Onus on new government to mend Nepal-China relations

People in Nepal appear to have a high tolerance for the city’s chaotic streets, potholed roads, and power shortages. The country known as a tourist hub has seen an upsurge in the number of tourists, but the numbers have not helped the country cope with rising inflation, it appears. On the contrary, they appear to have impacted the livelihoods of local communities. At a time of national unrest and discontent, on Dec 26, Pushpa Kamal Dahal was sworn in as Nepal’s Prime Minister in Sheetal Niwas amid tumultuous political rivalry and skepticism, with the goals of reviving the economy and balancing international power-play. Despite his optimism, Dahal is sure to encounter more challenges than in his previous two terms in office, both inside and abroad.

Dahal’s first objective will be to restore people’s trust in the government. To enhance the effectiveness of government operations, Dahal should be more aggressive in promoting a transparent government mechanism and undertaking wide-ranging accountability measures.

Nepal’s GDP per capita has remained stagnant for years. The new government should invest more in infrastructure, create new jobs, channel additional industrial capital to boost tourism, and obtain different sources of income for the people, while also focusing on reducing the trade deficit, maintaining currency stability, adding liquidity to the market, and curbing inflation. Diplomatically, Dahal faces a more difficult situation, as China, although actively promoting the Belt and Road Initiative to enhance infrastructure investment and construction in Nepal in recent years, was totally frustrated with previous Prime Minister Deuba’s series of anti-China measures. The United States, which regards China as a rival, is trying to bind Nepal to its “Rebalancing Asia and the Pacific strategy” as part of its global stranglehold on China’s development, while India, which has a territorial dispute with China, wishes to intensify intervention in Nepal’s domestic politics due to its hegemony over Nepal’s energy and trade. Despite signing of the Millennium Challenge Corporation (MCC) agreement between the former government and the United States, Dahal must ensure that its terms do not supersede Nepal’s laws, and that foreign staff executing the agreement do not have the same legal protection as diplomats do, to deter potential espionage. Moreover, notwithstanding the government’s final veto of the US’ State Partnership Program (SPP) project, Dahal must make it clear to every citizen that any type of foreign military presence does not serve Nepal’s best interests, and a free and independent neutral position would provide Nepal a stronger edge in the rivalry among superpowers. The road ahead is challenging in terms of bilateral relations, but there are some beams of hope too. One-way trade is now possible through the China-Nepal Hilsa/Purang port and two-way trade has just resumed through the Kyirong-Rasuwagadhi border after a three-year hiatus due to the epidemic. Gradual reopening of more Nepal-China links means more development opportunities for Nepal’s northern Himalayan region. What’s even more thrilling is that the Sino-Nepal cross-border railway connectivity project has seen new progress. On Dec 27, a group of six Chinese experts arrived in Kathmandu to initiate a survey for the development of the cross-border rail link. This railway line, once opened, will not only bring new opportunities for tourism but will also improve Nepal's export pattern and enhance Nepal's economic resilience. It is an important step in the construction of linkages that will help Nepal fulfill its long-cherished dream of transforming from a land-locked country to a land-linked country, ushering in a new era. In the long run, the railroad will also be connected to South Asia, considerably improving Nepal’s strategic position, and bringing greater opportunities for Nepal. Besides, the inauguration of Pokhara Regional International Airport, constructed with Chinese assistance, has opened new prospects for the country that is hugely dependent on tourism. Increased air connectivity resulting from this infrastructure will bring tangible benefits to the tourism industry and to the Nepali people. With effect from Jan 8, China will remove restrictions for international visitors wanting to enter the country and resume outbound travel of Chinese citizens. This will surely contribute to the Nepal Tourism Decade strategic action plan. Before the pandemic, tourists from China accounted for the largest number of tourists visiting Nepal from a single country. With a gradual easing of travel restrictions, Nepal can attract more Chinese tourists to give its economy a boost. The BRI cooperation projects should be pushed forward without delay. Both Nepal and China are aware of certain foreign geopolitical interests at play. The onus is on the new government to take the northern neighbor into confidence by keeping external interventions at bay. Incomplete China-Nepal projects should be expedited and issues requiring immediate attention sorted out promptly. Since Prachanda is not a new face in the leadership position, he should be aware of the sensitivities of an immediate neighbor and should not repeat some activities of the previous government that had upset China. Government engagements should be based on trust and friendship, not on political posturing. Beijing looks forward to deepening cooperation with the new government in Kathmandu, and expects a similar gesture from the new government. The author is a Chinese scholar with interest on Nepali affairs