had originated in modern day Qinghai, Gansu, Sichuan and Yunnan, included tea, silk, animals (especially horses) and many agricultural products. Trade from India – cottons, other medicinal and agricultural products – as well as Buddhism – flowed the other way. So much trade developed that Calcutta began the port of choice for Western China and Tibetan produce to exit to international markets, and the city even today boasts India’s largest Chinatown. The Nathu La Pass, the worlds highest paved road, recently reopened, and although initial trade along this route remains small, two markets, one in Sikkim and one in Yadong County in Tibet have reopened either side of the border. China has announced plans to extend and upgrade the road on the Tibetan side, while India has shown signs of easing restrictions on their side. Meanwhile, direct flights between Dhaka (Bangladesh, east of Kolkata), Kolkata itself, and Kunming in Yunnan Province have just reopened and have been so successful the planes servicing these routes have been upgraded from 50 people to 240 daily.


Map of the Nathu-La Pass, and the proximity of Kolkata and Dhaka to Lhasa. Kunming lies to the east.

Nathu-La Pass

The Nathu-La Pass at the border between India and China.

Other overland routes have been recreated also. In terms of road connections, the famous Stillwell Road, which originally ran from Calcutta via Burma and into Yunnan Province, was a major trading route and a vast hub of Southeast Asian trade until the second world war. This is now being upgraded to an all weather route from both sides and across Myanmar, and assuming political problems within Myanmar can be resolved is highly likely to re-appear as the major road route it once was. If so, goods traveling this route can reach Indian ports from Yunnan in 48 hours instead of the current 10 days.

Stilwell Road


An American convoy along the Stilwell Road during World War II.

The Stilwell Road today. It's in use but requires significant investment to cater for todays modern heavy trucks. When upgraded, India-China trade journeys will be cut to 1/5 of the current time taken.

Rail links are also set to improve. Subject to heavy damage during WWII, Chinese and Indian investment is creating spurs into Myanmar that will connect the East Indian Rail network to China’s network, also linking up with the Singapore-Hanoi route currently close to completion. This will result, if difficulties with Burma can be resolved, with rail routes from Calcutta and Dhaka, traveling east through Burma, Chiang Mai, into Hanoi, and then either south down through to Singapore or further east to Kunming and Nanning. The latter city especially is being developed by the Chinese as a major rail hub intersecting with the national rail network, while India’s own network penetrates it’s country three times more effectively than the Chinese. When completed, the impact on cities along these routes will be huge.

Trans Asia rail routes

The proposed Trans-Asia rail routes will revolutionize transportation of goods across Southeast Asia and open up many ports and cities across the region.

Air links between China and India are massively improving with many new routes being introduced during 2008. Flights between Delhi and Beijing are set to become daily, as is the Mumbai-Shanghai route, linking the regions two major financial centres. These have already proved highly popular. Other routes connecting India with China have been proposed with routes between Delhi, Mumbai and Chennai, and Changzhou, Suzhou, Wuxi, Ningbo and Hangzhou, while China Southern have recently announced the resumption of flights between Guangzhou, Chennai and Bangalore.


The impact these developments overall will have are huge, and to date have largely been ignored by the media. Kunming and Nanning cities in China’s South-West are already better integrated with Southeast Asia, with significant implications for cities such as Hanoi, Chiang Mai, Mandalay, Dhaka and Kolkata. As trade between India and China increases, political problems within Burma, sandwiched between both nations are less likely to be tolerated as a transit pass for road and rail. Lhasa too, will develop more to become the trading city it was in the past, with the new Qinghai-Lhasa rail link giving extra incentives for goods to pass from North-West China, through Lhasa and down to Calcutta. That route also reduces by two-thirds the length of the current journey of such goods which instead have to travel overland and exit via Tianjin, 5,000 kilometers away. The Western routes coming down from Kashgar and into previous Indian territory are now the preserve of Pakistan, however China is putting trade pressure on Karachi to settle the region down and re-commence the old silk road routes from there. However, it’s East India and Yunnan that show the greatest promise. As Indian and Chinese trade is set to quadruple in the next two and a half years, it’s this region that looks set to benefit the most.

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3 Responses to India and China Developing Cross-Border Trade Links

  1. Raveen says:

    Interesting stuff! Thers an ongoing project about a rail link connecting China to Pakistan’s Gwadar port – it’s a Chinese investment. There was some discussions on the possible rail link through india towards pakistan/middle states but for the moment has been scrapped by the indian government.
    Even with the diffferent gauges in place we are seeing cargo flow from China towards Europe – this does entail a lot of wagon changes but does get there faster than sea. The world and the traders are heading for some interesting times.

  2. Chris Devonshire-Ellis says:

    Actually I did comment about Gwadar Port in the presentation – 400km from the Straits of Hormuz – a massively important sea lane carrying 90% of the worlds crude oil – on the south Pakistan coast, and a massive Chinese investment. We’ll run a piece about that later as it didn’t quite fit into the overall topic above.

  3. It will be great and ordinary people will benefit immensely. But there are vested interests to scuttle these ideas.

Comments are closed.

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