Bridging the Gaps

Despite being all-weather friends, the lacuna in Nepal-China relations lies in implementing the bilateral agreements inked in different period of time. While Prime Minister KP Sharma Oli made his six-day state visit to China from June 19–24, 2018, numerous agreements were signed between Nepal and China’s public and private sectors to develop hydropower projects, cement industries and establishing highland food parks. While different Nepali investors and Chinese investors were signing the separate memorandum of understandings (MoUs) in Beijing, Nepalese media, academicians and foreign policy experts back home were mulling whether these agreements will be implemented ?

This time, there are high chances of these agreements being implemented soon as the present government is strong and environment for the foreign investment is stable, and most importantly the agreements have been made with the private companies as well. While inaugurating the 2018 Nepal-China Business Forum jointly organized by the Embassy of Nepal and the China Council for the Promotion of International Trade, Prime Minister Oli expressed confidence that Chinese entrepreneurs would take advantage of the conducive atmosphere and investment-friendly policies of the new government formed after the end of protracted political transition in Nepal. On the occasion, agreements were not only signed between the two governments but also between the private sectors. To exemplify, CEO of Investment Board (IB) of Nepal Maha Prasad Adhikari and Vice President of Huaxin Cement of China Xu Gang signed the project investment agreement between the Investment Board of Government of Nepal and Huaxin Cement Narayani Private Ltd. The Chinese firm has pledged 144 US Dollars of FDI to generate 3,000 metric tonnes of cement per day. Likewise, the government of Nepal, Ministry of Energy, Water Resources and Irrigation, and China Communications Construction Company agreed to prepare a detailed feasibility study on Eastern Terai River Training in Biring, Kamala, Kankai rivers. Joint Secretary at the Ministry of Energy Dinesh Kumar Ghimire of Nepal and Deputy General Manager of China’s Communications Construction Company Liu Dongyuan signed the agreement. Similarly, MoU between Fortuna Investment Pvt. Ltd of Nepal and Guizhou Maritime Silk Road International Investment Cooperation was signed on establishing the highland food park for varieties of fruits and vegetables. Chairperson of Fortuna Investment Company of Nepal Bhawani Rana and ZhagZao of Guizhou Maritime Silk Road International Cooperation signed the MoU. Over 46 million US dollars would be invested in this project.

Interestingly, some of the agreements including that of transit and transportation, which were termed as “historic” and” game-changing” during Oli’s China visit in in March 2016 during the Indian border blockade failed to gather momentum during his second visit. Both the governments have to sign and exchange the transit protocol to bring the Transit and Transport Agreement into effect which has provided Nepal access to Chinese sea port for third-country trade. Owing to the same, Nepal government recently sent a high-level team to China to negotiate the terms of the Protocol to the Nepal-China Transit Transport Agreement.

The assurance that Prime Minister K P Oli has received from his Chinese counterpart over the culmination of Nepal-China cross-border connectivity through railways, is an indication that all the gaps present in Nepal-China bilateral relations will be soon eliminated. On June 20, 2018, when Prime Minister KP Sharma Oli held a meeting with Chinese President Xi Jinping at the Great Hall of the People in Beijing, Chinese President assured Prime Minister Oli that he is keen to see the Nepal-China cross-border connectivity come to fruition. “The train from Shigatse will reach to Kathmandu,” Xi said. Although Nepal and China largely agreed in 2016 to develop a Chinese railway network from Sighaste to Kathmandu and to Lumbini, near the Nepal-India border. Even a Chinese team came to Nepal to conduct a pre-feasibility study of railway link between two countries. But, during Oli’s bygone visit to China, the two countries agreed to expand Chinese railway only to Kathmandu, not extending it to Lumbini. On June 22, 2018, Nepal and China signed a landmark accord to develop a cross-border railway line that will connect the Tibetan town of Kerung with Kathmandu, calling the Cooperation for Railway Connectivity “as the most significant initiative in the history of bilateral cooperation”. Thus, instead of perceiving it as the upshot of India’s disenchantments with the Chinese railways reaching her borders, it was the result of balanced foreign policy that Oli exercised with the two immediate neighbors. Already senior government officials from Nepal and India have agreed to seal the Memorandum of Understanding for Preliminary Engineering cum Traffic Survey of the Raxaul-Kathmandu rail line as soon as possible.

The predominant challenge to implementing the railway from Kerung to Kathmandu is the issue of funding. It has been reported that China has offered a loan for the construction of the Nepali side of the railway. But, Nepal prefers the funding be a grant as rumors have been falsely spread that Nepal will be caught in “debt trap” if the railway is funded through a loan from China. Oli’s visit was anticipated to finalize the funding issue, but unfortunately it made no headway during this China sojourn.

During his visit, Prime Minister Oli and Premier Li not only reviewed whole gamut of bilateral relations but also agreed to implement the agreements and understandings reached in the past, including the early finalization of the Protocol to the Agreement on Transit Transport. It is clear indication all the gaps will be bridged by the incumbent Oli-led government. Despite some gaps, the agreements to open specific routes along with the settlement to initiate certain important projects are some noteworthy achievement of this visit. Some critics have disgraced Oli’s inability to take ahead the protocol of long awaited “Trade and Transit treaty” which could have been immediate benefit for country. This agreement done by PM Oli during his previous tenure would settle the issues regarding trade and transit, trade route and further ensure Nepalese rightful access to Chinese port. And this issue is promises to be patch up in fourteen point joint statement.

The bilateral agreement regarding the matters of Trans-Himalaya multidimensional connectivity expansion and other agreements concerning railways, expansion of road network, transmission line were also inked. However China has not yet mentioned about funding in Detailed Project Report (DPR) of Nepal-China Cross Border Railway line from Keyrong to Kathmandu. Nepal is expecting that this project would be aided under Belt and Road initiative plan. But on one hand China is investing more on giving loans than aids through BRI project, which indicates Nepal may also remain under compulsion to take huge loan. On other hand there remains some space for optimism as China has history of helping in Construction of Kodari highway during 1960s when China was comparatively poorer than now and was under the doom of great famine. Owing to this fact it would be rational choice for Nepal to expect funding from today’s second largest economy mounting at 6.6% growth rate a year. China has further agreed to assist on re-opening Tatopani route, improve Syaprunbesi- Rasuwagadi route and also help to construct bridge in Rasuwa and Tatopani.

PM Oli also raised the issue of trilateral cooperation during his meeting with Chinese president and prime minister. The motive behind focusing on this issue can be considered as a diplomatic step to seek balanced relation with both China and India. Amid the context of improved relation between China and Indian after Wuhan talk and also the soft speech by Indian Prime minister in Singapore might have triggered Oli to bring the issue of trilateral cooperation in discussion. Although some experts views that it’s diplomatically delicate to raise the issue of third party in bilateral talk. While talking about Trilateralism, India has always been unease regarding Nepal-China relation and reluctant to join this grand cooperation framework. But these days India’s attitude towards Nepal has changed after Wuhan talk as it didn’t pass any words regarding Oli’s China visit. Interestingly, India’s dream to inroad train inside Kathmandu through Birjung and China’s Keyrong-Kathmandu railway project gives the fishy sense of some unofficial economic agreement between two countries. Because the arrival of both trains inside Kathmandu would shorten their trade distance to around 150km, resulting more viable trade opportunity.

The primeministerial visit to China was beheld with apprehension as well as condemnation among political enthusiast in Nepal. However with left alliance dominance and Oli as governing leader, China seems trying to build easy entrance inside Kathmandu. In such context the agreements remains in interest of both nation and would soon phase into implementation. These agreements seek to take bilateral relation to new height by contributing to the foundation of massive human community with shared future. Such connectivity would abridge the all gaps between both nations as well upholds economic relation and will hopefully results progress and generate fruits for Nepal