In 2016, the government charted the course of Vision 2030 for Nepal. The National Planning Commission (NPC) and its leadership then organised a grand Vision 2030 conference in Kathmandu, where all development partners, including the Asian Development Bank (ADB) and World Bank, came to join hands with the government and sketched the framework to generate, share and sustain prosperity. The government’s Vision 2030 strategy envisions making Nepal a middle-income country. To reach that point, it is trying to leverage all possible means, including support from the international community and particularly of the Belt & Road Initiative (BRI).

Precisely, the current government is banking more on connectivity infrastructures to change the course of the development and transform the country’s economic outlook within the next decade. Chinese President Xi Jinping’s visit on the eve of the next decade is linked to the path of prosperity that Nepal aims to follow in the next ten years. The projection of 7.1 percent of economic growth in 2019 indicates that Nepal is heading in the right direction, although this growth is a byproduct of the country’s economic structure.

The joint statement issued between Nepal and China at the end of Xi’s visit has multiple points that give hope for the decade to come. The possibilities of deeper as well as broader engagement between the two countries are one of them. The joint statement reads, ‘an agreement to intensifying implementation of memorandum of understanding on cooperation under Belt and Road Initiative to enhance connectivity encompassing ports, roads, railways, aviation and communications within the overarching framework of Trans-Himalayan Multi-Dimensional Connectivity Network with a view to significantly contributing to Nepal’s development agenda that includes graduating from LDC at an early date and becoming a middle-income country by 2030 as well as realising Sustainable Development Goals (SDGs) by the same date.’ This paragraph from the joint statement is linked to Nepal’s long-held aspirations. However, the modality and pace of implementation will shape the future path of cooperation, as well as the resultant output.

Xi’s statement concerning Nepal’s exit from being a land-locked country to land-linked country has further broadened the horizon of possibilities that can push for a shift away from the country’s development dependency on India. Although Nepal’s path in the next one decade will not be determined solely by the inflow of investment from China and access to the market it provides, these factors, nonetheless will be critical for Nepal to adopt more ambitious goals and work accordingly.

President Xi’s visit to Nepal can be seen as the starting point for the country to engage in regional politics with promising potentials in economic development and social welfare. The future is expected to be linked to how much support it receives from China in the coming days. However, the reality as of now is that there has been less progress in advancing bilateral trade, despite the promises and continuing push from Nepal.

Over the next decade, Nepal needs investment worth nearly 49 percent of its GDP in all sectors. The implementation of federalism in the country will be a continuous process of institutionalisation, which will also require additional financing beyond achieving SDGs. But the government has been taking financial support—both loans and grants—from bilateral and multilateral donors without a clear strategy for financial management. Nepal should be able to maintain a minimum of 8.5 percent of economic growth in each consecutive year for the entire decade to become a middle-income country with a per capita income of $2,500. But for that, the state should be able to inject around $15 billion investment in the economy each year. That’s where Nepal is going to look towards our northern neighbour for support. Nepal is looking at BRI as a source of unlimited funds. But the question is how much of such funds will be funnelled from the Chinese government without calculating strategic interests and rate of returns in the long run.

To realise the much-touted dream of prosperity, Nepal needs support from all of its friends and both neighbours. That also warrants an uninterrupted flow of foreign direct investment (FDI). China can be that source of fund flow for Nepal to grow economically. But it is the government that needs to be cautious enough to invest in the right sectors and projects that have a high rate of return and strategic importance from the service delivery perspective.

An agreement to conduct a feasibility study of the cross-border railway, as well as extending cooperation on the Kathmandu-Pokhara-Lumbini railway, was signed during the Chinese president’s visit. The implementation of these railway projects will help Nepal usher in a new era, helping the economy grow at the desired pace—since economic stagnation has become a standard feature due to inefficient connectivity infrastructures.

If Nepal fails to materialise all the agreements that it has signed with China, and connectivity infrastructures remain as inferior and substandard as they are now, then the country will be locked in a vicious cycle of under-development and unemployment—and ultimately remain a least developed country even after 2030. Federalism may take its own course but for a functioning federal set-up, all 753 local governments need sources of finance beyond revenue to build the required infrastructure. The principal responsibility of the federal government is to adopt a balanced foreign policy and make strategic diplomatic moves so that the prospects of a bright future do not fizzle out on the way to 2030.

If this anticipated support from China does materialise, then the pattern of growth will also change in Nepal in the 2020s. Nepal also has the possibility of having a strong decade as like Bangladesh, Kenya and the Philippines. But unlike these three countries, Nepal’s development outcome will depend more on external hands. Further, the government has to pursue a balanced foreign policy and adopt foreign investment-friendly policies so that the support from ‘external hands’—foreign investors and the international community—would be available. Development goals are materialised only with a leadership that looks beyond immediate needs and party politics.

Despite these bright prospects for the decade, there are some latent signs of chaos and political instability, particularly if institutionalising federalism and the implementation of the constitution go off-track. As Nepalis are looking forward to 2030, the leadership should put extra efforts on balancing foreign policy that facilitates an inflow of FDI and supports the development of game-changing connectivity infrastructures.