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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2903

China Goes The Extra Mile To Woo Nepal

By Rattan Saldi - Syndicate Features

President Xi Jinping was hardly back in Beijing from a two-day state visit to Kathmandu when the Himalayan nation’s Defence Minister Ishwar Pokhrel flew into the Chinese capital and signed a 2.5 billion rupee three year agreement for beefing up Nepali Army’s capacity in disaster relief. General Wei Fenghe told his remarked on the occasion that his country was always positive to extend military support to Nepal for capacity building of its army.

Neither side explained the urgency for the deal. Nor did they say why Pokhrel- Fenghe deal could not be signed when President Xi was in Kathmandu holding extensive talks with his hosts - Prime Minister K.P. Sharma Oli, President Bidya Devi Bhandari, and Communist Party of Nepal Co-Chair Pushpa Kamal Dahal. Xi also met the leader of the main opposition Nepali Congress, Sher Bahadur Deuba, who is a former Prime Minister.

Marking the Xi visit, the two countries had signed twenty Memorandum of Understanding in diverse fields that range from infrastructure to agriculture and health and education. Agreement was reached on several road projects and the long awaited Trans Himalayan Multi-dimensional Connectivity Network, which includes a cross-border railway line from Kerung (China) to Kathmandu and beyond to Pokhra and Lumbini. Xi also pledged aid worth 56 billion Nepalese rupees for capacity building and development during the next two years.

Nepal is signatory to China’s flagship programme, ‘Belt and Road Initiative,’ BRI; it has identified 35 projects for this venture but has since pruned the number to just nine. Being a poor country, Nepal will look to grants in aid rather than loans to execute these BRI ventures. Moreover, there is resistance in Nepal to take up projects with loans from Chinese companies. Well, it is the fear of a debt trap that accompanies the Bamboo capitalist, wherever he goes in Asia to Africa and Latin America.

China-aided rail and road construction, transmission lines and hydro power projects are spread across Nepal from its borders with Tibet Autonomous Region to the Terai region bordering India. The Kerung-Kathmandu railway line will run nearly 400 Kms in Western Tibetan region and the remaining 150 Kms will be China-Nepal border to Kathmandu.

The projects identified under the BRI are capital intensive with long gestation period. These are upgradation of the Rasuwagadhi-Kathmandu road, construction of Kimathanka-Hile road, the Tokha-Bidur road, the link from Dipayal to the Chinese border, and two hydro power projects (762 MW Tamor and 426 MW Phukot Karnali), one 400 KV transmission line (Galchhi-Rasuwagadhi-Kerung) The proposed rail line and the Madan Bhandari Technical Institute are also listed under the BRI category.

Given the poor fiscal health of Nepal, many local experts are advocating that principles of financial responsibility should be the corner stone of China projects. This they contend is essential to offset debt trap. They also want employment of local people besides skill and technology transfer. Difficult to dispute their contention since Nepal does not have a broad based job market even though unemployment is high.

The focus of the Joint Statement issued at the end of Xi visit was on the Trans-Himalayan Multi-Dimensional connectivity and trade related issues. Both countries agreed to conduct feasibility study for the rail line. Well, pre-feasibility study was over in June last. Funding remains the basic irritant. It remains unresolved. Significantly, the Joint Statement was silent on this issue.

Like India, Nepal has a large adverse trade imbalance with China. And like he did with Modi in India, in Kathmandu also, Xi promised to change the trade scene. He assured Prime Minister Oli of positive measures to expand Nepal’s exports to China, primarily agricultural products. He also assured technology transfer to enhance Nepal’s manufacturing capacity.

Another promise Xi had held out to Oli was making land-locked Nepal into a land –linked country. Connectivity is therefore high on the agenda; components of connectivity are ports, roadways, railways, aviation and communications within the framework of the trans-Himalayan Multi-Dimensional Connectivity Network.

In 2016, the two countries had signed a Trade and Transit Agreement during K.P. Sharma Oli’s earlier stint as Prime Minister. A protocol to operationalize this agreement was signed during Nepal President Bidya Devi Bhandari’s visit to China in April this year allowing Nepal to use four Chinese sea ports and three dry ports for trade with third countries, breaking its dependence on India for its external trade.

There has been a steady growth in Nepal- China relationship ever since the “the blockade” of 2015-16 for which large sections - the ruling class, Nepal Communist Party including – still blame India. Oli had signed the Trade and Transit agreement with China to break India’s monopoly over Nepal’s traditional business and trade relationships. This dependence, however, continues. Well it is because, the trade routes have not yet been operationalized. And there is no early prospect of bonanza from the deal because of difficult terrain and lack of infrastructure.

China has hoped that an extradition treaty would be high watermark of President Xi’s visit to Nepal. The hope remained unfulfilled, not because China did not go the whole hog to woo Nepal during the visit but because of dynamics of Nepali politics. Sections of the ruling Nepal Communist Party were opposed to signing the treaty. The main Opposition also was not favourably inclined. Both fear that the treaty could an edge to China to deal with the Tibetans using Nepal as a transit to travel to India, where Dalai Lama lives in exile.

- Asian Tribune –

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