China’s Nepal plan: Firmer footing, weakened Delhi

Sandwiched between India and China, Nepal occupies a unique position in these countries’ strategic calculations. China, which has traditionally adopted a pro-establishment policy in Nepal, is seen to have become increasingly assertive in its engagements there since the 2015 massive earthquake in Nepal. Under such circumstances, one can expect greater competition between China, India and the United States (US) in Nepal in coming days. Since China announced its ambitious Belt and Road Initiative (BRI), also known as One Belt One Road, in 2013, it has been quite assertive in its approach toward Nepal. This became apparent when China began increasing its engagement with Nepal after the massive earthquake in April 2015 devastated several parts of the landlocked country. China provided $483m in grant assistance for 25 reconstruction projects in five sectors: infrastructure, people’s livelihood in mountain areas, archeological heritage renovation, disaster preparedness and health for post-quake reconstruction1 When the ‘unofficial blockade’ by India had precipitated a backsliding in India-Nepal relations, Nepal’s Prime Minister KP Sharma Oli signed multiple agreements on his visit to Beijing in March 2016 related to infrastructure development with China. There has also been a constant flow of security assistance from Beijing to Kathmandu since then. This includes aid to the tune of $2.6m in 2008, RMB20.8m in 2009, $7.7m in 2011 and $32.3m in 2017. Further, in 2017, Nepal and China began the first-ever joint military drill, ‘Sagarmatha Friendship’, which was a major turning point in their bilateral defense cooperation.

India, the US and the UK have long been Nepal’s major defense partners. However, in recent times, China has emerged as one of Nepal’s most important major defense partners. In 1989, Nepal purchased military hardware such as anti-aircraft guns, medium range surface-to-surface missiles and AK-47 rifles, whose sale was halted with the fall of the monarchy in 1990. During the short royal takeover, Beijing resumed its weapons sale to King Gyanendra by providing around $1m to fight the Maoist insurgency.

There has also been a constant flow of security assistance from Beijing to Kathmandu since then. This includes aid to the tune of $2.6m in 2008, RMB20.8m in 2009, $7.7m in 2011 and $32.3m in 2017. Further, in 2017, Nepal and China began the first-ever joint military drill, ‘Sagarmatha Friendship’, which was a major turning point in their bilateral defense cooperation. During the visit of Deputy Prime Minister and Defence Minister Ishwor Pokhrel to China in October 2018, both countries signed an agreement in which China pledged to increase its military support to Nepal by 50 percent to strengthen Nepal Army’s disaster management capabilities and to better equip Nepal’s United Nations peacekeeping missions. Besides financial assistance, the People’s Liberation Army has also increased the number of war college seats and National Defense Course quotas for Nepal Army officers. The recent engagement between the two countries goes on to suggest that China is set to overtake Nepal’s traditional defense partners. Despite the previous resolution of border disputes between Nepal and China, there have been reports of Chinese encroachment of Nepalese territory in Humla in recent times. On 21 Aug 2021, the Deuba government formed a panel, led by Jaya Narayan Acharya, Joint-Secretary at the Ministry of Home Affairs, to study the boundary issues along the Nepal-China border from LimiLapsa to Hilsa of Humla. The panel concluded that there are issues at Pillars 11 and 12 and suggested that the government resolve the issues by forming a joint inspection group of experts. The six-member panel, which had representatives from the Nepal Police, Armed Police Force, National Investigation Department and the Department of Survey, stated that there are issues needing bilateral attention. However, China denied such encroachment. India, on the other hand, is concerned about China’s growing proximity to Nepal. New Delhi will undoubtedly find it challenging to successfully manage China’s expanding footprint in Nepal on its own. It is also predicted that the US is going to be more proactive in Nepal after its $500m Millennium Challenge Corporation (MCC) grant project was ratified in the Nepalese parliament in Feb 2022. Nepal started to view the MCC with suspicion after the US Acting Deputy Assistant Secretary for South Asia, David J Ranz, remarked that the MCC project was an important initiative under the US Indo-Pacific strategy during his visit to Kathmandu in May 2019. The remark led the Left parties of Nepal to believe that the MCC would invite the China-US rivalry to Nepal. Media reports and analysts see a Chinese hand behind the anti-MCC protests, as China has understood the MCC to be an integral part of the US Indo-Pacific strategy, putatively designed to encircle China strategically. In such a situation, one can expect greater competition between China and the US in Nepal, moving forward. China is in favor of a stable Nepal with a strong government so that it can push its development projects, especially under the BRI. Additionally, a stable government in Kathmandu would serve China’s primary interests in maintaining security in the Tibetan Autonomous Region. This is because only a strong and stable government can address Chinese demands and its strategic interests in Nepal. China has been accusing external actors (read Western powers) of making use of Nepal’s fragile situation (read Tibet). Hence, Beijing would prefer a government in Nepal that is sensitive to Chinese interests. Breaking away from the traditional norms of China’s pro-establishment policy, Beijing is interested in engaging with different political parties because, apart from its major security interests, China now also wants to dilute, if not challenge, India’s predominant influence in the country. Thus, Beijing is proactively engaging in public diplomacy and establishing several development projects within Nepal to expand its leverage. This is part of Jaiswal’s journal article under Nepal’s Foreign Policy in a changing world, a joint publication of the Institute of South Asian Studies-National University of Singapore (ISAS-NUS) and Nepal Institute for International Cooperation and Engagement (NIICE) on Nepal’s Foreign Policy in A Changing World