Nara La, Nepal. Wikimedia Commons.
The recent 2017 elections in Nepal resulted with the coalition of the Communist Party of Nepal (Maoist Centre) and the Communist Party of Nepal (Unified Marxist Leninist) winning 80 of the 275 seats in the House of Representatives, giving them the majority rule. The party, under the leadership of Prime Minister Khadga Prasad Oli, has voiced support for greater collaboration with China.
The Communist party victory signals a shift in Nepal’s approach to relations between China and India. India has long held a strong presence in Nepal’s economy and politics. As part of their campaign promises, the party will push for closer collaboration with Beijing over New Delhi. The shift stems from the ideological support China has given the party, and desires to distance Nepal from India after recent conflicts.
In 2015, protests by Madhesi groups in the southern region of Nepal against the new Nepalese constitution lead to an Indian blockade. Subsequently, Beijing supplied resources, especially fuel, that were lost due to the blockade. This crisis elicited anti-Indian sentiments and feelings of trust with China, especially with Oli, as this was during his first term as prime minister.
The new government recognizes the need for aid to bolster the economy and to support development projects. With the degradation of Nepal-India relations and the opportunities surrounding Chinese support, Kathmandu is balancing relations between the two countries to maximize economic growth and political stability with both neighbors.
Nepal’s rivers and mountainous geography present high potential for hydropower development. Due to a lack of funds, Nepal has relied on outside investments. Both India and China have contributed funding in the past. Most recently, approved projects include a 750 MW plant in the West Seti River under the Chinese state-owned Three Gorges International Corp, and two 900 MW plants owned by two Indian companies - GMR Group and Satluj Jal Vidyut Nigam Limited - that would be primarily used to export power to India.
In relation to energy, almost all of Nepal’s petroleum is imported from India. This reliance, along with a large importation of electricity from India, has exponentially increased the country’s trade deficit with India. Greater exploitation of hydropower is thought to expand Nepal’s own energy capacity, lessening dependence on Indian energy. Cooperation with Beijing gives Kathmandu an increased ability to accomplish this. The new government is actively taking this approach, which is seen with return of a formerly scrapped deal for the 2.5 billion USD Budhi Gandaki dam project with China’s Gezhouba Group.
As part of the Belt and Road initiative, Nepal has access to transportation infrastructure development from Beijing. Negotiations over this between China and Nepal came to a head in 2016 when Oli, who was still prime minister at the time, secured Nepalese transit rights through China. The agreement opened the possibility to connecting Nepal to primary Chinese production centers, specifically through rail connections. Proposals for further road and rail routes continued to be made throughout 2017, even though Oli was not in power.
India has long been the main trading partner with the landlocked country, but it has been costly due to logistical incompetence, including rail congestion, inefficient customs clearance, and limited coordination between related agencies. India and Nepal have been working to improve these conditions with the implementation of an Asian Development Bank-supported electronic cargo tracking system for better security between the major port of Kolkata and Nepalese customs points. However, Chinese possibilities seem much more enticing. The most promising project is the Qinghai-Tibet railway, which is planned to reach the Nepal border by 2020. There is interest in connecting the rail to Kathmandu, which would place Nepal’s trade capacity with a direct connection to Beijing.
Nepal is also expanding its sources for internet services by teaming with China. The country has long been dependent on Indian telecom companies for cyber connectivity, which made Nepali users vulnerable to network failures. In January, this ended when Nepal Telecom and China Telecom Global launched internet services by laying optical fibers between Kerung in China and Rasuwagadi in Nepal. While India is still present, the Chinese involvement offers more flexibility in pricing and greater confidence in reliable connections.
Through all these ways, China is rapidly gaining influence in Nepal. New Delhi is expressing concern over the shift as another South Asian country leans further from India and closer towards China. The Maldives and Sri Lanka have received great political influence and investments from China, and Nepal seems to be following in suit.
Despite China’s increasing presence, India and Nepal are still historically, culturally, religiously, and politically deeply intertwined. India still has great influence over the country through trade, open borders, and shared military arrangements. Nepal is not trying to fully move away from India towards China. Instead, Nepal acknowledges its growing needs, and the new government is making it possible to satisfy those needs from both Indian and Chinese sources.
Ethan Masucol Ethan is a first-year student majoring in Plan II and International Relations & Global Studies with a minor in Chinese at the University of Texas at Austin. |  |
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