BRI-ng it home

Published On: September 5, 2017 02:00 AM NPT By: Republica  | @RepublicaNepal


Nepal-China cooperation 

Nepal’s China policy has always been problematic. We seem to want to be closer to China only when India, now responsible for nearly 70 percent of Nepal’s trade, tries to overtly meddle in Nepal, as most infamously happened during the five months of border blockade in 2015. Following on the same script, it was in the aftermath of the blockade that the then Prime Minister KP Sharma Oli signed the historic trade and transit agreements with the northern neighbor. Perhaps the Chinese are well aware of this tendency of our political class, which is why the foreign policy practitioners and think-tanks in China are skeptical about Nepal’s continued commitment to its Belt and Road Initiative (BRI). Though Nepal is now a formal BRI member, the Chinese believe Nepal is not doing enough to improve Nepal-China cooperation. They point to a few perennial irritants, for instance constant change of guard in Singha Durbar. One government signs important bilateral agreements with China but even before it has had a chance to implement them, someone else comes to power. Since the Chinese prefer established power centers, this ever-changing cast of characters in Kathmandu is problematic. 

The Chinese also point to lack of progress on the projects they have funded as another sign of Nepal’s failure to honor its side of the bargain. It is true that the Chinese contractors have also broken their obligations in vital projects like international airports in Bhairahawa and Pokhara, both of which have been marred by time and cost overruns. But constant fighting among political parties in Nepal, each of which wants to appoint its own apparatchiks in these projects, has been as big a problem. Separately, the political establishment in Nepal seems to miss the high value of symbolism in Chinese diplomacy. For instance, it has not gone unnoticed in Beijing that while 30 countries sent their government or state heads to the landmark BRI conference in Beijing back in May, Nepal was represented by a deputy prime minister. If Nepal really wants to benefit from China’s growing economic heft, it will have to do a better job of taking the Chinese establishment into confidence. Otherwise, there is a realistic chance that Nepal could miss out on the BRI gravy train. 

On Sunday, the Investment Board of Nepal (IBN) signed an agreement with Hongshi Holding Group, the largest producer of building materials in China, to bring in US $251 million of investment for a cement factory. In this the IBN basically acted as an intermediary that will protect the interest of Hongshi in Nepal and ensure that the logistics for the cement factory, a joint venture with a Nepali company, are taken care of. If the IBN can expertly play out its expected intermediary role, a message will be sent to foreign investors that Nepal is a safe and profitable investment destination. It will also address precisely the kind of issues in Nepal that China is worried about. In the end, extensive economic engagement with China should be among our core foreign policy goals. Ideally, our relations with India, strong as they are, should be completely independent of our relations with China. 


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