Major changes unlikely in Nepal-China ties during Xi’s third termMany blame Nepal’s inconsistent approach to dealing with China for limited progress on bilateral ties.
The 20th plenum of the Chinese Communist Party scheduled to begin on October 16 in Beijing is expected to give a third presidential term to the incumbent, Xi Jinping. Over 2,292 party delegates will also select the CPC’s Politburo Standing Committee (PSC) as well as a new Cabinet for the next five years.
Just like the rest of the world, Kathmandu is following developments in Beijing with keen interest, and to see if there will be any policy changes on Nepal under a new Chinese setup under Xi.
Undoubtedly, Xi is the most powerful, successful and effective leader in contemporary China, after only Mao Zedong, said Ramesh Nath Pandey, former foreign minister. “Now it is up to us to decide how to take advantage of the watershed moment. At a time when both our neighbours China and India are ruled by powerful leaders, we should explore ways to benefit from the new opportunities they offer.”
“China has already become a superpower and India is soon poised to be the fifth largest economy. Unfortunately, there is a little chill in our relations with both the neighbours,” said Pandey. “Our top leadership does not appear to have a line of communications with either Modi or Xi at a time when we need to work closely with both,” said Pandey.
Nepal-China ties have seen many new twists and turns in the decade after Xi came to power in 2013. Nepal became a founding member of the China-led Asian Infrastructure Investment Bank that was set up to fill the gap in infrastructure sectors in Asia. Later in 2014 Nepal signed up to its Belt and Road Initiatives, but not a single project has started in Nepal under the initiative due to differences over priority between the two countries.
Then, in 2016, Nepal and China signed a landmark transit and transport agreement that allowed Nepal access to seven Chinese ports. The agreement’s protocol was signed three years later during the 2019 China visit of President Bidya Devi Bhandari.
After the general elections in 2017, CPN-UML chair KP Oli became prime minister and travelled to Beijing in June 2018. He signed a slew of understandings and agreements which further cemented ties. But government officials say there has not been desired progress in the implementation of several such agreements owing to the Covid pandemic, China’s zero-Covid policy and internal political situation of Nepal following the fall of the Oli government—and with the government training its focus on the three-tier elections.
Oli’s visit to Beijing also paved the way for President Xi to visit Nepal in October 2019, just ahead of the Covid outbreak. The Chinese president paid a two-day state visit to Nepal and assured to transform “landlocked” Nepal into a “land-linked” country by offering Rs56 billion support and promised a feasibility for Nepal-China cross border railway, among other things.
But soon after Xi’s return home, the world was gripped by the Covid pandemic affecting the BRI’s planning and also ongoing China-funded projects in Nepal. But Chinese engagements in Nepal continue.
But many reckon the top Chinese priority given to Nepal during Xi’s two terms is likely to continue.
“China is our important neighbour and in the past ten years, Nepal-China relations have been on an upward trajectory, which will be cemented further under the leadership of Xi in next five years,” said Sundar Nath Bhattarai, chairman of the China Study Centre. “That we are in high Chinese priority is clear from the several high-level visits by Chinese leaders in recent years.”
Xi is credited with a series of economic reforms that helped pull hundreds of millions of people out of the vicious cycle of poverty, said Bhattarai.
In 2019, ahead of Xi’s state visit to Nepal, the then ruling Nepal Communist Party (NCP) conducted a two-day workshop on Xi Jinping Thought, which proposes a strategy to achieve the Chinese dream of building a great socialist society and rejuvenating China and its role as a central global power.
Around 200 NCP leaders and cadres participated in the workshop.
The Covid pandemic notwithstanding, high-level bilateral visits continued. Chinese Defence Minister Wei Fenghe visited Nepal in November 2020, followed by other high-level visits. Wang Yi, the foreign minister, Li Zhanshu, head of the Standing Committee of the Chinese National People’s Congress, and Liu Jianchao, new head of the International Liaison Department of the Communist Party of China, among others, visited Nepal despite China’s zero-Covid policy—particularly after the formation of the Sher Bahadur Deuba government in July 2021.
The Chinese establishment views the Deuba government as pro-West and pro-India especially after the Nepali parliament ratified the controversial $500 million Millennium Challenge Corporation Nepal compact and showed an interest in signing the US State Partnership Program while seemingly being lukewarm on BRI projects.
Will there be any changes in Chinese policy after Xi’s reelection for a third term?
There will be no fundamental changes in Nepal-China relations, says CD Bhatta, a political and geo-strategic analyst.
There are, however, caveats in Nepal-China ties. The BRI, considered a flagship project of President Xi, is in crisis. Despite assurances from the Chinese leadership to take ahead the Nepal-China cross-border railway, which is to be funded under the BRI, its planned feasibility study is yet to kick off.
As per a preliminary study, the Kerung-Kathmandu railroad will be around 80 km, and will need $3-3.5 billion investment for its construction. There are also some speculations that China could revisit the investment model of the BRI template to prioritise loans.
“Of course, China now is moving towards the third phase of the BRI [BRI 3.0] and will certainly revisit the viability of some of the projects, but on its own terms,” adds Bhatta. “If needed, some of the ambitious projects could be postponed, if not scrapped outright. But nothing can be said now as it also depends on how the geopolitics evolves in the region. If there is a strong geopolitical penetration [of the West] in the region, then China will have to compromise and extend cooperation in the neighbourhood.”
Prem Khanal, Assistant Professor at International Relations and Diplomacy at Tribhuvan University, said that despite China’s visible priority for Nepal, Kathmandu failed to seize the opportunity during the visit of Xi to Kathmandu and on other occasions.
“Our China policy has become inconsistent. The Chinese had high expectations from the Oli government, which enjoyed a near two-thirds majority, especially with regard to BRI projects, but that did not happen,” he said.
“The Chinese are clear about their Nepal policy, but we are not about our China policy. Our priorities keep changing with a change in government. Also, we failed to capitalise on Xi’s visit to Nepal,” Khanal added.
In his reckoning, Nepal could have requested China to build a mega-project, but it did not. Nepal’s focus should be “on extracting maximum possible support for megaprojects from our neighbours and friendly countries—be it India, China or the West,” said Khanal.