China’s evolving engagement with Nepal

Prime Minister KP Sharma Oli’s upcoming visit to China in the first week of December marks a notable departure from the Nepali tradition of newly appointed prime ministers prioritizing India for their first international visit. In his previous terms, Oli adhered to this unspoken convention, but this time, India has not extended an invitation despite his four months in office, signaling what some interpret as a shift in India’s approach to Nepal.

Oli’s visit is generating significant attention both domestically and internationally, largely due to his track record of signing strategic agreements with China during his past tenure. This will be his third official visit to China as Nepal’s prime minister; he previously visited in 2016 and 2018. Notably, during his premiership, Chinese President Xi Jinping also made a landmark visit to Nepal in 2019, the first by a Chinese leader in over two decades.

In 2016, as Nepal was recovering from months-long economic blockade imposed by India, Oli signed a Transit and Transport Agreement with China, granting Nepal access to Chinese ports for essential imports and reducing Nepal’s reliance on India. The agreement also marked a major shift in the age-old Nepal-India relations. This agreement was formalized in 2019, further strengthening bilateral ties between Nepal and China. 

Although high-level exchanges between Nepal and China are not new, Oli’s upcoming visit is under heightened scrutiny.

One of the major focuses of this visit is China’s Belt and Road Initiative (BRI), with which China has long urged Nepal to make concrete progress. Discussions are ongoing about a BRI implementation plan—a topic broached but left unresolved during former Prime Minister Pushpa Kamal Dahal’s visit to Beijing. Nepal is also expected to request debt relief on a Chinese loan for Pokhara International Airport, potentially in exchange for BRI commitments. India and Western countries have expressed implicit concerns, warning Nepal of potential debt risks and corruption associated with the BRI. While Nepal signed the BRI framework in 2017, specific project implementation has stalled due to Nepal’s reservations and external pressures.

Oli’s visit also highlights Nepal’s complex diplomatic balancing act amid growing international interest in its relations with China. India and Western nations are increasingly wary of Chinese influence in South Asia, including in Nepal, and are closely monitoring this visit. Within Nepal’s ruling coalition, there is a disagreement over engagement with China; the Nepali Congress is cautious about progressing with the BRI, whereas Oli’s party, the CPN-UML, advocates for advancement. Oli has sought to maintain coalition harmony by consulting coalition leaders, including Congress President Sher Bahadur Deuba, as they work to finalize the agenda.

A few days earlier, UML and NC held a meeting to discuss Oli’s planned China visit. The two parties agreed that Foreign Minister Arzu Rana Deuba would work on the agenda of the visit after consultations with NC leaders. The meeting between UML and NC indicates that Prime Minister Oli wants to deal with China without upsetting his coalition partner.

Over the past few years, mainly after Xi Jinping’s Nepal visit in 2019, bilateral cooperation between two countries is ever expanding. Along with continuous development partnership, two countries are cooperating in the new areas. Another vivid change in China’s engagement in Nepal is through its Communist Party of China. Over the past few years, CPC has been engaging with Nepal’s major parties, particularly focusing on communist parties. Senior leaders of CPC continuously visit Nepal and China is also inviting Nepal’s political parties from center to local levels. Similarly, China also organizes sessions with leaders of Nepal’s major parties to inform about the decisions taken by CPC and Chinese government.

In the third week of Oct 2024, Chen Gang, Secretary of China’s Qinghai Province, led a delegation visiting Nepal with two major objectives, first organizing an interaction program with Nepal’s political parties and another to meet Nepal’s political parties. The delegation shared the decisions made by the Third Plenary Session of the 20th CPC Central Committee which has taken some important decisions in the areas of opening up after 1978. This is just an example CPC often organizes such programs in Kathmandu and Beijing. In January this year, Sun Haiyan, Vice minister of the international Liaison Department of CPC, conducted a high-level discussion with the leaders of parties represented in Nepal’s Parliament. In the program, she made a remark that some forces are trying to spoil Nepal-China relations so Nepal’s political parties should be cautious of it.

Since President Xi’s visit in 2019, China’s presence in Nepal has expanded beyond government-to-government partnerships, notably through the Chinese Communist Party (CPC) directly engaging with Nepal’s political landscape. Dozens of delegations mainly from three communist parties—CPN-UML, CPN (Maoist Center) and CPN (Unified Center)—have visited China to participate in various programs. Leaders from NC, Rastriya Swatantra Party and other fringe parties have also visited China over the years, but not quite as often as the communist parties.

Senior CPC leaders have also frequently visited Nepal, fostering ties primarily with Nepal’s communist parties and facilitating interactions that include briefings on CPC policies. In October 2024, Chen Gang, the CPC Secretary of China’s Qinghai Province, led a delegation to discuss recent CPC decisions and further bilateral cooperation, underscoring this growing political engagement.

CPC is mainly engaging with Nepal’s communist parties, often advising them to unite and form one powerful communist force. In August this year, when Nepal faced unprecedented floods and landslides, it was the CPC and not the Chinese government that rushed to provide relief to the disaster survivors. The CPC channelized the aid through Nepal’s major political parties. 

There is no doubt that China’s influence in Nepal is increasing at different levels. The rising presence of Chinese NGOs, which were virtually absent a decade ago, is one example. Organizations such as the China Foundation for Rural Development (CFRD) now actively participate in health, education, agriculture, and disaster relief in Nepal, often collaborating with UN agencies on initiatives like the Global Development Initiative (GDI). 

China’s influence in Nepal has grown significantly over the past decade, and Oli’s visit is expected to further deepen this relationship. Should Oli secure agreements with China that align with coalition interests, particularly with Nepali Congress’s consent, Nepal’s relations with India and the broader international community may experience further shifts.