Detailed Analysis of China-Nepal Relationship

1. Past History

China and Nepal share a long history rooted in geographic proximity and cultural exchanges. Diplomatic relations between the two nations date back to the 7th century, when Nepal had close ties with China under the Tang Dynasty. Modern diplomatic ties were formalized in 1955, after China established its control over Tibet in 1950. Nepal officially recognized Tibet as part of China, marking a key moment in their relationship. Throughout the Cold War, Nepal maintained neutrality, balancing its relationships with both China and India.

Nepal's recognition of the “One China Policy,” which affirms China’s sovereignty over Tibet, has been a foundational element of their bilateral relationship. During the reign of King Mahendra in the 1960s, Nepal sought to diversify its external relations to avoid overdependence on India, further strengthening its ties with China.

2. Bilateral Aspects

China and Nepal maintain strong diplomatic and political relations. Over the years, Nepal has often leaned on China for economic, infrastructure, and defense cooperation to counterbalance India’s significant influence. China has consistently shown interest in supporting Nepal’s economic development, infrastructure, and defense capabilities.

High-level visits have become a routine part of their diplomatic relations. In 2019, Chinese President Xi Jinping visited Nepal, further cementing ties between the two countries. During this visit, both countries signed agreements aimed at bolstering connectivity, infrastructure, trade, and tourism.

The Belt and Road Initiative (BRI) is a critical aspect of China-Nepal relations. Nepal joined the BRI in 2017, which led to several infrastructure projects, including roads, hydropower plants, and airports, aimed at enhancing connectivity between the two countries.

3. Economic Aspects

Economic cooperation between China and Nepal has grown significantly in recent years, with China emerging as Nepal’s second-largest trading partner after India. China's investments in Nepal have spanned multiple sectors, including energy, infrastructure, telecommunications, and tourism.

Trade: Nepal’s trade with China has increased exponentially, although the trade deficit remains large. Nepal primarily imports electronic goods, machinery, and consumer products from China, while exporting limited agricultural and raw materials.

Infrastructure: China’s involvement in Nepal’s infrastructure projects is central to their economic ties. Projects like the Pokhara International Airport and various hydropower projects have deepened economic relations. Additionally, China is involved in the construction of railway lines aimed at linking Tibet to Kathmandu. These infrastructure projects are part of China’s efforts to integrate Nepal more closely into its economic orbit, bypassing traditional trade routes through India.

Tourism: Chinese tourists constitute a significant portion of Nepal’s tourism industry. China’s increased connectivity with Nepal, including direct flights, has boosted tourism, with cultural and religious tourism playing a key role.

4. Political Aspects

Politically, China’s influence in Nepal has steadily grown, especially after the 2015 Nepal-India border blockade, which many Nepalis perceived as coercive. In response, Nepal strengthened ties with China to reduce its dependence on India.

Nepal’s political leadership, including both the Nepali Congress and the Communist Party, has generally favored closer ties with China. China’s role in facilitating political unity within Nepal’s communist factions has also been notable. For instance, in 2018, Chinese diplomats played a behind-the-scenes role in merging Nepal’s Maoist and Marxist-Leninist factions, which formed the Nepal Communist Party (NCP).

China’s non-interference policy has been crucial in its political relations with Nepal. Unlike India, which has historically been seen as more involved in Nepal's internal politics, China has maintained a position of respecting Nepal’s sovereignty.

5. Cultural Aspects

Culturally, China and Nepal share long-standing Buddhist ties. Lumbini, the birthplace of Lord Buddha, is an important religious and cultural site that attracts many Chinese pilgrims. China has invested in developing Lumbini into a global Buddhist center.

Educational and cultural exchanges between the two countries have also increased. Chinese language programs and Confucius Institutes have been established in Nepal, promoting Chinese culture and language among Nepali students. Additionally, China offers scholarships to Nepali students for higher education in Chinese universities.

6. The India Factor

India has historically been Nepal’s primary partner in terms of trade, culture, and politics, largely due to the countries' geographical and historical ties. However, the China-Nepal relationship has often been influenced by the broader India-China rivalry.

India's influence in Nepal has periodically led to tensions, especially during periods of political turmoil in Nepal. For instance, the 2015 blockade, where many Nepalis felt India imposed an informal trade blockade in response to Nepal's new constitution, pushed Nepal to seek closer ties with China.

China is seen by some Nepali leaders as a counterbalance to India’s dominance in Nepal’s internal affairs. India has expressed concern over China's growing influence, particularly through the BRI and military ties.

At the same time, both India and China have been competing for influence in Nepal’s infrastructure development and strategic positioning. However, India retains cultural, religious, and social influence over Nepal due to open borders, labor migration, and shared historical ties.

7. The USA and Western World Factor

The U.S. and Western nations have been wary of China's growing influence in South Asia, including Nepal. The United States has increased its engagement with Nepal through economic aid and diplomatic efforts. The Millennium Challenge Corporation (MCC) compact, a U.S. government grant to Nepal for infrastructure development, was seen as part of Washington’s efforts to counterbalance China’s BRI influence.

However, Nepal faces a delicate balancing act between accepting aid from the West, especially the U.S., and strengthening ties with China. Nepal has carefully navigated its position, aiming to benefit from both without appearing too aligned with either power bloc.

Western countries, especially the EU, have also been active in promoting democracy, human rights, and development in Nepal. They are cautious of Chinese investments, which often come with concerns about debt dependency and governance.

8. Other Relevant Aspects

• Military Cooperation: Although not as significant as economic cooperation, military relations between China and Nepal have seen gradual improvement. China has provided military assistance to Nepal, including equipment, training, and humanitarian aid. China has also conducted joint military exercises with Nepal, signaling growing defense ties.
• Strategic Importance: Nepal’s geographic location between India and China makes it strategically important to both nations. China's growing influence in Nepal, particularly through infrastructure projects that may one day allow direct access to Indian markets or bypass India, is significant in the broader geopolitical competition between the two Asian giants.
• Tibet Factor: China is particularly sensitive about Nepal’s handling of the Tibetan refugee community. Nepal has adhered to China’s strict policy of preventing anti-China activities by Tibetan refugees, which has strengthened China-Nepal relations. Beijing remains vigilant about Nepal's stance on the Tibet issue, ensuring Kathmandu's continued support for the “One China Policy.”

Conclusion

The China-Nepal relationship is multifaceted and shaped by historical, economic, political, and strategic factors. While Nepal has long sought to balance its relations between China and India, China's growing economic presence and strategic investments through the Belt and Road Initiative have deepened bilateral ties. Despite the strengthening of ties, Nepal must manage this relationship carefully, especially considering its geographical position between two powerful neighbors, India and China, and the increasing engagement of the U.S. and the West.