Nepal – China Relations and the perils of Indian foreign policy

Nepal and China established diplomatic relations in 1955, and their bond grew even stronger following the 2015 Gorkha Earthquake. India, Nepal's southern neighbour, enforced a trade embargo in the same year, leaving a landlocked and disaster-stricken Nepal desperate for petroleum and other necessary supplies. This provided China with an opportunity to portray itself as a kind and helpful neighbour. Nepal and India have profound social, cultural, strategic, political, and economic relations that date back millennia. Unfortunately, when exposed to the shifting fundamentals of time, ties wither. India-Nepal ties have gradually deteriorated as the two nations' economic links have failed to keep pace with India's modernization and progress. The benefits of India's booming economy have become increasingly unattainable, and so unimportant to regular Nepalis. China has been pouring money into Nepal, assisting the landlocked country in building new highways and connecting it to Chinese cities for the transit of petroleum and other important goods, reportedly to help Kathmandu reduce its reliance on New Delhi. In 2014, China surpassed India as Nepal's largest source of foreign direct investment. According to reports, Beijing accounted for 90% of Nepal's FDI in the first quarter of 2020. That's a huge sum of money that can't be overlooked.

Following that, Nepal became one of the first countries to sign up to China's Belt and Road Initiative (BRI), a multitrillion-dollar effort by the Chinese government to expand its global influence. Furthermore, since 2018, the two neighbours have been discussing a number of train and electricity line projects. This indicates that Chinese investment in Nepal has increased over time, despite the fact that it was significantly lower before to 2015. The series of engagements has evolved into a strategic economic partnership over time, going beyond the simpler paradigm of investment. The 2016 trade and transit agreement have geopolitical ramifications that India's objections were neglected as well. Similarly, the BRI-led project of the KyiRong - Kathmandu railroad represents tenacious attempts by both countries to connect Tibet and Kathmandu, reducing Nepal's whole reliance on India.

Because India has failed to assist Nepal in developing its infrastructure, particularly its enormous hydropower resources, the Nepalese government is eager to conduct business with China. China, with its great track record of project implementation, may be able to fill in the gaps where India has failed. Hostility toward India among Nepal's elite has grown as a result of India's encouragement for greater engagement by politically weak groups like the Madhesi’s, who are Nepalis of Indian descent. During the 2015 Madhesi unrest, India was accused of blockading Nepal and delaying crucial fuel supplies, establishing a reputation of India as a bully who fails to deliver.

In the field of security, we've seen an increase in cooperation as well. In 2014, China constructed a training academy for the Armed Police Force (APF), which defends Tibet's border districts, and many counter-terrorism drills were held in partnership between the Nepal Army and the PLA. According to reports, China is also attempting to create cultural ties with Nepal. The relationship between the Chinese communist parties and the Nepalese communist parties is becoming stronger by the day. In order to break down the linguistic barrier, China is apparently paying Nepalese teachers to teach Mandarin. The contested areas of Lipulekh, Kalapani, and Limpiyadhura were the subject of a violent conflict between India and Nepal earlier this year. Nepal even released a new map that included these places, bringing the two countries' relationship to a new low. In addition, a border dispute erupted between Nepal and China after Beijing built 11 structures in Humla, which Kathmandu claims as its territory. Two major problems arise as a result of Chinese investment in Nepal. First, large-scale investments have the potential to influence Nepal's politics, as they have in other nations such as the Maldives. Second, Nepal has an open border with India, which has impacted India's small-scale economy by acting as a conduit for large-scale smuggling of Chinese goods. Improved physical connectivity between Nepal and China can only help to accelerate this process. Bilateral collaboration in fields including building, education, agriculture, and hydropower has eroded India's traditional sphere of influence in Tibet, while continuous border and water issues have strained India-Nepal ties. As a result, Nepal has made strengthening economic ties with China a top priority. However, greater connections between China and Nepal have benefited both countries internationally. Nepal has backed China's position on Xinjiang at the United Nations Human Rights Council for the past two years, and Nepal also supported China's position on Hong Kong's status last year.

The two countries' long-running border conflict offers an opportunity for them to modernise old relationships and work toward a common vision of prosperity. More than just resolving territorial disputes is required of India and Nepal. They must refocus on the underlying strengths of their distinct social, cultural, strategic, political, and economic linkages, while also modernising ties to connect people, markets, finance, and technology. Centuries of social, cultural, political, strategic, and economic relationships can only survive if they can adapt to changing circumstances. India and Nepal's governments must change the narrative, update their policies, and get out of the way so that people's bonds can flourish once more.

Notes -

1.       Economics and Influence: Chinese Investment in Nepal • Stimson Center: https://www.stimson.org/2020/economics-and-influence-chinese-investment-in-nepal/#:~:text=Nepal%20and%20China%20established%20diplomatic,the%20Gorkha%20Earthquake%20of%202015.&text=Beijing%20is%20now%20a%20significant,Nepal's%20trade%20and%20economic%20enhancement.

2.     www.dw.com: https://www.dw.com/en/nepals-delicate-balancing-act-between-china-and-india/a-52693835

3.      For Nepal it’s getting easier to trade with China. India must look beyond boundary issues: https://theprint.in/opinion/for-nepal-its-getting-easier-to-trade-with-china-india-must-look-beyond-boundary-issues/458317/

4.     Nepal-China Relations - Ministry of Foreign Affairs Nepal MOFA: https://mofa.gov.np/nepal-china-relations/

5.     Nepal-People's Republic of China Free Trade Agreement Free Trade Agreement: https://aric.adb.org/fta/nepal-peoples-republic-of-china-free-trade-agreement

6.     Nepal: Exploiting The Elite - Gateway House: https://www.gatewayhouse.in/chinese-investments-in-nepal/

7.     How China is trying to push India out of Nepal - It's raining money | The Economic Times: https://economictimes.indiatimes.com/news/politics-and-nation/how-china-is-trying-to-push-india-out-of-nepal/its-raining-money/slideshow/78655540.cms

Pic Courtesy-Raimond Klavins at unsplash.com

(The views expressed are those of the author and do not represent views of CESCUBE.)