President Xi Jinping of China had first proposed the Nepal-China-India Economic Corridor, an idea supported by PM Narendra Modi of India
The April 25th earthquake and subsequent aftershocks reminded us of the natural vulnerabilities of the whole of the Himalayan range, and thereby of the need for a joint effort to deal with them. Nepal’s earthquake is thus an opportunity for the proposed Nepal-China-India (NECHIN) Trans-Himalayan Trilateral Mechanism. The three countries are intertwined by geography, history, religion, culture and economics, which should make them work together for mutual gains. The period between 1960 and 1990 witnessed flourishing of Nepal-China relations and Nepal, India and China have, we might way, spent the last 25 years discovering each other.
President Xi Jinping of China had first proposed the Nepal-China-India Economic Corridor, an idea supported by Prime Minister Narendra Modi of India. Although the so-called ‘trilateralism’ is heavily dependent on India-China relations, greater economic integration of the region is likely only with Nepal’s participation. The trilateral focus could be on roads, cultural and economic connectivity, infrastructure, energy, tourism, smooth trade and transit, regular fuel supply and trade diversification. Energy cooperation between Nepal, China and India would be significant because the northern region of South Asia is today facing a severe energy crisis. To add to this, Northern India is also facing water scarcity. Thus joint water and energy management would be crucial for the NECHIN region in the 21st century. Environment and climate change are also serious concerns of these countries.
The Chinese government has principally agreed to build the Trans Himalaya Betrawati-Trishuli economic corridor (Rasuwagadhi-Galchi) and conduct feasibility studies on Gandaki and Koshi corridors. There are already well-functional border points connecting Nepal and India via rails and roads. Thus tri-lateral transport system would promote trade and transit in underdeveloped but resource-rich parts of the three countries.
A high-level source has indicated that China has shown interest in helping Nepal deal with its load-shedding and fuel shortage on a permanent basis, and proposed the Nepali government to construct Trans Himalayan Cross-border High-voltage Power Transmission Line between Kyerung (Tibet) and Kathmandu for power import from China. This can later be connected to the Indian grid for trilateral trade in electricity. Likewise, the Nepal-India cross-border high-voltage electric transmission line is nearly complete with the support of the World Bank.
Also, China seems keen in the operation of a ‘Freighter Ropeway’ installed on the same electric lines, which can be further extended to the southern border and beyond to important Indian rail-heads. These are all innovative projects that will ease supplies of necessary goods in and out of Nepal. It will thus be the third important tri-lateral economic corridor crossing the central Himalayas.
In addition to joint energy development, construction of an oil pipeline from Tibet’s Kyerung to Kathmandu and modernization of border check-points, customs and security apparatus are high on China’s agenda in the proposed Comprehensive Mutual Framework (CMF) presented during DPM Kamal Thapa’s official visit to Beijing in December. Such proposals from the northern neighbor necessitate bilateral discussions at political level and also within line ministries in Nepal, and preparation of a master-blueprint. This should be done because the NECHIN mechanism would help the three countries resolve issues related to their national security and territorial integrity besides the menaces of terrorism, money laundering, illegal immigration, trafficking of women and children, and smuggling of drugs.
China-India economic relations have flourished as they are backed by a multitude of bilateral agreements, including BIPPA signed in 2006 and Double Taxation Avoidance Agreement signed in 1994. But Nepal and China do not have a Trade and Transit Treaty (TTT) nor a Bilateral Investment Promotion and Protection Agreement (BIPPA).
To enhance road, rail and air connectivity and offset any possible transit obstruction, Nepal needs to develop alternative accesses to sea via China, in addition to securing Indian seaports. Hopefully, preparations are underway to sign a TTT with China so that Nepal may use its seaports for trade with third countries. Such a treaty will also enable commercial purchase of petroleum products from China so as to compensate for the monopolistic supply from India.
Similarly, signing of BIPPA will also open avenues for Chinese engagement in exploration of crude oil, uranium and energy development. The latter will include constructions and operations of mega hydropower projects as well as nuclear and thermal power stations in Nepal. The BIPPA with India has already granted it preferential rights for energy and infrastructure development in Nepal.
The road and rail connectivity via Lipulekh—the tri-junction of NECHIN on the far-western Byasrishi VDC of Nepal—and the Nathu-la pass of Sikkim in the eastern flank— are major routes that would directly connect the three countries via land. The Chinese railway system that has already been extended to Tibetan city Shigatse will reach Kyerung by 2020. If extended beyond, it will help with the expansion of regional connectivity with India and other countries in South Asia. Moreover, the extension of the railway from Kyerung to Lipulekh (by 2025) will not only make the region a vibrant Multilateral Trade Hub (MTH) but also will ease people-to-people contacts of the three countries, heralding an era of multilateral relations. It would definitely make Nepal a South Asian Bridge (SAB) because of its geographic location.
Similarly, the Chinese proposition of the ‘One Road One Belt’ will help with business and connectivity in NECHIN region, and with direct connectivity to 60 other countries of Asia and Europe. Surprisingly all these developments are going to happen within a decade. Nepal should look to deepen the ties between India and China, and look to benefit from the value chain between the two countries. However, only a politically stable Nepal with effective governance could be a valuable partner in the trilateral mechanism.
The process of Track II, trilateral Nepal-India-China dialogue is already underway in China and India, but not much attention is being paid to it in Nepal. But the people of South Asia have a lot of hope from the tripartite mechanism. If we are serious about it, connecting China with India through Nepal could change the “face and fate” of some of the world’s most inaccessible and impoverished areas.
The author is a political economist and RPP-Nepal Central Committee member