Pro-China Nepalese Government

In recent years, Nepal has been seeking to strengthen its ties with China, particularly in the areas of economic development and infrastructure. The government of Nepal sees China as a key partner in its efforts to develop the country’s infrastructure and boost economic growth. China’s investment in Nepal’s infrastructure has been welcomed by the Nepalese government as an opportunity to help it address its infrastructure deficit and create jobs.

The Government of Nepal has also been trying to use China as a counterbalance to India’s traditional dominance in the region. India has long been seen as having a strong influence over Nepal’s politics and economy, and some in Nepal have sought to reduce this dependence by building closer ties with China.

However, this pro-China stance has also been met with some criticism and skepticism by some in Nepal who argue that Nepal should be cautious about becoming too dependent on China and should seek to maintain a balance in its relationships with both China and India.

Chinese Infrastructure Projects in Nepal

China has invested in a number of infrastructure projects in Nepal in recent years. Some examples include:

The Kathmandu-Terai Expressway: This is a 75.5 km long, 4-lane expressway that will connect Kathmandu to the southern plains of Nepal, known as the Terai. The project is being built with a $318 million loan from the China Exim Bank and is being constructed by a Chinese state-owned company.

The West Seti Hydropower Project: This is a 750 MW hydroelectric power plant being built on the Seti River in western Nepal. The project is being developed by a Chinese state-owned company and is being financed by a loan of $1.6 billion from the China Exim Bank.

The Pokhara Regional International Airport: This is a new international airport being built in Pokhara, a city in western Nepal. The project is being developed by a Chinese state-owned company and is being financed by a $216.5 million loan from the China Exim Bank.

China-Nepal cross-border railway: A loan of $8.3 billion cross-border railway project that would connect China and Nepal, is currently under discussion and it would be a major infrastructure project that would connect the two countries and help boost trade and tourism.

There are other projects include upgrading and maintenance of highways, building of bridges and many more.

China also provided a loan to Nepal for the construction of the Kerung-Kathmandu railway line, which is a major infrastructure project and also for many other projects as well.

High Level Political Visits

A number of high-level Chinese political leaders have visited Nepal in recent years. Some examples of such visits include:

In 2019, Chinese President Xi Jinping visited Nepal, becoming the first Chinese President to visit Nepal in 23 years. During the visit, China and Nepal signed a number of agreements on issues such as trade, infrastructure, and tourism.

In 2017, Chinese Premier Li Keqiang visited Nepal and signed a number of agreements on infrastructure projects and economic cooperation.

In 2016, Chinese Foreign Minister Wang Yi visited Nepal and signed a number of agreements on infrastructure projects and economic cooperation.

In 2016, Chinese Defense Minister Chang Wanquan visited Nepal and signed a number of agreements on defense cooperation.

In 2015, Chinese Vice President Li Yuanchao visited Nepal and signed a number of agreements on infrastructure projects and economic cooperation.

In 2022 alone, three high level visits took place. Li Zhanshu, number three in China’s leadership hierarchy and China’s top legislator visited Nepal for three days from September 12. Earlier, state councillor and foreign minister Wang Yi’s visited in March and Lin Jianchao, CPC’s international department chief, visited in July.

These visits demonstrate the growing importance that China attaches to its relationship with Nepal, and the increasing level of engagement between the two countries on a range of issues.

Chinese Claims to Nepalese Territory

There have been reports of border disputes and incursions by Chinese forces into Nepalese territory in recent years. The most notable of these incidents occurred in 2015, when Chinese border guards destroyed a makeshift border pillar set up by Nepalese border security personnel. Nepalese officials have also reported instances of Chinese troops crossing the border and building structures on Nepalese territory.

However, Chinese officials denied any such intentions and stated that the incursions were the result of misunderstandings and disagreements over the exact location of the border.

The boundary between Nepal and China is not clearly demarcated and there have been disputes over the exact alignment of the border in some areas.

Access to Chinese Ports

China has proposed to provide Nepal with access to Chinese ports as a way to boost trade and reduce Nepal’s dependence on Indian ports. This would allow Nepal to use Chinese ports to export its goods and import raw materials and other goods, which would reduce transportation costs and time, and provide Nepal with an alternative to Indian ports.

In 2017, Chinese Premier Li Keqiang visited Nepal and proposed to provide Nepal with access to Chinese ports through the development of a cross-border railway that would connect the two countries, and also signed a memorandum of understanding (MOU) to that effect. This railway would connect the Chinese city of Kerung to the Nepalese capital Kathmandu, and would also connect to other cities in Nepal.

Additionally, in 2019, Chinese President Xi Jinping, during his visit to Nepal, also proposed to build a “Trans-Himalayan Multi-Dimensional Connectivity Network” which would include upgrading and expanding infrastructure, such as roads and railways, to connect China and Nepal, and also improve access to Chinese ports for Nepal.

The proposals are still under discussion and have not been implemented yet. However, if implemented, it would help to reduce Nepal’s dependence on Indian ports, providing Nepal with an alternative route for trade and commerce.

India’s Actions to Counter Chinese Influence

India has traditionally had a strong relationship with Nepal, and has sought to maintain its influence in the country as a counterbalance to China’s growing presence. India has been trying to counter China’s influence in Nepal through a number of different strategies.

India has been providing economic aid and investment to Nepal in order to support the country’s development and infrastructure projects. India has also been encouraging Nepalese businesses to trade with and invest in India, in order to boost economic ties between the two countries.

India has been engaging with Nepal on a political level, and has been working to strengthen its ties with the Nepalese government and political leaders. India has also been working to build closer ties with Nepal’s political parties, in order to maintain a strong relationship with the country’s political establishment.

India has been working to strengthen cultural and people-to-people ties with Nepal, in order to build stronger bonds between the two countries. India has also been encouraging Nepalis to visit and study in India, in order to build closer ties between the two countries.

India and Nepal have been cooperating on security issues, such as countering terrorism and drug trafficking, in order to maintain stability in the region.

United States Stakes in Nepal

The United States has a relatively limited influence in Nepal compared to regional powers such as China and India. However, the US has been seeking to expand its engagement with Nepal in recent years in order to promote stability and security in the region.

Besides providing development and humanitarian assistance, the US has also been providing security assistance to Nepal, including training and equipment for Nepal’s military and police forces. The US has also been working with Nepal to counter terrorism and transnational crime in the region.

In recent years, the US has increased its high-level visits to Nepal, with visits from US Secretaries of State, US Ambassador to India, and US Ambassador to Nepal, and also has been providing aid and assistance in various sectors such as, health, education and more.

Nepal’s parliament ratified the US-led Millennium Challenge Corporation or MCC compact on 27 February 2022. The MCC, a US aid agency, signed a $500 million compact with Nepal to support the country in its developmental goals. Many have dubbed the MCC compact as Washington’s hedging strategy against China’s increasing aid for Kathmandu.

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The Galwan Clash

A border standoff in eastern Ladakh erupted on 5 May 2020. The face-off escalated after the Galwan Valley clashes.

On 15 June 2020, Chinese troops, estimated to be more than 250, attacked a group of 50 Indian soldiers who were inspecting the progress of the Chinese withdrawal from the Indian side of the Line of Actual Control (LAC) in the Galwan Valley. The encounter ended in the deaths of 20 Indian soldiers and an undeclared number of Chinese troops, and led to a prolonged standoff between the two sides.

There had not been a single death from hostilities at the LAC in over 45 years — since 1967 – despite several hundred Chinese LAC violations annually.

The Current Situation is not promising.

The 16th Border Meeting was held on 17 July 2022, a step-by-step de-escalation was agreed but very little progress has been made.

The stated Indian position has been that until and unless there is peace and tranquility on the border, overall China-India relations cannot much progress. So far, India has remained reluctant to engage China normally in the bilateral context.

Beijing has repeatedly said that border standoff does not represent the entirety of China-India relations, while New Delhi has maintained that peace along the frontier is essential for the two countries to work together.

Chinese violations the LAC in all sectors are growing in frequency – up to 660 LAC violations by the PLA in 2019. There is an uncommon level of hostility, including fist-fighting and rock throwing that were rare prior to 2017.

The trends suggest LAC standoffs are growing more hostile, more frequent, longer in duration, and are receiving more media coverage and international attention, potentially restricting both sides’ room for manoeuvre.

There is a substantial massing of military forces in Ladakh to positions near the LAC.

Why Did China Resort to Aggression?

Some of the likely reasons are discussed below

Infrastructure Development. There has been an acceleration of Indian infrastructure development near the LAC in an attempt to close a substantial deficit with China there.  In April 2019, India completed work on the critical Darbuk-Shyok-DBO road running parallel to the LAC in Ladakh, stretching all the way to its northernmost outpost at Daulet Beg Oldi. More recently, India began building east-west feeder roads from DSDBO to its forward outposts near the LAC. This year, India was also reportedly engaged in efforts to improve road infrastructure at Pangong Lake.

China has attempted to pressure India to halt infrastructure activities. India refused to heed China’s calls; the PLA applied military pressure. Only this time with more troops, more equipment, more locations, more pressure, and one potentially bold attempt to change the status quo at Pangong Lake.

India continues to construct and modernize over 60 “strategic roads” along the LAC, with an expected completion date of 2022.

Galwan River area has now become a hotspot because it is where the LAC is closest to the new road India has built along the Shyok River to DBO – the most remote and vulnerable area along the LAC in Ladakh.

Major Power Diplomacy. China tried to woo India to hedge against the U.S. Indo-Pacific strategy and making it a key partner in the Belt and Road Initiative. India declined.

China’s Neighborhood Strategy. China wants to effectively check a rising New Delhi by asserting its strength and psychological advantage in bilateral ties.  It wants to have a China-centered regional order with Beijing as the sole leader or rule-maker in the region.

Blame for Pandemic. China believed that India was catalyzing resentment against Beijing over poor handling of the pandemic that originated in Wuhan. India took over as the chair of the WHO executive Board on 22 May 2020 and it had a say in the probe into the origins of the pandemic and Taiwan’s participation in the 72nd session of the World Health Assembly.

Internal Dissent. Xi Jinping and the Chinese Communist Party (CCP) faced one of the biggest crises since the party came to power in 1949 because of dissatisfaction in handling the pandemic and the consequent surge in economic distress. At the NPC plenary, President Xi’s expected message was conciliatory to the domestic audience, while the international assertion was to be robust and defiant.

Restrictions on Chinese investments. The Chinese government took offence to India’s new rule notified in early April 2020 that blocked Chinese companies from acquiring Indian firms without government approval. The Indian government decided that all procurement orders of Rs 200 crore or less could not go to foreign companies. It could discourage cheap exports from China. Since the clash, India has also banned 224 Chinese Apps and a few dozen Chinese companies are facing tax evasion scrutiny including ZTE, Huawei, One Plus, Xiaomi and Vivo.

Change of J&K Status. India abrogated Articles 370 and 35A of the Constitution on Jammu & Kashmir, which provided the province special status and autonomy on 5 Aug 2019. J&K was made a Union Territory directly administered from Delhi. China described India’s move as “unacceptable”, undermining its “sovereignty” — even raised the issue at the UN Security Council. Frequent calls have been made by Indians to integrate Pakistan Occupied Kashmir (POK) and Gilgit- Baltistan as these territories rightfully belong to India. China is concerned about these demands since the Belt and Road Initiative (BRI) is part of the ‘China Dream’ and the Karakoram Highway passes through these Indian territories to Gwadar port on the Arabian Sea.

India’s Accelerating Partnership with the US. China is concerned with India’s increasing and growing proximity to the US which it belives is aimed at countering China. Some of the developments which have taken place are

•             Major Non-NATO Defense Partner with all basic enabling agreements in place.

•             Over $20 billion in defense sales to India MQ-9B unmanned aerial systems; P-8I maritime patrol aircraft, C-130J transport aircraft, C-17 planes, MH-60R multi mission maritime helicopters, AH-64 Apache helicopters, CH-47 Chinook helicopters)

•             U.S.-India Defense Technology and Trade Initiative

•             Institutionalised 2+2 Ministerial Dialogue (2018)

•             Quad Initiative (March 2021).

•             Exemption from buying the S-400 Triumf AD systems from Russia

•             Malabar joint exercises

•             Close collaboration in Covid-19 response

•             Counterterrorism Joint Working Group

•             Homeland Security Dialogue

•             Counter Narcotics Working Group

The Ukraine War

With the attention of the US-led West diverted to Russia’s invasion of Ukraine instead of countering China in the Indo-Pacific, an emboldened Beijing is likely to indulge in muscle-flexing along the LAC, especially in the Arunachal sector.

India will have to grapple with a more belligerent China along its northern borders as a fallout of the Ukraine crisis.

The PLA has shown no signs of de-escalating the 21-month-long troop confrontation in eastern Ladakh, even as it has systematically strengthened its military positions and infrastructure all along the LAC.

Apart from conventional military capabilities, China’s focus on space, cyberspace and “informatized” and “intelligentized” warfare has been a major concern for India.

India’s Encirclement By China

New Delhi has numerous other concerns regarding China’s activities in almost all of India’s neighbouring countries.

Today, China with its unmistakable clout in South and Southeast Asia has used its economic-political-military influence, in intensifying its ties with Bangladesh, Myanmar, Sri Lanka, Nepal, Bhutan, Pakistan, Afghanistan and Maldives causing Indo-China political and security discord.

According to the US annual report “Military and Security Developments Involving the People’s Republic of China (PRC) 2020” the Pentagon says that in addition to the Chinese military base in Djibouti, China is seeking to set up military logistics facilities in Pakistan, Sri Lanka and Myanmar. In addition, China is considering to base its military logistics and infrastructure in Thailand, Singapore, Indonesia, United Arab Emirates, Kenya, Seychelles, Tanzania, Angola, and Tajikistan.

China is using the One Belt One Road (OBOR) initiative first announced in 2013, to support its strategy of national rejuvenation by seeking to expand global transportation and trade linkages to support its development and deepen its economic integration with nations along its periphery and beyond.

While China finances the developmental projects in target countries, information about its loaning operations are kept secretive and vague. Consequently, governments of BRI countries end up being completely unaware of the amount of money that they owe to China when contracts expire since loans extended to Chinese state-owned companies, banks, special purpose vehicles, joint ventures, and private sector institutions. The terms and conditions of the loans give China the right to use the finished projects and land as collateral if the latter were to default on loan repayments.

Potentially, these projects, when taken over could provide a global PLA military logistics network to interfere with military operations against China and support its own offensive operations as the Chinese global military objectives evolve.

Let us look at Chinese inroads into India’s neighbouring countries.

Myanmar

Myanmar is also part of BRI and likely to face the Chinese Debt Trap. There is also a lack of trust on the Myanmar side, due to China’s historical role in supporting rebel groups in Myanmar.

China and Myanmar share a 2,227-kilometer-long border. They have a boundary protocol signed in 1961, to conduct joint inspections every five years. But this has only occurred twice—in 1984-86 and 1992-95. A dispute over the border between Myanmar’s northern Shan State and China has simmered since 2008. Parts of the 200 km fence built by China have been pulled down by locals. The Chinese government is pushing Myanmar to implement the long-delayed Belt and Road Initiative projects and the China-Myanmar Economic Corridor (CMEC) Chinese townships are coming up inside Myanmar border areas administered by Wa authorities. The expansion of Chinese influence is obvious.

The CMEC will terminate at a new deep-water port at Kyaukpyu in Myanmar’s Rakhine state. Some analysts have raised fears that the port could someday be used as a base or access point by the PLA.

China has a maritime reconnaissance and electronic intelligence station on Great Coco Island in Myanmar. The Chinese Army is also building a base on Small Coco Island in the Alexandra Channel between the Indian Ocean and the Andaman Sea north of India’s Andaman Islands. These two islands, which have been leased to China since 1994.

Bangladesh

China is considered as an ‘all-weather friend’ of Bangladesh – Their ties cover geopolitical, economic spheres and defence ties form a key area of their relationship.

Bangladesh forms part of China’s Belt and Road Initiative-BRI. But all is not well between their ties. China tends to interfere with Bangladesh’s foreign relations matters.

Chinese Ambassador to Bangladesh Li Jimming, on May 10, 2021, warned Dhaka against joining the QUAD and said that if Bangladesh did so, it will “substantially damage” bilateral relations between Bangladesh and China.

China accounted for around 74 percent of Bangladesh’s arms imports between 2010– 2019 including submarines.

Bhutan

Bhutan shares an over 400-km-long border with China and the two countries have held over 24 rounds of boundary talks in a bid to resolve the dispute.

Bhutan and China issued a 1988 Joint Communique on the Guiding Principles for the Settlement of the Boundary and signed agreement on the maintenance of peace, tranquillity and status quo in the Bhutan-China Border areas in Kunming in April 2021.

China is using all tactics available to it for twisting Bhutan’s arms. China has established new villages roads and military or police outposts in disputed Bhutanese territory.

The Chinese game plan is probably to exchange it for another disputed pocket around Doklam, in western Bhutan at the cost of India’s security.

China seems to have managed to effectively lower India’s influence in Bhutan.

Nepal

China is trying to succeed in replacing India as the key economic as well as security partner for Nepal.

China’s main interest in Nepal has always been led by its concerns over Tibet. 25,000 Tibetans live in Nepal.

The Chinese have always considered Nepal the soft underbelly of Southern Tibet and are now determined to keep it under their influence.

Under a Marxist government, Nepal is trying to reshape its ties with China as a possible counterweight to India by proposing extension of their railway network from Tibet to Nepal, infratsructure projects and providing land link to Chinese ports.

Nepal as a buffer is important for India but India is losing its clout in Nepal to China.

Sri Lanka

Sri Lanka joined China’s BRI with several projects but now Colombo has fallen into the premeditated scheme of a Chinese debt trap, paying off its loans through debt-equity swaps to creating extra-jurisdictional Special Economic Zones.

An often-cited example of the ‘debt-trap diplomacy’ is the case of Hambantota in Sri Lanka, where the local government was forced to sign the port away on a 99-year lease after failing to repay Chinese loans.

For India, Lanka is an island that can be transformed into a veritable enemy aircraft carrier anchored on her doorstep, within strike range. Sri Lanka is also a potential kick-off point for an Antarctica mission at some future point.

Maldives

Maldives is barely 70 nautical miles away from Minicoy island in India’s Lakshadweep archipelago and 300 nautical miles away from India’s west coast.

Until 2017, Maldives was part of the Indian security grid receiving defence and economic assistance from India.

In 2013, after Abdulla Yameen came to power, Xi visited Maldives. Maldives joined the Maritime Silk Road and the two nations inked a free trade agreement. Chinese infrastructure projects flourished. Maldives accumulated a debt of nearly $3.1 billion (GDP $4 billion). There have been speculations about a possible Chinese naval base in Maldives. However, since Ibrahim Mohamed Solih came to power as president in 2018 after defeating Yameen, India has been prioritized over China.

Pakistan

China’s “irreplaceable, all-weather friend” Pakistan is China’s biggest arms buyer, counting for nearly 47% of Chinese arms exports.

China has established ammunition factories, provided technological assistance and modernised existing facilities.

The Chinese Chengdu J-10B fighter and Low to Medium Altitude Air Defence System (LOMADS) LY-80 has been supplied to the Pakistan Air Force. The Chinese have provided technology to manufacture JF-17 Thunder fighter aircraft, K-8 Karakorum advance training aircraft, AWACS systems and Al-Khalid tanks.

China is the largest investor in Pakistan’s Gwadar Deep Sea Port, which is located at the mouth of the Strait of Hormuz.

China played a major role in the development of Pakistan’s nuclear infrastructure, such as in building the Khushab reactor (for production of plutonium) and the completion of the Chashma Nuclear Power Complex and plutonium reprocessing facility.

China inroads in  Pakistan/Sindh/Baluchistan and Pakistan Occupied Kashmir, under the garb of BRI and strategic importance attached by it to China Pakistan Economic Corridor (CPEC) are an open secret.

India’s Opposition to CPEC. India has not endorsed the CPEC because it passes through the contested Gilgit-Baltistan region that remains, according to India, under the illegal occupation of Pakistan.

It is crucial for China to gain control over the Gilgit-Baltistan region (Pakistan-occupied Kashmir PoK), as the region borders the Xinjiang province of China.

CPEC would link Pakistan’s southern Gwadar port in Balochistan on the Arabian Sea to China’s western Xinjiang region. It also includes plans to create road, rail and oil pipeline links to improve connectivity between China and the Middle East.

Gwadar port, located on the Arabian Sea, will allow China to have a say in global energy economics as the country can use a naval base to hold control over the maritime traffic passing between West Asia.

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While the construction has not started, the survey is part of a pre-feasibility study for the project.

The plan was conceptualised by China in 2008 and it was decided that the railway corridor would connect Lhasa to Shigatse and would be extended to Keyrung on the Nepal border. This is to be further stretched to Kathmandu and Lumbini.

Cost has been a major concern with the entire project already hitting estimates of over $300 million. The project is complex with several tunnels and bridges required.

China plans to build a 540-kilometre strategic high-speed rail link between Tibet and Nepal passing through a tunnel under Mt Everest, a move that could raise alarm in India about the Communist giant’s growing influence in its neighbourhood.

ALSO READ The China Factor in Nepal

China is considering tunneling under Mount Everest to connect better with the South Asian markets. The extended rail line from the Tibet’s capital Lhasa to Kathmandu in Nepal, will reduce India’s influence in Nepal.

China had earlier discussed extending the Qinghai-Lhasa line to the Nepalese border without digging a tunnel.

The Lhasa line was extended to Xigaze, the second biggest city in Tibet, which is closer to the Nepalese border as Chinese authorities completed a 253-km long link railway line in August last year. 

As with any engineering project of this size, it is not without its opponents. The International Campaign for Tibet cautions that there are “dangerous implications for regional security and the fragile ecosystem of the world’s highest and largest plateau.”

Restrained by rugged Himalayan mountains with its “remarkable” changes in elevation, trains on the line would probably have a maximum speed of 120 kmph.

The feat would provide China with more influence over India’s allies and neighbours as well as continue Beijing’s plan to open up the Buddhist plateau of Tibet to tourism and modern Chinese culture.

Basically, a rail line from mainland China under the Himalayas would connect the nation to the billion plus inhabitants living below “The Roof of the World”.

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Indian Railway Projects

To counter China’s influence through the proposed rail corridor, India has also planned railway links in Nepal. Six cross border railway lines have been proposed between India and Nepal till date.

Unlike the Nepal-China railway line that faces hurdles because of the terrain, the construction of railway lines between India and Nepal is less challenging. Two of these projects have had some progress.

The first is the Jayanagar-Janakpur-Bardibas railway line at a cost of Rs 5.5 billion. The 69 km project is divided in three phases. In the first phase, the 34-km segment between Jayanagar and Kurtha is complete. Work is in progress in the second phase which is 18 km from Kurtha to Bhangaha in Mahottari district and the third phase which is a 17 km segment from Bhangaha to Bardibas.

The second is the Kathmandu-Raxual railway line, which is 136 km-long and is proposed to be an electrified rail line connecting the border town in India of Raxaul to Nepal’s capital Kathmandu. The Indian team has already completed the pre-feasibility study of Kathmandu-Raxual railway line and both were in the process of holding consultations on preparing the Detailed Project Report of the railway line.

Comments

Prime Minister Narendra Modi has made efforts to bolster the nation’s regional pull, but the construction of a contiguous rail line between China and the Nepalese capitol Kathmandu would undermine his historical geographic advantage as early as 2020.

China has been scaling up its ties with Nepal much to the chagrin of India to stem the flow of Tibetans travelling through Nepal to meet the Dalai Lama in Dharamshala.

The idea is to find a short route to Nepal in order to access the vast Indian market in a short time. China may be trying to involve Nepal in its Bangladesh-China-India-Myanmar project because New Delhi has shown less enthusiasm for the BCIM project. 

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