New Delhi, July 9 (IANS) China now appears to be trying to re-establish its influence in Nepal after a Bangladesh foray, with new promises of economic assistance and infrastructure development.
With China’s Vice Minister for Commerce Yan Dong’s Kathmandu visit this week, the message was unmistakable.
Beijing wants deeper economic ties, faster project delivery, and formal safeguards for its investors.
This followed Nepal Foreign Minister Shisir Khanal’s meeting with his Chinese counterpart Wang Yi in Beijing last month. It marked the Himalayan nation’s first diplomatic visit to China since a new government assumed office in Kathmandu earlier this year.
Incidentally, Khanal’s Beijing trip followed his India visit, underscoring Kathmandu’s dual engagement strategy.
Yan has reportedly proposed a Free Trade Agreement (FTA) and a Bilateral Investment Agreement (BIA), urged Nepal to set up a one‑stop service for Chinese businesses, and offered help to expedite stalled infrastructure at border crossings such as Tatopani and Rasuwagadhi.
Large, visible, foreign investment and projects and trade facilitation measures – if not transparently financed and locally beneficial – can create dependency and public resentment that Beijing may exploit to secure political concessions.
Yan’s push for one-stop services and investor safeguards is designed to lower barriers for Chinese firms and accelerate that dependency.
In the run-up to the March 5 Nepal election, a multi-billion-rupee industrial park – part of China’s Belt and Road Initiative (BRI) projects – near the India border of Nepal’s Jhapa district hit the headlines when the Rastriya Swatantra Party (RSP) – now in government – dropped it from their poll manifesto.
There has been concern among sections in Nepal, who expressed caution regarding the financial implications of BRI projects, particularly in light of Sri Lanka and Pakistan falling into financial difficulties with similar Chinese investments.
Nepal sits between two regional powers, and unlike the previous communist regime, the Balen Shah-led new government is deliberately balancing ties with both China and India.
Khanal’s visits to India, followed by China, reflect Kathmandu’s effort to extract economic benefits while preserving strategic autonomy. Despite Beijing’s outreach, however, Nepal remains tightly connected to India through geography, trade, employment, and culture.
The incumbent Prime Minister is largely seen as a nationalist, attempting to tread a path between the two South Asian giants.
Beijing is pursuing its long‑standing view of Nepal as another South Asian foothold, with promises of more investments under the ambitious BRI, even as several projects like the one in Jhapa have been delayed or embroiled in financing disputes.
Reports suggest that unlike the K. P. S. Oli government, Kathmandu is now looking at improving relations with India while keeping Chinese investment and infrastructure cooperation on track, perhaps aiming to convert competition into bargaining power.
Meanwhile, say reports, Yan has also asked Nepal for support in WTO arbitration and on issues related to critical minerals — a diplomatic ask that signals Beijing’s interest in securing political backing as well as commercial footholds.
Its interest in “critical and strategic minerals” and in shaping related policy discussions suggests a longer‑term economic stake that could give China leverage over resource‑sensitive projects and negotiations in the region.
Chinese‑funded roads and cross‑border trade zones at Tatopani and Rasuwagadhi improve commerce but also enhance connectivity along the northern frontier. Improved infrastructure will be geopolitically consequential and serve dual‑use in crises, shortening logistics timelines and complicating India’s strategic calculus in the Himalayas.
Further, an FTA or BIA privileges for Chinese investors could widen Nepal’s trade asymmetry, and could divert Kathmandu’s trade and supply‑chain linkages away from India. That would affect border trade, informal commerce, and the livelihoods of communities that depend on cross‑border markets, as pointed out by several analysts.
Incidentally, China first proposed a BIA in 2012 after Kathmandu and New Delhi signed a similar agreement in 2011, which is currently under challenge in Nepal’s Supreme Court, according to a report in The Kathmandu Post on Thursday.
After agreeing in principle to sign a BIA in 2014 and exchanging draft texts, Nepal reviewed the proposal and sent its comments and suggested revisions, seeking Beijing’s endorsement, it added.
Besides India, said the report, Nepal has already signed bilateral investment protection agreements with six other countries, including France, Germany, Britain, Mauritius, Qatar, and Finland.
–IANS
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