April
THE ECONOMIC WEEKLY
14,
1962
Nepal-China Trade Relations
Y P Pant
Nepal is a land-locked country bordered on
Tibet region of C h i n a . The regions adjoining
per cent of Nepal's foreign trade is with India,
ports of India, principally Calcutta.
Trade with
one per cent of Nepal's total trade.
the West, South and East by India and on the North by the
the Chinese frontier are mountainous.
Consequently, about 95
Trade with overseas countries is also carried on through the
the Tibet region of China does not constitute more than
In spite of the small volume of trade, it is interesting to study commercial
relations
between
Nepal
und China.
The purpose of this article is to analyse, on the basis of available information, recent trends in
trade between the two countries.
As there is a considerable v o l u m e of trade which goes unrecorded as a result of difficulties of establishing comprehensive customs control along the mountainous frontier the statistics used here, collected by the
Central Bureau of Statistics, Nepal, are not, however, entirely reliable.
Finance
[The views
Secretary
expressed
to His
in this article are the author's own and have nothing to do with his position as
Majesty's
Government
of Nepal.]
W H I L E the trade routes t o I n d i a
and f u r t h e r overseas t h r o u g h
I n d i a are quite convenient, w i t h
the
Himalayan
range — ridges
stretching southward f r o m the H i malayan highlands to the l o w lands
of the T a r a i — f o r m i n g the border
between Nepal and the T i b e t region
of China, transport is a handicap
to trade w i t h China. The. K y e r o n g
Pass, w h i c h lies Northeast f r o m
K a t h m a m i u and is situated at an
altitude of about 9,000 feet through
Rasua G a d h i , is
regarded as the
shortest route to the T i b e t a n capit a l , Lhasa, at a height of 14,000
feet. The K u t i Pass is inaccessible
even to park animals. In a d d i t i o n
to a few passes w h i c h are related
respectively to the rivers, Sun K o s i ,
T r i s u l i and Gandaki, a series of
breaks in the
Himalayan
range
t h r o u g h w h i c h r i v e r gorges penetrate p r o v i d e the setting for trails.
The market t o w n of T a k l a k o t overlooks K a r n a l i river between the
N a n d a g i r i and
D h a u l a g i r i peaks.
T h i s route also has been sometimes
used
between
Kathmandu
and
T i b e t . On this trade route is situated a prosperous
Nepalese village
T h a k , w h i c h is a
depot for salt
brought f r o m T i b e t .
On the Eastern side the K a l i Gandaki r i v e r , a t r i b u t a r y of the
Candaki river, breaks through a
small t o w n , M u s t a n g , w h i c h is j u s t
accessible
to pack animals.
It is
said that in olden days smugglers of
o p i u m used to pass t h r o u g h this
t o w n . The D o o d h K o s i , a t r i b u t a r y
of Sapta K o s i closed over a pass,
Naugpa, at an a l t i t u d e of about
25,000 feet, takes
a trade
route
over a water-shed, Because of
the
inaccessibility to the pack animals,
generally men and
women carry
f r e i g h t on t h e i r backs over these
passes.
T h o u g h in the past there
has been
some
physical
contact or c o m m u n i o n of trade and
commerce
and
culture
between
Nepal and China across the H i m a layas through
the passes,
so far
they have proved useful for local
transit rather than for international
trade and commerce.
T h e difficulties of most of these
regions can be conceived f r o m some
other facts also. T h e Northern-most
region is the least populated
part
of the country, and m a i n l y H i m a layan w i t h huge deposits of snow
in most places, Here ice-clad mountains w i t h angular outlines
shine
h i g h up in the temperate sky, givi n g l i f e to m o r a v i a n streams and
rivulets that gush f o r t h in zigzags,
to i r r i g a t e the tarai plains and the
vast plains of I n d i a .
Small Volume of Trade
Thus Nepal's trade w i t h Tibet is
carried on over the Himalayas, and
does not constitute more than one
per cent of the total trade of the
country. As explained above there
was some physical contact since
ancient times between Nepal and
T i b e t region of China. Historical
changes and developments in China
have left some marks f r o m time to
time i n Nepal.
The history of trade relations bet w e e n N e p a l and T i b e t part o f
Chinacan
be traced
f r o m 1872
w h e n a treaty was signed. T h i s
t r e a t y g o v e r n e d the
relations bet w e e n t h e m and p r o v i d e d , among
o t h e r t h i n g s , f o r freedom o f trade
621
and commerce for the citizens
of
both countries in
each
other's
territories. T h i s was further strengthened after the treaty of
Thapathali. This continued t i l l 1904 when
the famous B r i t i s h E x p e d i t i o n to
settle differences between the B r i t i s h
and the T i b e t a n Governments
was
sent in 1904 under Colonel Y o u n g husband. Since the Tibetans refused
to enter
into
negotiations
and
offered active resistance to
the
B r i t i s h entry, this became a m i l i tary expedition afterwards. The
terms of the I n d o - T i b e t a n ' T r e a t y
concluded in 1904
included "the
opening of three trade marts
one
at Gyantsc. one at Yatung, and the
t h i r d a t G a r t o k ; the abolition o f
trade duties
between
Tibet
and
I n d i a ; the payment of i n d e m n i t y
to the B r i t i s h Government and proh i b i t i o n of secession or lease of any
Tibetan t e r r i t o r y to any foreign
power w i t h o u t B r i t i s h consent."
The opening of trade marts by
the B r i t i s h
Government had an
adverse effect on Nepal-Tibet trade.
The trade w i t h I n d i a started becoming more favourable and it was
after this treaty that most
of the
Nepalese traders went and settled
down in Kalimpong in India for
trade purposes. I n fact, K a l i m p o n g
and Calcutta started becoming more
prosperous centres for
transactions
w i t h T i b e t p a r t o f China. A t the
same time Nepal's role as an entrepot trading
country
between
I n d i a and T i b e t also dwindled considerably when
faster and
better
connections directly through Sikk i m were established in the beginni n g of the present century. The road
was soon opened for commercial
April
14,
1962
THE
ECONOMIC
WEEKLY
THE ECONOMIC WEEKLY
A p r i l 14, 1962
traffic. Of course, trade through
Nepal i n a l i m i t e d sense still continued—from
K a t h m a n d u to
the
Tibetan border—to use the old, slow
and costly way of c a r r y i n g by hu«
m a n beings.
The establishment of the B r i t i s h
consulate at Gyantse made the
B r i t i s h a l l the more effective in
this respect and strengthened their
position against Nepal in commercial relations. In fact, "opening up
of the new road of Chhumbi almost stopped a l l trade w h i c h Nepal
used to have through K i r o n g and
Yenam marts, and thus N e p a l had
to suffer
losses."
Certain amendments to the treaty were made
at
subsequent dates.
Some of them
were, of course, helpful in developi n g brisk trade between the two
countries.
In 1926
the Tibetan
Government established
a foreign
office in Lhasa and this greatly facilitated official communication w i t h
foreign
Governments
including
Nepal.
However, because of the undeveloped transport
system
trade
relations could not flourish w i t h the
Tibet region. Since 1950 when
Tibet became a part of China and
China proper came to be regarded
as a trading partner, a motor road
has been b u i l t f r o m Peking to
Lhasa, and trade between the Tibetan capital Lhasa and its leading
trade centres
and Nepal
further
dwindled as a result of this development.
In fact, u n t i l 1955 when diplomatic relations between China and
Nepal were established, relations
between these two countries were
more or less completely cut off. In
September 1956 Nepal and
China
signed a comprehensive treaty of
friendship in w h i c h both the countries expressed their desire to develop their traditional economic and
trade relations on the principles of
equality and mutual benefit. A f t e r
this followed
the signing of
the
Nepal China aid agreement, accordi n g to w h i c h the Peoples' Republic
of China, w i t h a view to h e l p i n g
Nepal develop economically, undertook to provide economic a i d . In
M a r c h 1 9 6 0 an agreement between
the Governments
of
China
and
Nepal on economic aid was signed.
T h i s was a good start for developi n g trade relations w i t h China-
The value of i m p o r t s
of almoat
all commodities in 1959-60 in seen
to have gone up considerably, p a r t l y
because quite a number of people
left Tibet and migrated to Nepal
as a result of the p o l i t i c a l disturbances. These people m a y have
i m p o r t e d goods f r o m their country.
Scope for Development
Even though, as Table 3 shows,
the value of trade w i t h China is
almost insignificant in the country's
total trade, an analysis of the trends
of exports to and imports f r o m
T i b e t region of
China
is quite
interesting.
Composition of Trade
Exports to T i b e t are almost exclusively of agricultural o r i g i n ,
w i t h the exception of a few commodities like batteries, shoes, matches and cigarettes, which in some
cases are just re-exports to Tibet
from India. It is also seen that more
than 80 per cent of exports are
foodstuffs, w h i c h p r i n c i p a l l y include
rice, sugar, tea, wheat, chillies and
so on. Most of the products are f r o m
the h i l l y regions though a few
m i g h t have come f r o m I n d i a also.
Crude materials include hides
and
skins, indigenous herbs and
drugs
and manufactured goods
comprise
of cigarettes, matches, batteries, leather shoes and so on. In the miscellaneous group horses and dogs
are also included. Though on the
basis of the figures for two years,
much generalisation is not possible,
still certain trends can be deduced.
In spite of the fact that the total
volume of exports
over
the two
years has remained more or less
constant, certain
change^
can be
noticed in the individual items.
For example, a slight increase is
noticed in the export of food, while
excepting oils and chemicals, there
has been a considerable shrinkage
in the value of other commodities
exported. This m i g h t be partly because of the disturbances
in Tibet
i n 1960.
623
Though the volume and value of
trade of Nepal w i t h T i b e t region
of China has somewhat dwindled
in recent times, Nepalese merchants
s t i l l have some interest in the Tibetan trade. There are some traders
i n K a t h m a n d u dealing w i t h Lhasa
or the border districts. The border
trade, however, is to a great extent
of a barter character. The H i m a layas have always constituted a
difficult frontier and the Tibetan
market is very l i m i t e d . The population of Tibet is only 4 m i l l i o n havi n g p r i m i t i v e f a r m i n g and animal
husbandry as two m a i n occupations.
The peasants use p r i m i t i v e wooden ploughs and herdsmen s t i l l
follow their (locks to water and
grass. Hence the commodities
en.
tering into trade have generally
been articles of daily consumption
so far. Since the p r i m a r y occupation of the people in Tibet is
animal husbandry, they depend f o r
food supply on Nepal. There is
some
entrepot
trade
in specific
goods such as petrol, kerosene and
so on. W o o l is by far the largest
item of export f r o m Tibet. Gener a l l y , imports f r o m T i b e t region of
China include salt, sheep and goats,
horses, raw
wool, furs and skin,
blankets, yak tails and herbs, while
April
14,
1962
exports to T i b e t comprise
of rice
and
oilier foodgrains,
meal and
flour, sugar,
chillies,
cigarettes,
matches, shoes, textiles, herbs and
drugs.
As Table 3 reveals, over a p e r i o d
of t w o years Nepal's total f o r e i g n
trade w i t h T i b e t has considerably
gone up. A f t e r the completion of
the construction
of
a
highway
linking
kathmandu with
Tibet, 1
ECONOMIC W E E K L Y
there w i l l be still greater
possibilities of trade w i t h Tibet on a larger
scale. B u t strictly f r o m the economic p o i n t of view trade relations on
any substantial scale m i g h t not be
possibly developed in the years to
come. T h e total v o l u m e is l i k e l y to
continue to be too small to deserve
any great a t t e n t i o n . A g a i n , foreign
trade between t w o countries is more
or less a p r o d u c t of their respec-
tive sizes locational factors,
relative stages of economic g r o w t h and
needs. The development of trade is
not j u s t dependent on transport
facilities.
1
On September 15, 1961 Nepal and
China signed an agreement in Peking
for the construction of a Kathmandu
—Tibet highway. For this the Chinese
Government wilt pay £ 3.5 million in
instalments from July 1962 to June
1966.