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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2856

Dragon Shadow Lengthening over Nepal

By Rattan Saldi : Syndicate Features

China’s presence in Nepal has increased in almost all spheres of economic activity during the past few years, particularly after the 2015 blockade of Nepal-India border and because of not so hidden leaning of the ruling Communist Party towards Beijing. The two countries exchanged a number of high-level visits in recent months with the China promising heavy investments in connectivity and infrastructure development in the land locked Himalayan nation.

China has increased its linkages with Nepal in social and educational fields as well. Beijing is liberal these days in inviting Nepali youth, journalists and social and cultural leaders besides professionals from different walks of life. Mandarin has become a part of the curriculum in many Nepalese schools. More than 6,400 Nepali students are studying in China and nearly 3,000 students have benefited from Chinese scholarships. At least four Chinese Universities are offering Nepali as a subject as a part of the drive for ease of business with Nepali traders and businessmen. Flow of Chinese experts, businessmen and others to Nepal has increased in recent times.

There were several high-level political contacts between the two countries last year. President Vidya Debi Bhandari visited Beijing in April. Chinese President Xi Jinping was in Kathmandu five months later. He made his sojourn to the Nepalese capital after an informal summit with Indian Prime Minister Narendra Modi at Mallalapuram, near Chennai. Soon afterwards, Nepal’s Defence Minister Ishowor Pokhrel, who is also a deputy prime minister went to the Chinese capital to sign a defence deal. Prime Minister K.P. Sharma Oli visited China twice during the last four years, first in March 2016 during his first stint in office, and again in June 2018.

From the Chinese side, Vice Premier, Prime Minister, and CPC leaders have been coming regularly to Nepal besides drones of professionals and bureaucrats in an engagement aimed at pushing bilateral ties to a new level. This is in keeping with President Xi’s pledge to forge ‘strategic and long-term cooperation’ with Nepal. He spoke about his intentions in an interview to a Nepali daily.

The United States which is trying to promote bonding between Indo-pacific region countries South Asian nations is watching the growing Sino-Nepali contacts with a hawk’s eye. On Xi’s Kathmandu visit, US Assistant Secretary for South and Central Asian Affairs Alice Wells remarked “Chinese influence has grown in Nepal.”

Yogesh Bhattarai, Nepal’s Minister for Tourism, Culture and Civil Aviation has had a different take. “Chinese President’s visit has not only improved Sino-Nepal ties but also helped to enhance Nepal’s image in the international arena”.

China is trying to spread its wings not only in South Asia or South East Asia but also in the African region through its ambitious Belt and Road Initiative, BRI. India has out-rightly refused to join BRI. So did some countries notably Malaysia which see the venture as a debt trap wrapped in a sugar candy. Many BRI projects have not taken off for this very reason. Nepal, however, has joined the Chinese venture hoping to better its transport infrastructure. The world will keenly be watching the Sino-Nepal joint ventures.

A multi-dimensional connectivity project Kerung-Kathmandu railway line is in limbo which the communist leadership in Nepal hyped the most in the wake of 2015 blockade to reduce country’s dependence on India for its third country trade. The Gautam Buddha International Airport at Bhairahawa in Western Nepal has not been completed and the Chinese North West Civil Aviation Company has sought fourth extension to complete the project.

China and Nepal have signed an agreement to construct the Kerung Kathmandu tunnel road for cross border transport linkage as an alternative to the Arniko highway, damaged in the 2015 earthquake. During Xi visit, China promised to upgrade this highway for smooth flow of goods and other traffic between Nepal and mainland China through Tibet. China has thrown open four of its ports to Nepal for trade with third countries. And allowed Nepal to use Lanzhou, Lhasa and Xigatse dry ports as well. In a manner of speaking, Chinese offers gave wings to Prime Minister Oli’s plans to make land locked Nepal, a land linked country.

China controls just 14 per cent of Nepal’s trade demand as of now though it is aiming to significantly shift Nepal’s transit trade from India to itself projecting India’s slow rail systems and capacity squeeze on border as no match for its OBOR push. But the moot question is when will the dream materialize? Because without developing and putting in place related infrastructure, the Chinese offers of sea port and dry port facilities to Nepal will remain just an offer. Nothing more, nothing less. Long and difficult mountainous terrain and poor road connectivity through quake prone zone will make haulage of goods and other traffic between mainland China and Nepal will not be cost effective.

Nepal’s trade with third countries through Indian ports is also not very high at over $3 billion, India accounts for 60 per cent and 63 per cent, respectively, of Nepal’s imports and exports. The total imports from India during the Nepalese fiscal year 2017-18 amounted to NRs.809.81 billion (INR.50613.3 Crore or US$7.39 billion). About 18.7% (i.e.INR.9497.2 Crore) of these imports were against payment in US dollars and the balance in Indian Rupees. The total exports to India from Nepal during the Nepalese fiscal year 2017-18 amounted to NRs.46.60 billion (INR.2912.8 Crore or US$0.42 billion). Although the value of total transit trade through India has been increasing, its share in Nepal’s total trade with the world has seen a decline from 43.5 percent to 33.5 percent over the past decade.

Clearly the attraction of Nepali market for China is limited. It is the Indian consumer who matters for the Dragon. So, what China is eyeing is the vast Indian consumer market with transit of goods through Nepal to the thickly populated border Indian states of Bihar, Uttar Pradesh and Uttarakhand. Dragon spreading wings over Nepal has a deep-rooted business sense. Any doubt?

- Asian Tribune -

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