The Americans are the enemy, and their influence in the region must be minimized at any cost. This single logic guides China’s foreign policy under Xi Jinping. So even as the Chinese want to punish the Indians for daring to stand up to them on the border, they hold back. The fear is that a potent show of force could further solidify the already troublingly close US-India strategic ties. The same Chinese calculus may be at play in Nepal. China was unhappy that Prime Minister KP Oli was not doing enough to push the BRI projects, even as he embraced the American anti-China MCC compact. China promptly shut its two important border points with Nepal.
But following the Biden administration’s recent efforts to alternately woo and warn the Nepali political class, the Chinese are having a rethink. PM Oli has just inaugurated the ‘China-Nepal Friendship Industrial Park’ in his home district of Jhapa. Meanwhile, a 10-billion-rupee contract for a diversion tunnel on Sunkoshi River has gone to the China Overseas Engineering Co. On China’s part, as the fear of ‘American encirclement’ grows, they have had to play nice and keep engaging and investing in the neighborhood.
It’s a tricky balance. Even six months ago, most Chinese were unaware of their country’s checkered dealings with India. But then the border conflict spiraled to a level the Chinese state could not keep under wraps. So it belatedly acknowledged the killing of five PLA soldiers in last year’s clash near the Pangong Lake, and posthumously awarded them gallantry medals. This prompted a rabid anti-India reaction on Chinese social media, with most Chinese apparently in favor of teaching India a harsh lesson.
Even in Nepal, China wanted to punish the Oli government. But when the American State Department strongly urged Kathmandu not to forcibly return Tibetan refugees and the US Congress voted to increase support for Tibetans, China had to recalculate. The US Ambassador to Nepal Randy Berry started visiting individual Nepali leaders to appraise them on new American priorities. The Chinese were doubly spooked.
Thankfully for the Chinese, the Indians realize the cost of completely alienating its big neighbor to please a distant friend. (And this is exactly the case with Nepal too.) There has always been a strong anti-US lobby in India which fears giving a strong external actor like the US greater sway in its traditional backyard, not when China is already usurping the old Indian strategic space. The Modi government moreover fears the nationalist backlash should India suffer big reverses in a conflict with China. Hence there is a level of mutual readiness to de-escalate the border crisis.
India and China are both struggling to calibrate their relations with the US. And they have relatively stable governments, which is far from the case in Nepal. As Oli’s PM chair appeared shaky, foreign powers here were already jockeying for influence. Nepal is under increasing American pressure not to act tough on the Tibetans—and the Chinese want precisely the opposite. The Indians too have outlined the ‘red lines’ Nepal cannot cross while dealing with foreign powers.
At the end of the day, Nepal has no option but to heed the concerns of its two giant neighbors, even at the cost of alienating the US. But then Nepal diversified away from the two giant neighbors precisely to escape being swallowed up by one or the other. So, again, a difficult balancing act. Yet right now it’s hard to see Kathmandu accommodating American concerns over Chinese ones.