Nepal and China are close to an understanding on a framework for Belt and Road Initiative (BRI) cooperation, as officials say they have nearly agreed on the terms and conditions on which China had expressed its reservations.

The joint statement issued by both sides late on Tuesday states that “the two sides expressed their readiness to sign the MoU on building the Trans-Himalayan Multi-Dimensional Connectivity Network (THMDCN) and the framework for Belt and Road Cooperation between the two governments as soon as possible,” without specifying a distinct deadline.

Despite whatever is stated in the joint statement, bilateral negotiations are going on and the agreement could be signed at anytime, said Nepali officials, adding that the cooperation on the BRI framework could even be signed even during the current visit.

“Both sides expressed their commitment to strengthening connectivity between the two countries in such areas as ports, roads, railways, aviation, power grids and telecommunication, to help Nepal transform from a land-locked country to a land-linked country,” said the 12-point joint statement.

The two sides were expected to sign a new framework for BRI cooperation on Tuesday following delegation-level talks between Prime Minister KP Sharma Oli and his Chinese counterpart, Li Qiang. However, only nine different projects-related deals and agreements were signed, fanning suspicions that the much talked about framework for BRI cooperation was unlikely to be settled during the visit. The Chinese side had removed the word “grant” proposed by the Nepali side and suggested replacing it with “investment” for projects under the BRI.

After reviewing the new terms and conditions, officials found a compromise and decided to include the phrasing “aid and technical assistance” in relation to project execution in Nepal.

The word “aid” adds ambiguity and marks a step back from the Nepali Congress’ position of clearly specifying grants. Some countries also term line of credit as aid but which are essentially loans.

“The Chinese side, after going through the document proposed by the Nepali side, removed the word ‘grant’ from the text and added ‘investment’,” said another Nepali official privy to the development. The Chinese proposal was then communicated to Prime Minister Oli and Foreign Minister Arzu Rana Deuba for their instructions.

The Nepali side requested and insisted on having the phrasing “aid and technical assistance,” and the Chinese side responded positively, the delegation member said.

Despite Nepal’s repeated requests, no decision has been taken on the loan exemption for Pokhara International Airport. “This is something we hoped to achieve during the visit,” said one participant. “But the Chinese side was reluctant to exempt the loan.”

Back in Kathmandu, a team of ruling party leaders had reviewed and watered down some provisions of the BRI implementation plan draft, which was originally proposed by Beijing in early 2020.

Nepal signed onto the BRI in May 2017, but lack of progress on projects under it made Beijing think of ways to overcome the obstacles in Nepal—and this is how the idea of the ‘Framework agreement on BRI implementation’ came about.

As preparations for Prime Minister Oli’s visit to China were progressing, the issue of BRI and its discussion had taken centre stage inside the ruling parties—the Nepali Congress and the CPN-UML.

After several rounds of hectic meetings and talks including back channel negotiations with the Chinese side, a Congress-UML task force decided to remove provisions on loans, while also rejecting the blended financing model and some other investment modalities proposed by Beijing. They insisted that Nepal could only accept grants-based projects due to the country’s dire economic situation.

The new draft, prepared by the four-member task force, was handed over to the Chinese side for their consideration on Saturday.

After going through the Nepali proposal, the Chinese side sent their comments on Tuesday morning, adding the term “investment,” which puzzled Nepali officials.

Later, both sides resumed negotiations and agreed to replace the term “investment” with “aid and technical assistance”, Foreign Minister Deuba said.

Foreign Minister Deuba said Tuesday’s talks with President Xi Jinping, Prime Minister Li, and Zhao Leji, chairman of the Standing Committee of the National People’s Congress, went well.

Oli and Xi held one-on-one after delegation level talks, but Oli did not brief the Nepali delegation about the specifics of his meeting with Xi.

The Chinese president announced Rs9 billion (500 million RMB), according to Krishna Prasad Dhakal, spokesperson for the Ministry of Foreign Affairs. Xi, during the talks, while stating that he would encourage Chinese investors to go to Nepal and facilitate the export of Nepali products to Chinese markets.

Oli, on behalf of President Ramchandra Paudel, extended an invitation to President Xi to visit Nepal, Dhakal said. The Chinese president responded that he would visit at an appropriate time.

Oli, who is on a four-day official visit to China, held talks with Chinese President Xi, Prime Minister Li, and Chairman of the Standing Committee of the National People’s Congress Zhao, on Tuesday. Oli also invited Chinese Premier Li to visit Nepal. Li also assured that he would visit at an appropriate time.

The two prime ministers assessed bilateral relations and exchanged views on enhancing ties and development cooperation, the foreign ministry said.

In discussions with Zhao, the two sides discussed potential cooperation in parliamentary exchanges to better understand each other's experiences, according to Dhakal.

Nine different agreements and understandings were signed between Nepal and China after the delegation-level talks between Oli and his Chinese counterpart on Tuesday.

These nine agreements and understandings will be developed under the framework of BRI cooperation, a delegation member told the Post over the phone from Beijing.

“We had very cordial meetings with the Chinese president and premier,” said Foreign Minister Deuba told the Post over the phone from Beijing. “Our prime minister expressed Nepal’s unflinching commitment to one-China policy and assured the Chinese leaders that Nepal will not allow its land to be used against China.”

Oli had also hailed the tremendous development and prosperity achieved by China in a short time.

According to the Chinese official news agency Xinhua, Chinese President Xi appreciated Oli's long-term and firm commitment to the cause of China-Nepal friendship, and pointed out that China and Nepal are good neighbours, good friends and good partners connected by mountains and rivers.

“The two countries have always treated each other sincerely, respected each other and supported each other, and the bilateral relations have maintained healthy and stable development,” the news agency quoted Xi as saying.

Next year, 2025, will mark the 70th anniversary of diplomatic relations between China and Nepal.

“China places China-Nepal relations in an important position in its neighbourhood diplomacy. China is willing to work with Nepal to uphold the original intention of establishing diplomatic relations, consolidate traditional friendship, and promote new and greater development of the China-Nepal strategic cooperative partnership of friendship for generations for development and prosperity,” the Xinhua report said.

The Chinese president also stressed that China respects Nepal’s choice of a development path that suits its national conditions, supports Nepal in safeguarding its national independence, sovereignty and territorial integrity, and is willing to continuously consolidate strategic mutual trust with Nepal and firmly support each other on issues involving each other's core interests, according to the report.

“The construction of a three-dimensional cross-Himalayan interconnectivity network between China and Nepal is gradually turning from a vision into reality,” said Xi.

China, he added, “is willing to continue to deepen practical cooperation with Nepal, jointly build the ‘Belt and Road’ with high quality, strengthen cooperation in ports, transportation, power grids, communications and other interconnectivity, help Nepal accelerate its transformation from a ‘landlocked country’ to a ‘land-linked country’, continue to support Nepal's economic and social development within its capacity, and encourage Chinese companies to invest and start businesses in Nepal.”

China supports Nepal’s announcement of 2025 as the "Nepal Tourism Year" in China, and welcomes Nepali friends to come to China for business, tourism and study, said the Chinese president.

China is also willing to strengthen coordination and cooperation with Nepal in multilateral organisations such as the United Nations to safeguard the common interests of the vast number of developing countries, the report quoted Xi as saying.

Oli said that under the leadership of President Xi, China has made tremendous development achievements, “which can be regarded as a miracle in the history of human progress.”

“As a friend of China, Nepal is deeply proud and encouraged, and hopes to learn from China's successful experience to achieve its own development and prosperity,” the Xinhua report quoted Oli as saying.

“There is only friendship between Nepal and China, no problems, and the relationship between the two countries is based on friendship, equality and respect,” said Oli, thanking China for its timely assistance and valuable support to Nepal, and its help in transforming Nepal to a land-linked country.

Nepal is willing to continue to actively participate in the joint construction of the "Belt and Road Initiative" and welcome more Chinese companies to invest in Nepal and deepen practical cooperation in various fields, the Xinhua report quoted Oli as saying during his meeting with Xi.

On the occasion, the prime minister also reaffirmed Nepal’s longstanding stance that Tibet and Taiwan are both inseparable parts of China's territory.

“Nepal firmly adheres to the one-China principle, does not allow any force to use Nepal's territory to engage in anti-China activities and undermine China's interests, and opposes any foreign interference in China's internal affairs,” Oli said.

“The series of important initiatives proposed by China, such as the Global Development Initiative, are conducive to mankind's joint response to the current complex international situation and global challenges,” he added. “Nepal is willing to strengthen multilateral cooperation with China to safeguard the common interests of the global South.”