China’s Nepal Policy & BRI Prospects


Ritu Raj Subedi

On August 1 this year, Nepal and China marked 62nd anniversary of the establishment of diplomatic relations. Nepal-China relations have gone from strength to strength during the last six decades. Today China wants to define its bilateral relations with neighbours and other nations within the broader framework of the Belt and Road Initiative (BRI), an ambitious flagship project of Chinese President Xi Jinping unveiled in 2013. It seeks to connect Asia, Africa and Europe through massive investment on infrastructure, connectivity and mutual trade and economic cooperation. Nepal has finally become a part of BRI despite the displeasure of the southern neighbour that sees the BRI as China’s strategy to increase its economic and political clout in the region. But, for the poor countries like Nepal, the BRI stands as a great opportunity to overcome its infrastructure deficit, enhance connectivity, grow industries and diversify trade.

Equal treatment
As Nepal and China are working to give momentum to the BRI, China has unveiled its Nepal policy to “elevate comprehensive cooperative partnership between the two countries to new heights.” Chinese Foreign Minister Wang Yi had announced three basic principles with regard to China’s relations with Nepal during Foreign Minister Krishna Bahadur Mahara’s visit to Beijing in the first week of September. They are - equal treatment, mutual support and common development. Wang said, “China has always adhered to the equality of all countries, regardless of their size. So in the exchanges between China and Nepal, China will neither suppress Nepal nor interfere in Nepal’s internal affairs; China will never affiliate political conditions in bilateral economic cooperation or ask Nepal to take sides in foreign policies.”
These policies reflect China’s commitment to Panchasheel (five principles of peaceful coexistence) and the UN Charter that spell out the respect for the sovereignty of other nations and peaceful solution to any bilateral, regional and international dispute. China’s non-interference policy sharply contrasts with the foreign policies of southern neighbour that often tries to see Nepal-India relations through the lens of security and wants to be active stakeholders of Nepal’s internal politics, undermining the sentiments, sensitivity and territorial sovereignty of Nepal. In 2005, India brokered the 12-Point Understanding between the then CPN-Maoist and the parliamentary parties, which set the stage for the April Uprising in 2006 that culminated in the ouster of the kingship through the elected Constituent Assembly in 2008.
But, the 12-Point Accord has now come into severe scrutiny as it gave undue leeway to India to ‘micromanage’ Nepal to the utter humiliation of Nepalis. India refused to welcome Nepal’s constitution, endorsed by 90 per cent CA members, after the domestic forces defied its instruction to defer its promulgation. In retaliation, India imposed an economic blockade on Nepal that was struggling to pick up the thread following the devastating Gorkha earthquake in 2015.
Only a few weeks ago when Indian Minister for External Affairs Sushma Swaraj came to Nepal, she called for bolstering the current coalition of Nepali Congress and the CPN-Maoist Centre, while praising Maoist Centre’s chair Prachanda for passing the mantle to the incumbent PM without any political glitches. However, China has refrained itself from meddling in Nepal’s internal affairs. This is a key reason why China has succeeded to win the hearts of more and more Nepalis.
Elaborating the second principle, the Chinese foreign minister noted that China would continue to firmly support Nepal’s efforts in safeguarding national sovereignty and territorial integrity and strongly back up Nepal’s continuous exploration of the path of development that suits its own national situation. China is fully satisfied with Nepal’s adherence to One-China policy, which is China’s core interest related to national security. The third principle includes the agenda of common development. Wang said: “Over the years, China has attached great importance to expanding cooperation with Nepal on the basis of mutual benefit and win-win results. China welcomes Nepal to continue taking benefit from China’s economic development, and is willing to strengthen cooperation with Nepal under the ‘Belt and Road’ framework.”
On May 12, Nepal and China signed a Memorandum of Understanding on the framework agreement on BRI. Nepal has been pressed to come up with concrete proposals to execute the BRI projects. The construction of Budhigandaki and West Seti hydropower projects and construction of two cross-border transmission lines with Chinese investment are seen as specific projects being implemented under the BRI. During Mahara’s visit, the two countries agreed to repair the Araniko Highway, re-open the Syabrubensi-Rasuwagadi Highway and improve the infrastructure of the three border ports, namely the Zhangmu, Gyirong and Purang. They agreed to finish the joint feasibility study on the China-Nepal Free Trade Agreement within the year, complete 17 post-disaster reconstruction projects as scheduled and successfully hold the “Nepal Tourism Year” in China. This sort of bilateral understanding is expected to translate the BRI dream into reality.
China has invested more than 50 billion USD in countries involved in the BRI as of May. A total of 56 economic and trade cooperation zones have already been built by Chinese businesses in these countries, generating nearly 1.1 billion U.S. dollars in tax revenue and creating 180,000 local jobs. In the first seven months, China signed 78.09 billion US dollars of contracted projects along the Belt and Road, up 32.6 per cent year on year, said the Ministry of Commerce, China. “Its concepts, such as inclusiveness and strategic connection, conform with the common interests of the world. It has become the world’s largest growth initiative, livelihood project and public good so far,” said Wang Yiwei from Renmin University of China.

Coherent policies
For the landlocked countries like Nepal, the BRI provides not only land connectivity, but also access to the sea. In view of Nepal’s high dependency on India for much of its trade and commerce, Nepal’s accession to the BRI framework has been hailed as a giant step towards economic sovereignty and freedom. Given Nepal’s India-locked condition, Nepal’s trade and transit treaty with China has provided much respite. And BRI holds the key to implementing this landmark deal. However, political stability, coherent policies and consensus among the major domestic actors are required for Nepal to reap benefit from the multi-billion dollar BRI project.

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