Shyam Prasad Mainali

The relations between Nepal and the People’s Republic of China are age-old. The deep-rooted relationship between the two neighbours have evolved since the days of those who crossed the Himalayan border such as monk and scholar Buddhabhadra, Princess Bhrikuti, Araniko as well as Chinese monks such as Fa Xian and Xuan Zang. Since the formalisation of diplomatic relationships in 1955, the affairs between the two have been marked by friendliness, cooperation, and respect for each other’s sensitivities. Both countries have relentless faith in the ideals of the Five Principles of Peaceful Co-existence.

Nepal has strongly and firmly remained committed to One-China policy. The country does not allow its soil to be used for any inimical activities against China. To consolidate bilateral ties, both countries have a long tradition of regular high-level visits as well as utilising multilateral forums to engage regularly with one another. China expects Nepal to support its major issues, including Tibet, Taiwan, Hong Kong, and Xinjiang. The northern neighbour wants Nepal to maintain social stability, political neutrality, and most importantly, maintain independence in decision making.

Bilateral mechanism
There are several bilateral mechanisms between Nepal and China that are promoting mutual interests. Nepal-China Joint Consultation Mechanism is instrumental in discussing the entire realm of bilateral relations. This forum is used as a platform where important bilateral matters are discussed and progresses in relations are reviewed. Other bilateral mechanisms include Nepal-China Inter-Governmental Economic and Trade Committee, Nepal-China Joint Committee on Agriculture Cooperation, Border Law Enforcement Cooperation, Border Customs Meeting, Joint Tourism Co-ordination Committee, Nepal-China’s Tibet Trade Facilitation Committee, Energy Cooperation Mechanism, Mechanism for Facilitation on the Implementation of China-Nepal Cooperation Programs and Projects in Nepal, etc. All of them are engaged in promoting and facilitating matters of mutual interest.

Economic cooperation between the two countries dates to the formalisation of bilateral relations in the 1950s. The Agreement between China and Nepal on Economic Aid was the first cooperation signed in October 1956. Since the mid-80s, the Chinese government has been pledging grant assistance to Nepal under the Economic and Technical Cooperation Programme. It is offered to implement mutually acceptable development projects. Grants, interest free loans and concessional loans are the three categories of Chinese assistance to Nepal. Development efforts in the areas of infrastructure building, industrialisation process, human resources development, health, education, water resources, sports are contributed greatly by Chinese financial and technical assistance.

After the completion of the signing ceremony of Memorandum of Understanding (MoU) on Cooperation under the Belt and Road Initiative on 12 May 2017, new avenues for bilateral cooperation in the mutually agreed areas have opened up. The MoU related to the areas of economy, environment, technology, and culture aims at promoting cooperation on policy exchanges, infrastructure connectivity, trade connectivity, financial integration, and connectivity of people as well. Trade, tourism and investment, education and cultural cooperation, international affairs are other areas of concern for both countries.

China’s investment in Nepal has come in the form of FDI, humanitarian assistance and development aid which has reconfigured the geopolitical relationship between Kathmandu and Beijing. Chinese relief has also been instrumental in emergency and reconstruction phases of earthquake recovery. The flow of Chinese FDI in Nepal as well as the agreement to allow the latter to use Chinese seaports for trade has been challenging the Indian hegemony on Nepal’s economy. On Nepal’s part, power generation is expected to create a long-term, lucrative export market for the Himalayan nation. If all goes well, it can transform the government’s financial position by improving national income.

The trans-Himalayan railway also has the potential of connecting Nepal to the rest of the world which would open more avenues in creating a prosperous Nepal. Chinese investments and financing have a big role to play in Nepal’s infrastructure goals, but it is up to Nepal to create a conducive environment for success. The political leadership must put aside its differences with opposition parties and work together to usher a new era of infrastructure-propelled development.

China has relentlessly supported Nepal’s core interest in upholding its independence, sovereignty, and territorial integrity as well as a continued support to Nepal’s development endeavors through government channels without any sorts of intervention. Nepal and China are enhancing mutually beneficial cooperation, upholding the two countries' strategic partnership of cooperation featuring ever-lasting friendship for development and prosperity. Nepal firmly supports China in safeguarding national sovereignty and territorial integrity. Nepal will not allow any anti-China activity on her soil. Relations between Nepal and China became more robust when the two countries solved all border disputes by signing the Sino-Nepal Boundary Agreement on March 21, 1960.

China played a vital role in saving lives during the outbreak COVID-19 and extended extensive cooperation to Nepal as displayed by China providing the largest quantity of COVID-19 vaccines and medical supplies. This support has also extended in cooperation in tourism and trade which is vital to the post-pandemic recovery of Nepal.

Core interests
Socio-political stability and prosperity in Nepal and China are the matter of mutual interest and the relationship needs to be of a win-win nature. Nepal should benefit by connecting with world via China. In order to dedicate themselves to maintaining peace, stability and development in their respective countries, the way forward for Nepal-China relations could be through strengthening mutual political trust, dialogue, exchanges, and understandings, and extending mutual support to each other's core sensitivities and interests.

This can be done through prioritising the connectivity and socio-economic development endeavors under the broader theme of the connectivity network to secure common prosperity, regional peace, and development. To develop Nepal from a landlocked into a land-linked country by activating all bilateral consultative mechanisms for promoting relations in every sector and finally by strengthening cooperation at the United Nations and intergovernmental platforms for safeguarding common interests, collaborating in regional issues, and supporting each other in matters of mutual interests are highly desirable.

(Mainali is former government secretary. mshyam@nema.edu.np)