Have Nepal-China ties soured under the Deuba government?

Kamal Dev Bhattarai

Kamal Dev Bhattarai

Have Nepal-China ties soured under the Deuba government?

Many believe the current government has, instead of building trust, upset China, for instance by raising the issue of China’s alleged border encroachment without consulting Beijing

Following the formation of the five-party coalition government led by Nepali Congress President Sher Bahadur Deuba last July, Nepal and India have held a series of meetings. In this period, high-level American officials visited Nepal to consult on bilateral issues including on the much-debated Millennium Challenge Corporation (MCC) compact.

But with China, except for a phone conversation between the two foreign ministers and a few bilateral mechanism-level meetings, there has been limited engagement. Both sides blame Covid-19 for such a situation, but then high-level Chinese officials have been touring other countries even in this period.

Observers say some issues that evolved over the past few years have created mistrust between Kathmandu and Beijing. The pace of engagement with China was already down when CPN-UML Chairman KP Sharma Oli was the prime minister. “That downward trend has continued even after the formation of the new coalition government under Deuba,” says Upendra Gautam, General Secretary at China Study Center, a Kathmandu-based think-tank.

Many believe the current government has, instead of building trust, upset China, for instance by raising the issue of China’s alleged border encroachment without consulting Beijing. A few weeks after taking over government reins, PM Deuba formed a panel to investigate alleged Chinese encroachment in Humla district. The panel subsequently flagged some issues.

Foreign Policy analyst Rupak Sapkota says many in China saw this as an attempt to divert attention from the ongoing border dispute with India: it is not only with India that Nepal has border disputes but also with China. “The government further fueled this narrative by raising the Humla issue, which did not go down well in Beijing,” says Sapkota.

Nepal’s reluctance to appoint its China envoy has also raised eyebrows in Beijing. After recalling the ambassadors appointed by the previous government , the Deuba government nominated new ambassadors to India, the US, and the UK, but not to China. This suggests China is not its priority. A Maoist leader, speaking on the condition of anonymity, says coalition partners have been pressing PM Deuba to appoint the ambassador to China but PM Deuba continues to demur.

Travel restrictions imposed by China to control the spread of Covid-19 have also limited bilateral exchanges. Direct flights between Kathmandu and Beijing are yet to restart, severely affecting people’s movements. Hundreds of Nepali students have been barred from joining physical classes in Chinese universities. Similarly, movements at two major border points at Tatopani and Rasuwagadi have been restricted.

Moreover, there has been mistrust between Nepali Congress and CPN-UML on foreign policy over the past two years—and this mistrust has continued. In 2021, a Congress team led by Jeevan Bahadur Shahi, now the chief minister of Karnali province, visited the Nepal-China border at Humla district and came up with a report concluding that China has encroached on Nepali lands, much to the latter’s chagrin. The Chinese Embassy in Kathmandu then dispatched a letter to Congress expressing serious reservations.

Similarly, Chinese state mouthpiece Global Times ran a series of reports slamming the border report and dubbing Congress ‘pro-India’. Even after Deuba became prime minister, Global Times had on July 19 ran an article under the title ‘China-Nepal ties solid despite pro-India leader.’ The article by Zhang Jiadong, a professor at the Center for American Studies, Fudan University, said “Deuba's rise to power may tilt Nepal a bit toward India, but he will not change the basic idea of multilateral balanced diplomacy between China, India and the third-party countries.”

Another issue that is creating suspicion is China’s close involvement with Nepali communist parties, culminating in the 2018 merger between CPN-UML and CPN (Maoist Center). Many in Congress have come to believe that China tilts towards communist parties. Even now, China is pushing for the unification of Nepali communist parties, suggesting it prioritizes party-to-party relations instead of state-to-state relations.

But then China is keen on highlighting the Congress party’s historical contribution to cementing Nepal-China ties. NC and China have enjoyed cordial relations since the 1960s. During his Nepal visit in 2019, Chinese President Xi said: “The Chinese people will not forget the Nepali Congress Party's important contributions to the development of China-Nepal relations during the party’s ruling period.” A China watcher requesting anonymity says China has often failed to understand Nepal’s multi-party character, and thus its emphasis on communist unity. 

Growing geopolitical tensions and changing balance of power may be another reason for limited Nepal-China engagement. The China watcher says as the US, India and other western powers are closely watching or providing prescriptions on Nepal’s dealings with China, the current government is also under pressure to minimize engagement with the northern neighbor.

Not everything is downhill though. Despite the mistrust at the top political level, there has been steady communication between the two countries. When Deuba was appointed prime minister on 13 July 2021 following a Supreme Court order, there was no immediate response from the Chinese government. But on Julgauy 28, Chinese Prime Minister Li Keqiang sent a congratulatory message to PM Deuba, soon after he secured the vote of confidence in parliament.

In his message, the Chinese primer said, “China and Nepal are friendly neighbors linked by mountains and rivers,” while also hailing the two countries' solidarity and mutual help in the face of difficulties. Before that, on July 16, three days after Deuba became prime minister, China announced an additional two million doses of vaccines in grant. Both in terms of grant and commercial purchases, China has become the largest vaccine exporter to Nepal. According to Xinhua, along with the first 800,000 jabs of China-donated Sinopharm Covid-19 vaccines that arrived in Nepal on 29 March 2021, Nepal has so far received 13.8 million doses of Chinese vaccines.

On 19 October 2021, the two sides discussed each other’s concerns at length, for the first time since the formation of the new government. Chinese Foreign Minister Wang Yi held a long phone conversation with his Nepali counterpart Narayan Khadka, including on the border. He expressed a willingness “to share China's development opportunities with Nepal and jointly build the Belt and Road Initiative with high quality, help boost Nepal's economic and social development, and build a closer China-Nepal community with a shared future.” The Chinese side also requested Nepal to participate in the China-led Global Development Initiative aimed at supporting the development of developing countries, promote post-pandemic global economic recovery and strengthen international development cooperation.

Though the current state of relationship under the Deuba-led government may not significantly affect overall ties, it may create an imbalance in Nepal’s foreign policy. “There is an all-party consensus in Nepal that we should have a balanced relationship with at least the major powers, which the current trend could undermine,” Sapkota notes.

Gautam of CSC also suspects Covid-19 pandemic is not the only reason behind the thinning of engagement. For instance, Chinese Foreign Minister Wang Yi recently went to Maldives and Sri Lanka but did not come to Nepal. For the Chinese, implementation of foreign agreements during President Xi’s official visits remains a priority. The Chinese side is of the view that agreements reached between the two countries during Xi’s visit to Nepal in 2019 should be thoroughly implemented, says Gautam. “But our unwillingness to implement the agreements has raised questions about our country’s credibility,” he adds.


Where is the railway?

The much-hyped cross-border railway is not making any headway. Both the sides blame the pandemic for the delay in starting its feasibility study. In the first week of January, there was a virtual meeting between Nepal’s Department of Railway and China’s National Railway Administration about the same.

“Covid-19 has affected the feasibility study even though the two sides agreed to it during Chinese President Xi’s Nepal visit,” says Deepak Kumar Bhattarai, Director-General of Nepal’s Department of Railway. During his visit, the two sides had also reiterated their commitment to extend cooperation on the Kathmandu-Pokhara-Lumbini railway. Funding for the feasibility is yet to be discussed. Nepal has been requesting China to conduct the feasibility study on a grant basis, while China insists that Nepal should share costs.

Despite the slow progress, the Chinese have communicated their commitment to building the railway. In his video message to the International Conference on Nepal’s Reconstruction 2021 held on December 7, Chinese Foreign Minister Wang Yi said, “China will make solid progress in the feasibility study of a cross-border railway project, improve the Trans-Himalayan Multi-dimensional Connectivity Network, and help Nepal realize its dream of changing from a ‘land-locked country’ to a ‘land-linked country’.”