Nepalese Prime Minister K. P. Sharma Oli visited China last week. The visit was aimed to infuse new momentum into the bilateral relationship and create new areas of cooperation between the two nations. Chinese President Xi Jinping (習近平) expressed appreciation for Oli’s long-term commitment to promoting friendship between China and Nepal, adding that the two nations are good neighbors, good friends and good partners linked by mountains and rivers. Xi expressed his commitment to transforming Nepal from a “land-locked” to a “land-linked” nation. Oli praised China and Xi.
During Oli’s visit, the two sides signed nine agreements, including improving trade and technical assistance. One of the major highlights of the visit was political optics. Choosing to make his first foreign visit to China rather than India after becoming prime minister for a fourth term is not merely a break from tradition. It also indicates a personal bonhomie between Oli and Xi, and the uncomfortable relationship between Indian Prime Minister Narendra Modi and Oli. More to the point, China played a pivotal role in bringing the Oli-led coalition government to power in July, underscoring the rise of China’s influence in the domestic politics of Nepal. Beijing, as a part of its South Asia policy, is aiming to counter India’s political clout in Nepal.
The visit also witnessed concrete developments in Xi’s Belt and Road Initiative. Although Nepal had already signed a memorandum of understanding on the framework agreement of the initiative, Kathmandu showed reluctance to implement projects, because most of the Chinese financial support would be given to Nepal as loans, not grants. Learning from Sri Lanka’s economic failure, which led to the handing over of the Hambantota Port to China, Nepalese leaders expressed concerns about facing similar challenges. In this context, it is essential to observe that the two sides agreed to strengthen the synergy of their development strategies, and pursue more profound and even more concrete cooperation.
The two sides expressed their readiness to sign an agreement to build the Trans-Himalayan Multi-Dimensional Connectivity Network and the Framework for Belt and Road Cooperation between the two governments as soon as possible. The two sides also agreed to jointly advance the fourth phase of the China-aided Araniko Highway maintenance project and the Hilsa-Simikot Road Project, implement the second phase of the Kathmandu Ring Road Improvement Project, and others.
While Oli hopes that these and other projects would improve Nepal’s infrastructure, China aims to penetrate critical infrastructure in Nepal. This would enable China to have better connectivity with Nepal and other parts of South Asia, while the successful implementation of these projects would help Xi showcase the positive side of the Belt and Road Initiative and China’s power projection would be boosted.
China’s keen interest in completing infrastructure projects in Nepal is to counter the US$500 million infrastructure grant from the US after the Nepalese parliament ratified the US Millennium Challenge Corp agreement in 2022. China’s moves also aim to keep India from helping Nepal build up infrastructure.
In the trade and commerce field, China this year reopened 14 China-Nepal border trade points that were closed in 2020 due to the COVID-19 pandemic. This move would enhance bilateral trade between the two nations, enabling people in border areas to have better livelihoods.
Military cooperation is also a significant component of Nepal-China ties. Chinese military delegations have frequently visited Nepal and last year the two sides revived the Sagarmatha Friendship joint military exercises. China also provides training and military equipment to the Nepalese army.
The two sides have their reasons for expanding military ties. Oli wants to reduce his nation’s military dependence on India and has been instrumental in building military ties with China since 2015. China wants to make Nepal dependent on its military assistance by building close ties between its military-industrial complex and the Nepalese armed forces. With its military engagement with India’s neighboring nations, Beijing hopes to be in a better position to deal with New Delhi.
China’s close ties with Nepal also help ensure that Tibetan refugees do not use Nepalese soil for anti-China activities. Oli reiterated Nepal’s similar commitment. Oli also said that the People’s Republic of China is the sole legal government representing China, and Taiwan is an “inalienable part” of China’s territory. Nepal firmly supports China’s efforts to achieve its “national reunification” and opposes “Taiwan independence,” he said. Nepal also reiterated that Tibetan affairs are China’s internal affairs.
Notwithstanding improvements in bilateral ties between Nepal and China, the relationship suffers from structural and practical problems. Based on the experiences of Pakistan, Sri Lanka and other nations, there is no reason why Nepal would not fall into China’s debt trap diplomacy. For example, the airport in Pokhara, built with a Chinese loan of US$216 million, has failed to attract international flights. Nepal also has a massive trade deficit with China, further compromising Kathmandu’s sovereignty, and since there is uncertainty about the feasibility of several projects, including road and rail links between Nepal and China, Nepal cannot think about its development without India’s support.
Nepal should also be mindful of China’s recent encroachment into its territory, a major contention between the two sides, and the Nepali Congress party — an ally of the Oli administration — has expressed concerns over the profound implications that could emerge from implementing China’s infrastructure projects.
Although improving ties with other nations is in Nepal’s national interest, based on China’s assertive behavior in other nations, whether the Xi regime is genuinely interested in helping Nepal in its endeavors to boost its development and security is doubtful. After all, China has remained uncommitted to meeting Nepal’s requirements. Only time will tell whether Nepal protects itself from a Chinese economic invasion or compromises its sovereignty.
Sumit Kumar is an assistant professor in the department of political science at the University of Delhi and a former Ministry of Foreign Affairs visiting fellow at National Chengchi University.
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