Zhou Yuhua

In October 2019, Chinese President Xi Jinping paid a state visit to Nepal at the invitation of his Nepali counterpart Bidya Devi Bhandari. Taking the opportunity of jointly enhancing Belt and Road Initiative (BRI), the two countries comprehensively deepened mutually beneficial cooperation in various fields and upgraded the ‘China-Nepal friendly comprehensive partnership of cooperation for generations to China-Nepal generation-friendly strategic cooperative partnership for development and prosperity.’ The momentum of the ‘Belt and Road’ cooperation in 2020 has highlighted its strong resilience in the face of the sudden COVID-2019 epidemic.

Mutual benefits
In the first quarter of this year, China’s imports and exports with countries along the ‘Belt and Road’ reached RMB 2.07 trillion Yuan, a year-on-year increase of 3.2 per cent. This undoubtedly proves that the establishment of the ‘Belt and Road’ between Beijing and Kathmandu complies with the trend of the times of unity and cooperation, mutual benefit and win-win results, which is the correct choice in line with historical development.
Nepal is one of the few countries in the world where agricultural production is the main source of wealth accumulation and supply of material products. More than 80 per cent of Nepal’s population is engaged in agricultural activities, and a quarter of the population lives below the poverty line. The household handicraft industry and small enterprises account for a large proportion. Most of the enterprises are small in size and suffer severe lack of facilities and sophisticated marketing methods. The people largely rely on imports from countries such as India to meet their daily need of industrial products.
Meanwhile, due to the serious lack of oil and other important energy supply, the foundation of modern industrial economy is weak, and the proportion of modern industries in the industrial structure is low. Because of the domestic political factors coupled with the high cost of construction caused by the difficult geography, there is a shortage of hydropower and poor transportation networks in Nepal. Restricted by the laggard traffic facilities and customs clearance conditions, the land transportation between Nepal and India and Nepal and China is inefficient.
Currently, Nepal mainly depends on India for the foreign economic and trade exchanges. This situation has not only hampered the country’s speedy social and economic development but also brought extremely high risks to its political, economic and cultural security. Although the ‘economic embargo’ imposed on Nepal by India in the fall of 2015 was only a few months, it had badly affected the normal operation of domestic economy and society.
The Belt and Road Initiative does not aim to expand ideology. Neither does it indulge in a zero-sum game. Its goal is to create a win-win cooperation and common prosperity, and promote regional economic development. China has a solid foundation for advancing the BRI. In today’s international community, China is one of the few countries, probably the only one, which has sincerity, ability, willingness and confidence to provide Nepal with reliable development opportunities.
In May 2017, Beijing and Kathmandu signed a Memorandum of Understanding on the Belt and Road Initiative. During President Xi’s visit, Nepal and China agreed to accelerate the implementation of the Memorandum of Understanding on Cooperation under the BRI framework to strengthen ports, highways, railways, aviation, communications, and other links to jointly create a cross-Himalaya three-dimensional interconnection network. The construction of cross-border railway between Nepal and China is the primary task in the interconnected infrastructure. Both of the countries should make joint efforts to give full play to their respective advantages, ensure the unimpeded flow of people, services and commodities in the region, and promote the economic development of the Himalaya region.
According to the available statistics, China’s investment in a number of projects in Nepal has ranked first, becoming the latter’s largest source of foreign investment. Also China is the second largest trading partner and the second largest tourist source country after India, which has greatly promoted the domestic economic development of Nepal. As Nepal enjoys duty-free and quota-free market access to China, this will create positive conditions for investors to invest in Nepal’s manufacturing sector. China’s huge manufacturing base and vast internal market, combined with Nepal’s abundant natural resources and geographical advantages, will form an effective combination of value chain.
China has led the establishment of the Asian Infrastructure Investment Bank (AIIB), and Nepal has become its founding member. Within the framework of this organisation, the AIIB can provide investment and financing support to Nepal for its infrastructure development. In order to promote investment in trade between the two countries, Kathmandu will facilitate the opening of branches and other financial services of Chinese banks in Nepal.

Solid foundation
Judging from the development process after the establishment of the People’s Republic of China, cooperation between Nepal and China has deepened in political, economic, cultural, military and security fields, laying a solid foundation to strengthen cooperation under the BRI framework. And on the basis of taking full account of the interests and concerns of all parties, Nepal and China will build consensus and translate it into action, enabling them to make more visible achievements in accordance with the working ideas of development planning and project docking.

(Zhou is a professor at Xizang Minzu University of China)