A popular question often arises in the international sphere: Will Nepal fall under China’s influence? It is generally assumed that leftist parties in Nepal are close to China and democratic parties to India and the US. As a result, the leftists are assumed to favour Chinese interests and the latter favour India’s interests in the emerging geopolitical game.

During our closed-door dialogue with several influential leaders from the Nepali Congress, CPN-UML and the Maoist Centre who have held important ministries, one takeaway was that Nepali political leaders across major parties have a sophisticated understanding of Nepal’s core national interests concerning geopolitics. Despite divergent ideologies and differing affinities with China and India, they have surprising commonalities in their policy positions.

However, on Nepal’s external relations, the problem is not about fundamental differences in defining national interests or political affinities with India and China. The issue lies in managing four key factors that subvert policy positions: Geo-political squeeze, narrow political interests, corruption dynamics and weak negotiation capacities.

Geopolitical pressures

Geo-political competition in Nepal is most apparent in five arenas: Political influence, connectivity and critical infrastructure, market, resources and security. Our political leaders and decision-makers are under immense pressure from the big powers to make decisions that suit their interests in these areas.

In recent years, China has sought to cultivate close ties with political parties, especially those on the left, and encourage “independence” from India’s influence. Political influence is linked to the global rivalry in political values and world visions offered by China and the US. As a result, big powers have attempted to influence Nepal’s role in the international arena, including the United Nations. For the big powers, political influence is also a means of achieving their interests in connectivity, infrastructure, markets, resources and security. Such competition, if not managed, can lead to severe conflicts.

After the peace process, India became wary of China’s influence in Nepal. This rivalry intensified after the 2017 Doklam standoff and the 2020 Galwan Valley conflict. Consequently, India began to discourage Chinese engagements in Nepal. India-China relations directly impact Chinese investments’ feasibility in Nepal, including the Trans-Himalayan Multi-Dimensional Connectivity Network, which aspires to access the Indian market. It is apparent that Chinese investments in the hydropower sector have shrunk due to India’s policy on power trade. Therefore, the goals of the Nepal-China Industrial Park in Damak are achievable only if relations between India and China improve.

Nepal’s critical infrastructure, including transmission lines, telecommunications and digital infrastructure, is another sensitive sector. Geopolitical actors' involvement in these sectors may generate further vulnerabilities for Nepal’s national security.

Multiple cases worldwide have demonstrated that geopolitical competition is also about tapping resources and raw materials. Nepal has a few resources that China needs. However, Chinese companies have benefited from substantial procurement contracts, funded mainly by Nepal and multilateral agencies.

For China, Nepal is an attractive market in the short term and a gateway to South Asia in the long term. China’s engagements with Nepal and its policies in Tibet indicate that the country is betting big on accessing the South Asian market. However, this is another area in which India is very sensitive. Given China and India’s emphasis on security, they will exert more pressure on Nepal’s security sector, which receives little attention in Nepali public space.

Vulnerabilities and potential conflict

Our foreign policy goals should focus on resisting external economic and political pressures, avoiding geopolitical conflict, fostering trusted relationships with India and China and aligning external relations with our national interests. So, it is essential to recognise and address our vulnerabilities first. The leverage big powers have in shaping political leaders’ careers and domestic power dynamics is the major source of vulnerability in foreign policy decision-making. As external actors offer significant incentives, political leaders must fear them and be eager to appease them for personal benefit.

Corruption and financial interests continue to influence some of Nepal’s policy decisions. In the case of Pokhara International Airport, political actors, influenced by kickbacks and economic interests, moved the process from outside government institutions and mobilised the public to pressure decision-makers. The prevalence of many such cases shows that corruption dynamics will continue to influence decision-making across all political spectrums and other sectors unless we have accountability and transparency in aid and infrastructure projects.

Nepal’s vulnerability also stems from weak negotiation capacity and communication skills. Regarding dealing with big powers, Nepal lacks the necessary diplomatic mechanisms, skills and knowledge to promote national interest. It must take immediate steps to reduce the potential for geopolitical conflict. First, Nepal must set a clear course on the Belt and Road Initiative (BRI). China is pushing the BRI by gradually subsuming all forms of bilateral cooperation under the BRI framework. However, the implications of China's move are not yet clear. Although Nepal has already signed the BRI and should look forward to the initiative, it must enhance its negotiation capacity, address vulnerable areas and communicate better with China and other big powers to ensure mutual benefit.

Given the rivalry between India and China, Nepal must ensure that China feels safe from India’s engagements and vice versa. Nepal once had an informal policy where Chinese small-scale aid was limited to the northern districts and Indian small-scale aid was limited to the southern districts. However, the situation has changed in recent years as Chinese activities have increased in the southern border areas, and Indian activities have increased in the northern border areas. Nepal must ensure that such activities do not generate security dilemmas.

Another immediate step is to communicate Nepal’s position on security cooperation through a white paper to provide no room for misunderstanding among big powers about what Nepal will and will not do. Such a paper will be critical in developing trusted relations with big powers amidst growing geo-political rivalry. To reduce geopolitical conflict and ensure national interest, all political parties and leaders must agree to a common code of conduct for cultivating relations with external forces and political actors, which must be communicated well to international actors.

After all, the question for Nepal is not about whether it will fall under China’s influence but how it can benefit from geopolitical competition and maintain a trusted relationship with all the big powers.