China’s engagements in Nepal and challenges

Prime Minister Pushpa Kamal Dahal is set to visit China later this month. It is reported that PM Dahal would emphasize an agreement on cross-border energy trade, construction of two cross-border transmission lines in Rasuwagadhi and Kimathanka border points, construction of trans-Himalayan roads and integrated check posts among others. If the visit brings back home a few major breakthroughs in arenas of energy trade and connectivity, PM Dahal’s visit could be considered successful.

There are, however, quite a few challenges in further deepening Nepal-China ties as new proclivities and patterns of China’s engagement with Nepal—mostly problematic—have emerged over the last decade. One small event in Bhaktapur district in July this year sheds light on China’s newfound engagement patterns.

In the event, two representatives of Chinese Communist Party (CCP)’s International Liaison Department launched a project named “Silk Roadster” to mark the 10th anniversary of President Xi Jinping’s signature Belt and Road Initiative (BRI). The event was meaningful in three aspects—i) Silk Roadster is the latest one among quite a few initiatives announced over the decades and is reflective of China’s penchant for engaging with Nepal through new initiatives which are more often than not vaguely envisioned and fail to gain the necessary traction, ii) China’s proclivity to portray the success story of Nepal-China BRI agreement which in essence has remained in limbo for long and iii) China’s tendency to undertake bilateral relationship undermining standard diplomatic norms—mostly by prioritizing CCP’s party-to-party ties with the communist parties of Nepal.

Too many initiatives

Nepal had signed up for President Xi’s signature initiative BRI in May 2017. Both parties kept the MoU undisclosed for five years—and only when a Nepali media house released the full-text document in 2022, its contentious and vaguely defined provisions, such as the Free Trade Agreement and Policy Exchanges, drew scrutiny. In 2018, Nepal submitted a list of 35 projects to be executed under the initiative but upon China’s insistence the number was reduced to 16 and then to nine, finally. In Dec 2022, a Chinese expert team visited Nepal to initiate the Detailed Project Report of the Kathmandu-Kerung Railway—one among the nine proposed projects. Apart from this, there has been no concrete development—neither any provision is implemented nor any project under construction. Rather, Indian companies have bagged two of the proposed projects—Phukot Karnali Hydropower Project and Tamor Hydropower Project.

The main problem with Nepal-China BRI agreement remains the funding modality. While Nepal was already cognizant of the fact that BRI entailed loan components with a comparatively higher interest rate even while signing up for the initiative, no agreement was reached then. The Nepali Congress government formed in 2021 made it clear to China that Nepal simply cannot undertake BRI projects on commercial loans. That aside, starting from 2018, China’s lending spree also has taken a downturn due to its own economic slowdown. And the failure of some BRI projects across the globe have served as cautionary tales for countries like Nepal that are yet to enter the implementation phase of the BRI.

China has, however, gone to lengths in portraying the success story of the BRI in Nepal. In Dec 2022, just a day before the inauguration of the Pokhara International Airport (PIA), the Chinese Embassy in Nepal claimed PIA to be the flagship project under the initiative. The PIA was constructed with a loan from the Export-Import Bank of China, but it isn’t one among those nine proposed projects. And in July, the Silk Roadster platform was announced under the BRI framework focusing mainly on people-to-people exchanges in arenas like imparting training, building skills and providing scholarships.

Apart from the BRI, China has launched a few other initiatives. In 2022, China announced the Global Development Initiative (GDI) under which two projects are to be implemented in Nepal. The next is the Global Security Initiative (GSI). While China has been lobbying and pressuring political leaders, particularly the communists, to push Nepal into signing up for it, Nepal hasn’t done so as our foreign policy proscribes joining security or strategic alliances. However, former President Bidya Devi Bhandari had participated in the GSI event in 2022, despite repeated requests from the government to not do so. In 2023, China announced yet another initiative called the Global Civilization Initiative (GCI), which is quite ambiguous in its conception and language. Nepal hasn’t joined GCI either but, in June 2023, a dragon boat race was carried out in Pokhara under this initiative.

China has sought to engage with Nepal via its many initiatives announced in the last few years but none have materialized yet. If anything, these initiatives—particularly the GSI and GCI—have created confusion and shifted focus from main priorities and issues of Nepal-China collaboration.

Party-to-party ties

The next pattern that has emerged over the years is China prioritizing party-to-party ties, particularly ties with the communist ones, which amounts to undermining standard diplomatic norms and procedures. Albeit nominal, the common ideological identity makes it easier for the Chinese Communist Party (CPC) to engage with the communist parties.

China had facilitated the communist collaboration and subsequent party merger in 2017, and so long as the Nepal Communist Party (now divided into CPN-UML and CPN Maoist Center) was in power, China’s influence over Nepal was quite high. In 2019, about 50 Chinese Communist Party (CCP) leaders provided training to more than 200 Nepal Communist Party leaders on “Xi Jinping Thought”—a blueprint for consolidating authoritarian power.  It was during NCP’s rule, in 2020, that Nepal voted for Beijing’s new security law for Hong Kong, introduced amidst the Hong Kong pro-democracy protests at the UN Human Rights Council (UNHRC). The law had provisions of harsh penalties for vaguely defined political crimes. 

In 2020 itself, Nepal had defended Chinese policies in the western region of Xinjiang, at the UN General Assembly, despite reports that the state was subjecting the Uyghur Muslims community to systemic atrocities. During President Xi’s visit to Nepal in 2019, both sides had reportedly agreed to elevate the relationship to the “strategic level”—with neither side coming up with further clarification or justification regarding the use of the term “strategic”. 

China had perceived the split of NCP in 2021, and the subsequent parliamentary ratification of the US’ MCC as its influence over Nepal slipping away. China was then upbeat during the short-lived collaboration between the two main communist parties in forming a new government in 2022. These are just some cases in point—the pattern is all too clear.

China is a one-party state and the CPC itself is involved in China’s bilateral engagements. However, employing CPC’s party ties with the ideological counterparts in Nepal to push China’s interest is a challenge for a fledgling democracy like Nepal, which is yet to institutionalize democratic institutions, norms and procedures. China emphasizing ties with communist parties at the expense of other parties doesn’t even portend well for Sino-Nepal relationship as the communist and democratic forces command almost equal support of Nepal’s voting populace.

Conclusion

While Nepal can benefit a lot from collaboration with China, China’s push for multiple initiatives, and China’s emphasis for party-to-party ties along with a newfound penchant to interfere in Nepal’s internal affairs have come across as major challenges. China should now prioritize infrastructure projects, development assistance, and energy trade rather than seeking to push Nepal toward signing up for its many initiatives. 

It is also high time China acknowledged that it enjoys relatively favorable opinion amongst Nepal’s general public for a simple reason that, in the past, it had mostly refrained from directly interfering in our domestic affairs. On Nepal’s part, political parties should give up the tendency of employing bilateral relationships to their own advantage, and the government should negotiate toughly to safeguard our interests. PM Dahal’s upcoming visit is an opportune moment to do just that. The ball, however, is in China’s court—the trajectory of Nepal-China relationship is largely contingent on China’s approach, and its flexibility to address and accommodate our concerns.

The author is a research fellow at the Center for Social Inclusion and Federalism