Despite promises, bilateral trade with China struggles to bounce backWhile Beijing appears to be reluctant to open border points on different pretexts, Nepal has failed to raise the issue strongly, much to the disappointment of traders.
When the Tatopani-Khasa border point reopened on May 29, 2019, after remaining closed for four years following the 2015 earthquakes, there were hopes that bilateral trade with China would bounce back. Before the devastating quake damaged border infrastructure, the border point was a major mainland route for trade with the northern neighbour, with the Tatopani Customs Office collecting over Rs15 million in revenue daily.
But expectations were short-lived.
The Rasuwagadhi-Kerung customs point, 190 kilometres from Kathmandu, which was being used as an alternative route after the closure of the Tatopani-Khasa point, started to get more attention. The Rasuwagadhi-Kerung customs point, which was elevated as an international checkpoint between Nepal and China, allowing people from third countries to cross the border, was reopened in July 2020.
The Tatopani-Khasa border largely remained unoperational. And then came the Covid-19 pandemic. The border was closed.
The Chinese side agreed to open the Tatopani-Khasa border in April last year, initially to hand over medicines and medical equipment for the Covid-19 pandemic, but cargo movements were negligible.
Meanwhile, on the pretext of Covid-19, the Chinese side stopped sending cargoes through the Rasuwagadhi-Kerung customs point as well.
Bilateral trade between Nepal and China has been zilch.
The Tatopani border was then closed again for the remaining repair works on the Miteri bridge, or friendship bridge, that links Nepal and China.
Concerns were growing if there was an undeclared blockade on the Nepal-China border, as Nepali traders failed to import goods, facing losses to the tune of millions of rupees.
Amid this came the news that the Tatopani border would open from Monday after the completion of maintenance works at the Miteri bridge.
But the border point did not open, to the disappointment of traders. No carriers moved into Nepal from the Chinese side, apparently because snow obstructed the movement of traffic on the north.
“We had been informed that the border could come into operation from Monday following the maintenance of the bridge,” Lal Bahadur Khatri, chief of Tatopani Customs, told the Post “But there has been snowfall for the past few days. We are told that as soon as the snowfall stops, vehicles will start arriving.”
According to Khatri, there are no goods stuck on the border and newly ordered goods will come through once it is opened.
But traders say that the bridge has just been an excuse.
“The Tatopani border has not opened even after completing maintenance works on the bridge,” said Naresh Katuwal, president of the Nepal National Traders' Federation.
Tatopani-Khasa, 115 kilometres, has historically been one of the main land routes for trade with China.
Before the border was closed after January 20, about three-four containers carrying goods passed through it every day. It had been closed between January and October last year, as China closed its border points due to the pandemic.
But goods have failed to pass smoothly through this customs point also, for about 16 months now, after China put stringent measures in the wake of the Covid-19 pandemic.
Both border points had by and large remained closed since late January to prevent the possible spread of the coronavirus which was first detected in Wuhan of Hubei province of China in late 2019.
Over the last one year or so, Foreign Minister Pradeep Gyawali has held at least half a dozen virtual meetings and telephonic conversations with his Chinese counterpart, Wang Yi, but the issue of re-opening these border points has never figured.
Officials from the Ministry of Foreign Affairs and Ministry of Industry, Supply and Commerce and the Nepali embassy in Beijing have regularly taken the matter up with the Chinese side and communicated to them the problems faced by Nepali traders, according to sources familiar with the matter.
The sources say the Chinese side is of the view that trading points cannot be opened until the Covid-19 pandemic is over.
According to traders and businessmen, the way the cargo movement slowed to a crawl and then completely stopped, it looks like there is an unofficial border blockade in the north.
“As it would have sent a negative message if they had completely stopped the trade, they have slowed the flow of goods and this is tantamount to a blockade,” Naresh Katuwal, the president of the Nepal National Traders' Federation, told the Post. “Even the Industry Minister said it seems that some side has blockaded the border point and there is no environment for trading with China and this looks like an unofficial blockade.”
Hopes of imports via China had increased after Nepal signed a slew of agreements with Beijing in 2016, during KP Sharma Oli’s first stint as prime minister. The deals with the northern neighbour had come in the wake of the months-long border blockade imposed by India following the promulgation of the constitution in September 2015.
An increased bilateral trade with China was aimed at reducing Nepal’s almost-complete dependency on India.
Oli’s bid to secure agreements for bilateral trade through China not only earned him praise but also enough votes to put him back to power in February 2018. About three months later, Oli’s CPN-UML and Pushpa Kamal Dahal’s Maoists Centre merged to form the Nepal Communist Party, considered to be an outcome of Beijing’s heavy political investment and a pet project.
But the Nepal Communist Party started to face a crisis with two factions led by Oli and Dahal constantly quarrelling. The infighting continued the whole pandemic period.
Officials say reopening of border points and smooth cargo movements needed serious political intervention, but the governing party was in a mess. The Chinese side paid little attention to concerns communicated from the bureaucratic level, according to them.
It’s not that conversation at the political level had stopped between the two countries. Ever since Chinese President Xi Jinping visited Nepal in October 2019, there have been bilateral exchanges at higher levels.
But opening of border points has failed to figure prominently during such visits. Even during telephonic conversations between leaders–the recent one took place between Gyawali and his counterpart Wang on Friday–re-opening of border points failed to become an agenda.
Rather, China seems to be more interested in discussing the annoying political situation in Nepal, which was evident from a statement issued by the China’s Ministry of Foreign Affairs.
During his conversation with Gyawali, Wang, according to the statement, urged Nepal’s political parties to shelve differences and maintain unity and stability in Nepal for its own development and prosperity.
Traders say with cargo movements through northern borders coming to a halt, they are not very hopeful about trade with China reviving anytime soon.
According to the Trade and Export Promotion Centre, imports from China dropped 18.5 percent year-on-year in the first half of the current fiscal year. Nepal bought Rs96.33 billion worth of Chinese goods in the first six months, down from Rs118.25 billion in the same period last fiscal year.
Exports to China also fell by 50 percent in the first six months of the current fiscal year. Shipments were valued at Rs500 million, down from Rs1.02 billion in the same period last fiscal year.
According to Ram Prasad Regmi, customs officer at Rasuwa customs, every day five cargo vehicles have been entering through Kerung since mid-August last year–down from about 100 before the pandemic.
Traders have been saying that around 400 containers are still stuck on the two Chinese border points for as long as a year.
Bacchu Poudel, president of the Nepal Trans Himalaya Border Commerce Association, said that around 400 containers are still stranded on the Chinese side of the border.
“A container holds goods worth Rs10 million to Rs10.5 million,” said Poudel.
But according to Regmi, the Chinese have said there are no containers with goods of Nepali traders across the border in China.
“We do not know the exact number of containers that are held on the other side of the border in Kerung,” said Regmi. “Traders have been saying that there are but when asked, the Chinese officials said that there were no remaining goods carriers held on their side.”
Some Nepali vehicles that went before lockdown have been held at the Chinese customs but it is not clear exactly how many since the border is sealed, according to Regmi.
With the border closed between January and August last year, the backlog meant that by the festive season of Dashain and Tihar as many as 2,000 trucks were stuck at the Kerung border.
Some of the traders even opted to send the goods back to a Chinese port to be brought to Nepal by sea through Kolkata.
Others started bringing goods from China by sea rather than land. While it takes about 15 days for goods to arrive from China to Nepal by land, it takes about 35 days by sea via Kolkata, according to traders.
“Goods have been mostly coming through the sea route than overland from China,” said Poudel. “It takes around 35-40 days to bring goods through the sea route.”
While the traders were waiting anxiously for their goods to be allowed to pass, Chinese transporters hiked the freight charges.
The cost of transporting goods over the 26-km distance from the Kerung border point to the Nepali border point has been raised from RMB 15,000 (Rs300,000) to RMB 60,000 (Rs1.2 million) per container, according to Katuwal, the president of the Nepal National Traders' Federation.
At least two officials at the Ministry of Foreign Affairs and Ministry of Industry, Commerce and Supplies said they are aware of the traders’ concerns and have been constantly raising the issue.
“But there has been little progress,” said an official who wished to remain anonymous. “We have been receiving complaints from importers, though.”
The official said the matter can be sorted out only at the political level.
With hopes of the two border points opening fully for smooth cargo movement fading, traders have stopped ordering new goods from China to be brought via Kerung as well.
China's growth into a global trading giant has been exceptionally rapid. It became the world's largest trading nation in 2013, overtaking the US.
But for Nepali traders, trading with their northern neighbour is a loss.
“There is no environment for trading with China,” said Katuwal.
Anil Giri contributed reporting.