Due to the evolving geopolitical and geoeconomic situations, external assistance has now become more political and strategic than being purely economic. We cannot ignore the role of geoeconomic players who are playing in the economy of poor countries. Poor countries are finding it increasingly challenging to balance these power players and receive maximum assistance from them. This is even more complex and more difficult for Nepal which is a neighbor of two key geo-political players and rivals - India and China. For the past some years, any new prime minister of Nepal has found choosing between these two immediate neighbors for their first abroad visit a tough and delicate job, requiring fine diplomatic balancing. PM KP Oli’s recent visit to China, too, is influenced by this reality.
Under these circumstances, Prime Minister Oli paid an official visit to China from Dec 2 to Dec 5 at the invitation of Chinese Premier Li Qiang. During his visit, he held bilateral talks with Premier Li and exchanged views on matters of mutual interest. Oli also met Chinese President Xi Jinping in Beijing and Zhao Leji, chairman of the Standing Committee of the National People’s Congress of China. He delivered a keynote address at Peking University and also addressed the Nepal-China Business Forum, co-hosted by the Embassy of Nepal in Beijing, the China Council for the Promotion of International Trade, and the Federation of Nepalese Chambers of Commerce and Industry.
Before PM Oli’s China visit, the two major ruling parties were clearly divided over the financing modalities to implement BRI projects in Nepal. While the Nepali Congress was totally against accepting any kind of loan to implement BRI projects, the CPN-UML’s policy was to accept both grants and soft loans based on the importance of the BRI projects. However, after long deliberations between the two parties, they reached an understanding not to accept loans under BRI projects. The understanding reached between the Nepali Congress and the CPN-UML on the BRI framework has to serve as a basis for building a national consensus while conducting our foreign policy and external affairs policy in the coming days.
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China’s policy toward Nepal is stable and free of complications and the bilateral relations between the two neighbors have been friendly. Chinese financial and technical assistance to Nepal has been greatly contributing to Nepal’s development efforts in the areas of infrastructure building, industrialization process, human resources development, health, education, water resources, sports and the likes. Nepal is important for both its neighbors due to its geopolitical location.
PM Oli has been widely known as a leader to sign several historic agreements with China. During his visits to China in 2015 and 2018, the two countries agreed to implement the memorandum of understanding (MOU) on the BRI to enhance connectivity in key areas including ports, roads, railways, aviation and communications within the framework of the Trans-Himalayan Multi-Dimensional Connectivity Network. China agreed to allow Nepal to use four sea ports and three land ports. During Oli’s recent visit to China, the two countries signed a total of nine deals, including memorandums of understanding and agreements. Most importantly, Nepal and China signed the Framework for Belt and Road Initiative (BRI) Cooperation agreement in Beijing during the PM’s visit. The framework will be valid for three years and will get another three-year extension unless terminated by either side. Nepal’s proposal for ‘grant financing’ for BRI Cooperation Framework projects was rejected by China and after intense deliberations, the two countries agreed upon the phrase ‘aid financing’. Now, it solely depends on Nepal’s wish to ask for grants or loans to implement BRI projects.
The agreements and MoUs include a letter of exchange on the construction of the Tokha-Chhahare tunnel, an MoU on Nepal-China trade enhancement, an exchange of certificate on the completion of the nine-storey Basantapur Durbar reconstruction, a protocol on the export of thermally-processed buffalo meat, and an MoU on development plan (2025-2029) between the Finance Ministry and the China International Development Cooperation Agency of China. Likewise, a memorandum of understanding on economic and technical assistance, exchange of letters on cash assistance of RMB 300 million, an MoU on volunteer Chinese language teachers and another MoU between Nepal Television and China Media Group (CMG) on communication technology.
This signing of BRI agreements seems to be a big achievement of PM Oli’s visit and a milestone in Nepal China bilateral ties. However, the much-hyped conversion of the Pokhara airport loan into grants could not become an agenda during the bilateral talks. A number of projects are being agreed upon for implementation under the new BRI framework, which include: theTokha-Chehre tunnel road, Hilsa-Simikot road project, Kimathanka-Khandbari road and bridge, Jilong-Kerung-Kathmandu cross-border railway, Amargadhi City Hall in Dadeldhura, Jilong-Kerung-Rasuwagadhi-Chilime 220 kV transmission line, Madan Bhandari University, Kathmandu Scientific Center and Science Museum, China-Nepal friendship industrial park in Damak and Jhapa sports and athletic complex.
A 12-point Joint Statement between the People’s Republic of China and Nepal was issued in Beijing, on December 3, 2024, that elaborates on the overall understanding between the two countries. Both China and Nepal agreed to ensure timely and swift implementation of the agreements signed, consensus reached, and decisions made as well as completion of the programs, projects and activities being carried out jointly by the two countries. It is hoped that after PM Oli’s visit to China, the projects which are not moving and are slow in implementation in Nepal will gain momentum based on the new and past agreements between the two countries. Such projects include: Upper Trishuli Hydropower Project- Power Station and Transmission Line Projects, Larcha (Tatopani) and Timure (Rasuwagadhi) Frontier Inspection Station Project, The second phase construction of the Ring Road, Upgradation of the Syabrubesi-Rasuwagadhi Road, Upgradation of Civil Service Hospital and Upgradation of Kodari Highway and restoration of bordering bridges at Kodari and Rasuwagadhi.
Under the BRI projects, the most controversial, strategic, challenging, costly as well as most important project is the extension of the Qingzang railway from Tibet to Nepal and the border to India. This railway would be a shorter route for Nepal to connect with East Asia, Europe, Middle East and East Asia for trade and transport. According to China’s long term objectives, this railway has been planned to connect India and South Asia through Nepal which is supposed to be more beneficial to China and India compared to Nepal, if they agree to transport and trade through this railway. According to the joint statement, Nepal and China have expressed willingness to steadily advance the feasibility study of the Jilong/Keyrung-Kathmandu Cross-Border Railway, and planned to hold the 9th Working Meeting on China-Nepal Railway Cooperation. The Chinese side will continue to help Nepal train professionals in the field of railway. Similarly, both countries value the development of civil aviation ties between China and Nepal, and support and encourage air transport enterprises of both sides to open air routes and flights between Chinese cities and Nepali cities such as Pokhara and Lumbini in light of the market demand, so as to facilitate bilateral economic and trade ties and two-way travel.
In total, PMOli’s China visit seems to be successful in cementing the strong foundations of friendship between the two countries by balancing among geopolitical players. This visit has opened a door and increased confidence, better understanding between Nepal and China to start final discussion on the remaining process and financing modalities for the BRI project for their smooth implementations in favor of the nation.
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