Nepal PM Oli’s Visit to China: High on Optics, Low on Content

 

A Balancing Act with Limited Gains

Nepal Prime Minister KP Sharma Oli’s recent visit to China (December 2-5) aimed to signal a strategic balancing of relations between India and China. However, despite the optics, the outcomes appear modest. Over the past decade, China has increased its influence in Kathmandu through political alliances, infrastructure promises, and initiatives in trade and tourism. Yet, tangible benefits for Nepal remain elusive.

Key Meetings and Agreements

Leading a 78-member delegation, PM Oli met Chinese Premier Li Qiang, President Xi Jinping, and legislative head Zhao Leji. A nine-point agreement was issued on December 3, highlighting:

• The Tokha-Chhare tunnel project to connect with the Tibet border.
• Enhancements in trade.
• Reconstruction of the Basantpur Durbar (damaged in the 2015 earthquake).
• Export of buffalo meat.
• A $41 million cash assistance package.
• Deployment of Chinese language teachers.
• Cooperation in economic, technical, and media exchanges.

Challenges with the Belt and Road Initiative (BRI)

Despite signing into China’s BRI in 2017, Nepal has struggled to implement its 35 proposed projects due to policy disagreements and political opposition. China’s insistence on a “harmonious clause”—a euphemism for tight Chinese controls—has deterred progress. Learning from Sri Lanka’s debt crisis and the underutilization of Pokhara airport (built with a $216 million Chinese loan), Nepal has refrained from seeking loans, favoring grants instead. However, Beijing continues to push costly projects, including a railway connecting Tibet to Kathmandu, whose estimated cost exceeds Nepal’s GDP.

Controversial Infrastructure Projects

Several infrastructure projects involving China have faced setbacks:

• Budhi Gandhak Dam Project: Signed in 2017 by PM Dahal, canceled by PM Deuba later that year, renewed by PM Oli in 2018, and finally scrapped in 2022 due to environmental and financial concerns.
• West Seti Dam Project: A $1.6 billion agreement signed in 2012 was scrapped in 2018 due to escalating costs and protests.

Telecommunications and the Digital Silk Road

Nepal has deepened its telecommunications partnership with China. Contracts for mobile data services and the Next Generation Network (NGN) were awarded to ZTE Corporation and Huawei. Maintenance services are handled by Asian Info, aligning Nepal with China’s “digital silk road” initiative. These agreements grant significant control to China over Nepal’s communication infrastructure.

Expansion of Cultural Influence

A significant agreement during the visit was the deployment of more Chinese-language teachers to Nepal. The Confucius Institute, established in 2007 at Kathmandu University, has facilitated cultural exchanges, although similar institutes have faced closures in the West over espionage concerns.

Lingering Bilateral Issues

Despite increased Chinese tourism, Nepal’s economy suffers from e-payment fraud linked to Chinese platforms. A $2 billion annual trade deficit persists, while Chinese investments show little growth. Border trade routes remain unreliable due to natural disasters and infrastructure challenges. Nepal also lacks significant remittance inflows from China.

Strained Relations and Unrealized Promises

Nepal’s participation in Chinese-led initiatives like the BRI and Bo Ao Forum for Asia has not yielded substantial benefits. While adhering to China’s “one-China” policy and restricting Tibetan refugees, Nepal has received limited reciprocal gestures. Border disputes have emerged, with China allegedly removing border pillars in several districts, adding to Nepal’s discomfort.

A Costly Balancing Act

Nepal’s attempt to counterbalance India through closer ties with China has brought minimal rewards. Despite high-profile visits and agreements, the tangible benefits for Nepal remain underwhelming, leaving Kathmandu to reassess its strategic partnerships and their implications for national sovereignty and development.