There is much debate about what exactly the Belt and Road Initiative (BRI) is. The BRI is, in my view, a way for China to make profit and not an aid of any kind. Some developing countries such as Sir Lanka and the Maldives have actually fallen into debt traps while trying to repay BRI loans. Although Chinese President Xi Jinping has famously said that China is a peaceful nation and will not interfere in the affairs of any other country, the case of Sir Lanka, which has been forced to effectively sell one of its important ports to the Chinese, tells a different story. Pakistan, where China has already poured $60 billion into the China-Pakistan Economic Corridor (CPEC), is yet another example of countries in South Asia that have faced turmoil shortly after embarking on China-led BRI projects. This is not to stigmatize the project but only to remind the Nepali stakeholders that we have to be mindful of our national interest while getting involved in such mega projects.
Although some analysts have labelled the BRI “China’s Marshall Plan,” that is not the right label. The Marshall Plan was introduced to rebuild the Western Europe devastated after the Second World War. Whereas BRI, “the project of the 21st century,” is the brainchild of Chinese President Jinping advertised as a ‘common benefit’ model.
The Marshall Plan of the Americans had sought to control the recipient countries politically and economically. The BRI, on the other hand, does not push communist ideology onto participating countries. Even so countries such as Nepal, which have an ever-growing trade deficit with China, need to clearly spell out what changes they would like to see in their relationship with China during the implementation of the BRI.
The BRI brings about a new concept of regional and global development; every bilateral agreement China has had with individual countries is unique. What all agreements do have in common is that they are negotiated and finalized in a way that fosters mutual trust and a win-win spirit. This facilitates pooling of financial risk and brings about different forms of cooperation.
Nepal can benefit from this initiative, not the least by reducing its over-dependence on India. Before growing economically closer with China, however, Nepal needs to address some issues first.
The BRI, if implemented well, has the potential to take trade relations between Nepal and China to new heights. However, the trade balance heavily favors China. According to the Trade and Export Promotion Center (TEPC), China has surpassed India in trade with Nepal. Since 2006, Chinese trade with Nepal has grown 17 times faster than trade with India.
Yet Nepal’s trade with China in the past year shows that Nepal’s exports have decreased by 22.6 percent while imports have jumped by 13.8 percent (TEPC, 2017). Nepal hasn’t been able to decrease its trade deficit despite the removal of tariffs for nearly 900 Nepali products in China. The government of Nepal still appears unprepared and unclear on this issue.
The main objective of BRI is infrastructure and connectivity. China has ample things to export. But what are we going to export to China? Or is our joining BRI limited to importing more Chinese goods and tourists? BRI will help us only if we can re-customize it to our benefit.
China and India are the only neighbors of Nepal. We have no choice but to befriend them. But to end the asymmetric dependence of Nepal on India, China is only a slightly better choice.
It is true that Nepal wants to escape from political, economic and even psychological hegemony of India. But we should not see China as an alternate to India. Nepal needs to take urgent steps to correct the policy course from ‘equidistance’ to ‘equi-proximity’ with two neighbors.
If we don’t undertake proper homework in the near future, BRI could be next World Trade Organization for Nepal. The country has not been able to do much with its membership of the WTO since it joined in 2004
The author is with Annapurna Post’s foreign affairs bureau