The bilateral relation between Nepal and China is defined by the ‘Sino-Nepal Treaty of Peace and Friendship’, signed on April 28, 1960 by the two countries. Initially Kathmandu was skeptical about engaging with Beijing.

However, the relation was boosted when they ended all border disagreements by signing the Sino-Nepal boundary agreement on March 21, 1960, which was later ratified on October 5, 1961. Till then, Nepal maintained a balanced policy with its two neighbors, both China and India.

Recently, Nepal is making slow but steady efforts to increase trade and connectivity with China. KP Sharma Oli, Nepal Prime Minister, is gradually taking steps to benefit economically from China. Nepal is also backing China’s long waited desire to enter into SAARC (South Asian Association for Regional Cooperation ). Moreover, Nepal at present showing unwavering interest to join the Belt and Road Initiative (BRI) of China in a wish to use the Chinese Road and Maritime Network to manifold its trade and lessen  its heavy dependence on India.

Paving the Path to China).  

Since 1975, Sino-Nepalese relations have been cordial and developed radically, with China being the burgeoning resource of FDI while India still remains as the highest source of remittance to Nepal. The picture is translucent with the following example: according to Kathmandu, while about 1-2 million Nepalese are working in India, number of Nepalese in China is minuscule, only 3,500 in Mainland and 15,950 in Hong Kong. While China is eagerly waiting to spread out its network through BRI and ready to accept almost any participant, Kathmandu’s interest to develop its economy by joining the BRI played a significant role to engender the current scenario of paving the red carpet for the dragon to enter.

In April, 2019, Nepal’s President Bidya Devi Bhandari took part in Second Belt and Road Forum (BRF) for International Cooperation in Beijing. He eulogized the forum saying that, “The far-sighted vision of President Xi to build a community of shared future for mankind through Belt and Road Initiative (BRI) carries a huge potential. It is an important framework for collaboration, for cooperation and for connectivity.” He also added that the “BRI is the engine for prosperous future where not a single country is excluded from the fruit of development.”

Two significant aftermath developments had taken place after Nepal’s hearty participation in the BRI that clearly depict that Nepal wants to adhere with the BR norms, however adjoined to some impediment in the choice of particular projects under BRI.

Afterwards he and Xi Chin Ping, the Chinese President had a long meeting where a mutual communiqué was issued portraying the ambitious ‘Nepal-China Trans-Himalayan Multi-dimensional Connectivity Network’ that includes a cross-border railway- ‘Kerung-Kathmandu railway.’ China’s ambition to develop this railway network as a doorway to South Asia therefore is getting reflected in the official BRI documents with this inclusion.

Nepal, in 2016, signed a protocol with Beijing that allows Nepal to use China’s sea and road infrastructure for third country trade. Although this transportation facility has not yet been commenced yet due to lack of some infrastructural developments, Bhandari yet again signed off and revived the ‘Transit and Transport Treaty’ protocol during his visit to China. It’s another significant achievement in building up the relation between Nepal and China.

Regarding the proposed ‘Keyung-Kathmandu Railway Project,’ both countries have accomplished a pre-feasibility study and heading to begin preparing a Detailed Project Report (DPR) with an estimated cost of $312 million for two years. Though the cost-sharing plans for the DPR have not yet been disclosed, bilateral discussions in this regard are planned in next month.  

International Concerns

Many countries, particularly India and western states, directly and indirectly, have been forbidding the Nepal government about falling into the infamous ‘debt trap’ of China showing various examples like economic conditions of Sri Lanka and Pakistan, and pointing results of statistical analysis about the potential risks. They are basically worried about the pay back capacity of the loans that Kathmandu will borrow from Beijing in terms of infrastructural development. However, one particular study shows that Nepal in under tremendous internal pressure to revamp its stagnant economy and the government is lurking with the easy way out of gathering money in terms of loan from China.

In December 2018, the Nepali Foreign Minister, Pradeep Gyawali, was advised by US officials to think twice about their pay back capacity and probable consequences in future. In following January, the Japanese Foreign Ministry spokesperson, Natsuko Sakata, during his visit to Nepal accompanying Foreign Minister Taro Kano also warned Nepal saying that “the financial support for infrastructure projects should be concessional” which according to experts is directed to Chinese Projects in Nepal. In February 2019, Joe Felter, U.S. Deputy Assistant Secretary of Defense for South and Southeast Asia overtly commented that “Chinese investment in Nepal should serve the interests of Nepal not just of China.”

Confronting the Accusations

However, both Nepal and China have rescinded the accusations saying that they are vicious and maligning the notion of the BRI by portraying malcontents. Nepali government is highly determined to obtain the Chinese loans, therefore depicted the statements as a ploy to prevent Chinese investment in Nepal. The consensus among the ruling and opposition parties in Nepali parliament has bolstered Oli government’s confidence to seek the benefit of BRI. The government understands that massive loans from China is highly required to fulfill the Nepali people’s needs for growth and opulence and only grants from international forum can’t alone solve the issues.

While talking to media Foreign Minister Gyawali said, “It would be better on the part of friends wary of Nepal’s future to give us information about charitable organizations that extend loans at zero interest.” He was actually pointing out that countries that are unable to help Nepal in this condition don’t actually have right to criticize it.

China, on the other hand along strongly opposed the Western comments. Chinese ambassador to Kathmandu, Hou Yanqi, objected to the US concerns saying that these are “attempts to interfere with the friendly cooperation between China and Nepal, which is very ridiculous.” He also advised Chinese efforts portray those talking about a possible debt trap as merely spreading Western propaganda.

However, KP Sharma Oli, still now is trying to convince countries like US, India and other western powers that Nepal necessitates to boost bilateral and multilateral cooperation with neighbors and other friends or partners  to overcome the its own development challenges, especially with a dearth of internal resources.

By Manisha Ghosh

Image Credit: HKFP

References:

• https://www.aljazeera.com/indepth/features/nepal-access-china-ports-analysts-huge-deal-180917163226224.html
• https://idsa.in/idsastrategiccomments/ChinasInroadsintoNepal_ABhattacharya_180509
• https://thediplomat.com/2019/05/nepal-inching-toward-china/
• https://defence.pk/pdf/threads/nepal-inching-toward-china.617513/
• https://www.dawn.com/news/1479112
• http://capsindia.org/files/documents/CAPS_Infocus_SH_6.pdf