Navigating Nepal’s Relations with China: A Cautious Approach

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Although PM Dahal signed several agreements with China during his recent visit, critics at home are dismayed that Nepal is not gaining anything concrete from China

Prime Minister Pushpa Kamal Dahal recently completed his eight-day visit to China beginning on 23 September. On this occasion, Nepal and China came out with a 13-point joint statement covering a wide range of areas in which they agreed to re-open all the border crossings between the two countries, reactivate the checkpoints along the border, solidify the Belt and Road Initiative (BRI), finalise the China-Nepal Electric Power Cooperation Plan, and cooperate in developing hydropower, wind power, solar power, and biomass power. Besides, they agreed to breed yak, cow, and other domesticated animals in Nepal and export the agricultural produce to China. Other than this, they also agreed to help establish closer cooperation between Nepal’s Planning Commission and China’s National Development and Reform Commission and work together in such sectors as digital economy, agriculture, fisheries, and green and low carbon development.

They agreed to breed yak, cow, and other domesticated animals in Nepal and export the agricultural produce to China.

To promote the cultural links between Nepal and China, China showed a keen desire to send more Chinese language teachers and volunteers to Nepal. Additionally, it has vowed to strengthen such institutions in Nepal such as the China Cultural Centre and the Confucious Institutes and facilitate the translation and publication of ancient texts.

Nepal and China also made an important agreement to construct the Jilong-Keyrung (China) – Rasuwagadhi-Chilime (Nepal) 220 KV Cross-Border Transmission line. Once this project is completed, it will provide a crucial link for power trade between the two countries. Expectations are that by exporting its surplus power to China through this transmission line, Nepal would be able to diversify its energy market and reduce its sole dependence on India for the sale of power.

Regular flights would also be conducted between Pokhara International Airport and China. The Airport was constructed with financial support from the EXIM Bank of China and it was inaugurated on 1 January, but ever since then there has been no single international flight there and it is incurring huge economic loss.

Dahal also visited the most sacred religious place for the Hindus, the Kailash-Mansarovar in Tibet. Nepal wants to develop a crucial route between Simkot in Nepal and the popular Hindu shrines of Kailash Mansarovar to facilitate the tour of Nepalese and Indian pilgrims. By doing so, Nepal expects to attract Hindu pilgrims from all over the world, including from India. Mansarovar Lake is just at a distance of 160 kilometres from Simkot, the headquarters of Humla district in the northern part of Nepal. Though this route to Mansarovar could prove most advantageous to the Nepali and the Indian pilgrims from the point of view of travel costs, distance, time and visas, the road from Simkot to Mansarovar Lake is far more challenging to the travellers.

Nepal wants to develop a crucial route between Simkot in Nepal and the popular Hindu shrines of Kailash Mansarovar to facilitate the tour of Nepalese and Indian pilgrims.

On the outcome of his visit to China, PM Dahal termed it highly successful and said, “The visit has created an environment of mutual trust at the top political level and a conducive situation to attract more investment, expand bilateral trade and mutual cooperation while strengthening bilateral relations at the people’s level.”

However, critics at home are dismayed that Nepal has not gained anything concrete from China, though it happens to be the second-largest economy at the global level. To them, Nepal did not do anything to convince China to reconsider its controversial new map that undermines the territorial integrity of the country. About the agreement on Jilong-Keyrung-Rasuwagadhi-Chilime transmission line, they are sceptical about its future as there is a lack of clarity on its funding modality. They are also worried for the fact that China did not convert the loan for Pokharal International Airport into a grant. Instead, Nepal agreed to give continue with the feasibility study of the Jilong/Keyrung-Kathmandu Cross Border Railway, although it is likely to add the list of projects that could prove another white elephant to the country.

Nepal agreed to give continue with the feasibility study of the Jilong/Keyrung-Kathmandu Cross Border Railway, although it is likely to add the list of projects that could prove another white elephant to the country.

PM Dahal is also criticised for his failure to convince the Chinese to remove the non-tariff barriers like rigorous imposition of standard certification and proof of origin of the agricultural and industrial products on the exports of such items to China. Such a factor is also responsible for Nepal’s trade deficit with China which is fast growing year after year. In 2013-14, Nepal imported goods worth INR. 49.5 billion from China, which almost trebled to INR. 138.75 billion in 2022-23. During the same period, Nepal’s exports to China declined from INR. 1.57 billion to INR. 1.1 billion. Nepal imports almost 150 times more from China than what it exports to that country. Nepal mainly imports electrical goods, clothes, food, fruits, vehicles, mobiles, laptops, and machinery from China; while it exports herbs, carpets, furniture, handmade paper, and yarsagumba (cordyceps) to that country.

The Nepali people have been belied as the country could not get any concrete assurance from the Chinese side for the removal of non-tariff barriers on the exports of Nepali products to China and also in regard to converting the loans for projects like the Pokhara International Airport into grants.

Although Nepal has signed a number of agreements on the eve of Prime Minister Dahal’s visit to China, it is unlikely that they could have any tangible impact on the development of Nepal. The Nepali people have been belied as the country could not get any concrete assurance from the Chinese side for the removal of non-tariff barriers on the exports of Nepali products to China and also in regard to converting the loans for projects like the Pokhara International Airport into grants. Nevertheless, some credit may be given to Dahal for making Nepal’s stand on China’s BRI clear that projects under this initiative would be welcome to Nepal if it is given grants. China, however, is interested in providing loans and not grants to Nepal under BRI. It is due to this clash of interests between the two countries that over three dozen agreements that Nepal signed with China over the decades could not be implemented. Besides, he may also be credited for the way he desisted from signing Chinese President Xi Jinping’s doctrines such as the Global Security Initiative and the Global Cultural Initiative which could have serious implications for Nepal and other South Asian countries—although he did signed the Global Development Initiative.

Source: ORF (Hari Bansh Jha)