China’s BRI And Nepal

Prof. Dr. Balmukunda Regmi

In his opening speech to the 19th Congress of the Communist Party of China (CPC) in October 2017, President Xi Jinping reiterated the importance of international cooperation, and noted that even China could not cope with the challenges posed by global warming alone. In this statement we can see China’s willingness to be fully involved in world affairs.
Chinese President Xi’s commitments have clearly given priority to sustainable development projects along the Silk Road Economic Belt and the 21st Century Maritime Silk Road and the search for new partners for what is now jointly called the Belt and Road Initiative (BRI). The way the BRI is included in the CPC statute following the 19th CPC Congress makes the long-term implication of the BRI evident. The inclusion of the BRI by its name in the party statute of the CPC is a major step towards solidifying the initiative as a core plan of action that is to be carried out for an extended period in the future.
Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era which also gives due emphasis to the BRI has now been a part of China’s constitution with its amendment through the recently held NPC. The 19th CPC Congress also emphasized strengthening socialism with Chinese characteristics, party-building, and socialist rule of law, and setting concrete timelines for achieving development goals, such as building a moderately prosperous society and achieving socialist modernization. It also focused on augmenting China’s more substantial role.

Tibet Autonomous Region (TAR) of China which seems to be seeking a bigger role in the BRI has seen its economic growth on the fast track despite a slowing national economy in the recent years.
Tibet’s GDP has been one of the best performing in China over the past four years, with 11.5-per cent GDP growth in 2016, realizing the 24th straight year of double-digit growth, and 10.8 per cent during the first half of 2017, underpinned by strong investment in infrastructure and robust consumption, according to the region’s statistics bureau. China’s Tibet Customs said the region’s foreign trade rose 22.1 per cent year on year to 4.7 billion Yuan in the first three quarters in the last fiscal year. The fast growth in foreign trade benefited from a better business environment, infrastructure and trade policies.
Tibet Autonomous Region of China is very rich in resources. It has vast and diverse land, plant, animal, mineral, energy, climate, water, tourism resources. China wants to utilize these resources to benefit her economy.
China hosted the Belt and Road Forum for International Cooperation in Beijing in mid-May 2017. Delegations from over 100 countries and international organisations attended the Forum and exchanged views on synergizing national development strategies, improving connectivity, enhancing cultural communication and other topics. The Nepali delegation was led by the then Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara. Nepal signed in the Initiative on May 12, 2017.
China is aiding Nepal in a number of infrastructure projects including roads, power grids, bridges and industrial parks, all of which will become important channels to strengthen China-South Asia trade, where Tibet is an important gateway.
A Nepal-China economic corridor has been proposed under the Belt and Road initiative. China-Nepal-India corridor is another proposed trilateral cooperation project. However, because of India’s reluctance, trilateral cooperation has so far been been limited to a vision.
If China extends the rail links up to Lumbini and India supports the construction of rail links up to Kathmandu from the southern border, trilateral cooperation would definitely take place. India will ultimately have to join in the development of a trilateral corridor i.e. China-Nepal-India Economic Corridor.
If rail links from the southern and northern border of Nepal become real, pragmatically, the trilateral cooperation initiated through the bilateral deal between China and Nepal will be shifted towards a Quadrilateral Corridor i.e., China-Nepal-India-Bangladesh (CNIB) Economic corridor under the BRI.
Up until the mid-1990s much consumer goods in Tibet Autonomous Region of China used to be exported from Nepal. Now they sell a wide variety of goods, including eggs from Gansu province of China, bananas from the coastal cities of China, and American style shampoo from Shanghai.
Tibet Autonomous Region of China has traditionally been the home of subsistence agriculture and herding economy. For the most part, there was no currency, barter system was in practice even until 1960. The feudal system has only recently been displaced.
On April 28, 2017 Nepal proposed Kerung-Kathmandu-Pokhara-Lumbini railway to be a part of ‘One Belt One Road’ project initiated by China. There is a great potential for Chinese FDI, Chinese IT, internet connection in Nepal, petroleum import from China, Chinese/Tibetan medicines, etc.
While dealing with China, Nepal should focus on its needs such as FDI, leading to technology transfer and export, helping trade balance, trade facilitation, especially export to China, by removing tariff and non-tariff barriers. To achieve this, Nepal has to identify priority areas of investment and development, create special economic zones, tax free zones, remove, or at least reduce, the industrial taxes for attracting the investors, make sure that connectivity does not become an “isolated phenomenon” that does not carry Nepali goods outward.
Despite stability and prosperity in China’s Tibet, Nepal has not been able to reap optimum benefits. Rail links between Nepal and China will definitely present a bigger market for Nepali goods. This will also enhance Nepal’s tourism sector as over 130 million Chinese people go abroad as tourists annually. However, Nepal has not been able to attract even 0.2 per cent outbound Chinese tourists. Only about 150,000 Chinese tourists visit Nepal annually.
It is noteworthy that the significance of Nepal’s support to Chinese sovereignty over Tibet or Taiwan has been overemphasized by Nepal and repeated by China as a courtesy. China is not what it was in the 1950s and 60s. Now, China is a strong country which can challenge any force in the world not only to defend her territorial integrity but also to maintain or change the world order. Stability or instability in Nepal does not make much impact on present day China. Of course, Nepal has cooperated with China on many international issues. However, Nepal is yet to get real benefit from China’s exemplary economic development. The BRI should be a gateway for Nepal to reap benefit from her northern neighbour’s overall development.

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