China and India agreed on Sunday to reopen border trade at the Nathu La Pass on July 6 after 44 years' closure.

Officials from both sides ended the discussion on the issue in Lhasa, capital of Tibet Autonomous Region, and signed on the agreed minutes on Sunday.

The reopening of the Nathu La Pass is expected to give a major boost to bilateral trade between the two countries.

Trade in this area accounted for 80 percent of the total border trade volume between China and India in the early 1900s. Trading through the pass was suspended in 1962 after border conflicts.

"The reopening of border trade will help end economic isolation in this area and play a key role in boosting market economy there, " said Hao Peng, vice chairman of the autonomous region.

"It will also boost the transportation, construction and service industries, paving the way for a major trade route that connects China and south Asia," Hao added.

"The resumption of border trade is a great historic event, not only for enlarging trade, but also for greater relations between the two great countries," said Dr. Christy Fernandez, additional secretary of the Indian Department of Commerce.

The resumption of border trade reflects the improved ties between China and India, said Professor Liu Jiangyong with the institute of international studies of the Beijing-based Qinghua University.

He said that China and India have been exploring ways of mutual beneficial cooperation in the economic and trade fields, adding the accord on the guidelines for border demarcation signed in 2005 by the two countries created a peaceful environment.

Both sides marked 2006 as the year of Sino-Indian friendship.

More than 5,000 border residents came to Yadong county, where the Nathu La Pass is located, every year for a trade of 3.6 million yuan (450,000 U.S. dollars), although the trading port in Yadong did not officially open, statistics from the county show.

China and India signed a memorandum of understanding on the resumption of border trade at the Nathu La Pass in 2004. The Chinese State Council approved the plan on the construction of border trade markets in Yadong in the ensuing year.

"The reopening of the Nathu La Pass is a key move in strengthening economic and trade ties, which will also enhance mutual political trust," Prof. Liu said.

China and India recorded 18.73 billion U.S. dollars in trade volume in 2005, up 37.5 percent from the previous year, according to the Chinese Ministry of Commerce. The volume is expected to exceed 20 billion U.S. dollars this year.

Currently China and India trade mostly by sea transportation. Tibet Autonomous Region imports from and exports to India via Tianjin, a port city in the north which is thousands of kilometers away.

Tibet is expected to benefit much from the resumption of border trade at the Nathu La Pass, Hao Peng said.

"If only 10 percent of Sino-Indian trade goes through the pass it means at least more than one billion U. S. dollars."

Last year the foreign trade volume of Tibet was 200 million U.S. dollars.

With the reopening of Nathu La Pass, iron ore and livestock products from India and wool, herbs and electric appliances from China can be transported into the other country through the short cut, Hao said.