Sino-Nepalese Relations: Factoring in India

Bhaskar Koirala August 09, 2012

A cursory examination of the trajectory of Nepal-China relations over the past decade would certainly have to commence by honing in on events of February 2001, when the late King Birendra embarked on a state visit to China at the invitation of former Chinese President Jiang Zemin.



Bhaskar Koirala

Director, Nepal Institute of International and Strategic Studies and Doctoral Scholar, School of International Studies, Peking University, China





This article argues that the intensity of Sino-Nepal relations over the past decade has witnessed a lack of consistency, attributable to shifting political conditions in Nepal. From 2000 to 2010, Nepal has experienced different political systems such as constitutional monarchy, absolute monarchy and currently a republican framework. However, Nepal’s espousal of the ‘one China’ policy, particularly as it concerns Tibet, has been steady and enduring, as has the logic that Sino-Nepal relations are not strictly ‘bilateral’ in nature but also potentially serve as a channel for Nepal to connect to a wider canvas including Central Asia, Southeast Asia and East Asia. It is also argued that to a large extent, Sino-Nepal relations are poised to be significantly affected by an evolving China-Nepal-India triangular relationship on account of Nepal’s geographic position. Effective consolidation of this triangular relationship is vital to ensure political stability in Nepal and therefore security for both China and India. 




A cursory examination of the trajectory of Nepal-China relations over the past decade would certainly have to commence by honing in on events of February 2001, when the late King Birendra embarked on a state visit to China at the invitation of former Chinese President Jiang Zemin. On the first leg of this visit King Birendra addressed the Boao Forum’s inaugural ceremony affirming Nepal’s strong support and desire for active participation in an Asian Forum akin to the World Economic Forum in Davos. Subsequently in Beijing, the key aspect of Birendra’s visit on the bilateral front was the agreement forged between Nepal and China to expedite construction of the Syaprubeshi-Rasuwa road which would serve as a second road linking Nepal to the Tibet Autonomous Region of China(Friedrich Ebert Stiftung, 2001). Sino-Nepal relations of this particular period seemed to be marked by a convergence which in theory saw the leveraging of bilateral relations to position Nepal in a broader ‘Asian’ framework, and which in practice began to expand the physical infrastructure that would facilitate this.

The end of the decade witnessed another state visit to China in December 2009 by Nepalese Prime Minister Madhav Kumar Nepal, the atmospherics of which were markedly less grandiose in the overall-all leveraging of Sino-Nepal relations and appeared to focus more on mundane concerns reflected by the signing of just two accords on Bilateral Economic and Technical Cooperation and a Memorandum of Understanding on Youth Exchanges. Following the abolition of monarchy in 2007 and with Nepal thus in a period of transition, the Chinese government has naturally tended to proceed with some caution and avoided alignment with any one political force, not knowing which party is clearly preponderant in Nepal. This position has perhaps come into sharper relief after the much anticipated second visit to Beijing by former Premier Pushpa Kamal Dahal aka ‘Prachanda’ failed to materialize in May 2009. Though the immediate reason behind the cancellation of the visit had to do with the controversy surrounding the sacking of the Nepal Army Chief of Staff Rookmangad Katwal and Prachanda’s subsequent resignation, it can also be argued that the agenda of the visit itself was overly ambitious and perhaps premature given the nature of politics of that time. It is obvious that the intensity of Sino-Nepal relations has oscillated during the course of the past decade on account of momentous events such as the assassination of King Birendra in June 2001 and transition to King Gyanendra, the People’s Movement of 2006, the abolition of the monarchy and advent of republicanism and the complexities of the Nepalese peace process, land-mark events of the past decade which have all drawn sober official reactions from the Chinese government.  However, it would appear that the overarching logic for Nepal in advancing relations with China has always rested on the premise that Nepal would not just accelerate interactions with China but would also open up to the broader canvas of Central Asia, Southeast Asia and even East Asia and thereby create new opportunities to promote its national development and prosperity.

The extent to which this logic impacts upon global geopolitics is debatable, but to say that such a process is detrimental to Indian interests and security concerns requires reevaluation in light of tightening Asian integration and also the notion of ‘dynamic equilibrium’[4] which has been employed to characterize Sino-Indian relations and which obviously have a bearing on regional developments. Similarly, remarks in April 2010 by Indian Foreign Minister S.M. Krishna in Beijing that India and China ‘must always remember that the two countries are each part of the other’s immediate periphery [and] that… both seek a secure and peaceful environment that allows them to focus on domestic growth prospects [and that we must] encourage progress in our neighborhood [so] we will be more secure and stable’ (Krishna 2010)—would seem to point to a slightly reduced degree of Indian concern, for example, in the face of Nepal’s desire to expand cooperation and connectivity with China and thereby wider regions. It would appear that some sections of the Indian strategic community are also thinking along these lines.  


Key Aspects of Contemporary Sino-Nepalese Relations

The most profound developments in contemporary Sino-Nepal relations are represented by the rapid pace of changes in the western sector of China encompassing the Tibet Autonomous region and also the Xinjiang Uyghur Autonomous Region. The completion of the Qinghai-Tibet Railway is a quintessential example of this, as is the nature of infrastructure development in Xinjiang which could in the near future have particular relevance for North-West Nepal.Such transformations in China’s western regions have taken place with great intensity in the past decade and present Nepal with numerous opportunities to expand ties with China and beyond, especially in terms of physical connectivity. Indeed, Sino-Nepal relations are moving forward in a rather organic and irreversible manner.

Nepal shares a boundary of over 1,400 kilometers with Chinese territory (specifically with the Tibet Autonomous Region). Despite the fact that the Tibet issue has continued to crop up especially in Sino-US relations, Nepal’s consistent  espousal of the One China policy has rendered it a ‘non-issue’ in Nepal. Protests in Kathmandu by Tibetan activists notwithstanding, and in spite of very limited support for these protests by a small section of Nepal’s civil society, by INGOs and some sections of the diplomatic community based in Kathmandu, no government in Nepal has broken with this policy. Further, Nepalese do not necessarily conflate Nepal-China relations with the Tibet issue.

Rather, what figures prominently in Nepal’s imagination with respect to China is her expanding clout and achievements which are ‘brought home’ to Nepal on an almost daily basis via radio, television, internet, vehicular and air traffic, and also the movement of people and students. The likely impact of China on Nepal will be substantially amplified by 2013 when the Tibet Railway is expected to arrive at the border. It is true that Chinese soft power is increasingly being felt in Nepal, but one is rather confounded when only suspicions are cast on China and Nepal, for instance, when Confucius Centers are established in Nepal or when China Radio International launches a local FM radio station in Kathmandu(Bhattacharya2009), without conceding that Nepal stands to gain a great deal as well in terms of knowledge and information, in the same way that Nepal benefits from local radio broadcasts of the BBC World Service, from the Alliance Française, the Goethe Institute or the British Council, and from the availability of TV channels in Nepal in various languages such as Russian, German, English, French, Korean, Japanese, Arabic, Bengali, Hindi and so on. The Nepalese Service of China Radio International, as a matter of fact, has been operating in Nepal since 1975 and now has more than 500 CRI listener’s clubs and millions of listeners in the country(Embassy of People’s Republic of China in Nepal 2004). Comments by a former Chinese ambassador to Nepal are instructive: ‘Nepalese listeners of China Radio International (CRI) played an important role in disseminating information they got from CRI of China’s latest developments to their relatives and friends so [as to] further understanding of each other’( 2006; Sennitt 2005).The diffusion across Nepal of more information about China combined with increasing numbers of Nepalese students in China, as also the steadily increasing movement of peoples between the two countries is creating an organic and natural momentum that is bringing the two countries closer together. Furthermore, increasing air, vehicular and cargo traffic between the two countries is rapidly promoting Sino-Nepal economic relations as well.

Trade between Nepal and China has registered significant increases in recent years. Exports from Nepal to China in the fiscal year 2005-06 stood at approximately US$12.8 million; by fiscal year 2008-09, the figure had more than doubled to US$26.4 million. However, it must be acknowledged that China is still only the fifth largest export market for Nepal behind India, US, Bangladesh, and Germany. On the other hand, China is currently the second largest importing country to Nepal behind India and here staggering increases have been seen. For instance, in fiscal year 2004-05, imports from China stood at approximately US$183.7 million but by 2008-09 the figure was close to US$469 million, translating into a significant balance of trade deficit for Nepal of around US$443 million(Trade and Export Promotion Centre2008/2009). Finally, China is also one of the largest bilateral donors to Nepal, ranking sixth in terms of official development assistance to Nepal, providing about US$12 million every year. 

On the political front, for China at this point in time, perhaps the single greatest concern in terms of Nepal is related to political stability. The reasons according to Han Hua of Beijing University are, ‘simply because it is likely to have a spill-over effect on the security environment in China’s frontier areas. For Beijing, Nepal’s strategic disposition is of tremendous value to its South Asia Policy and to the stability in its frontier region (Han 2006)

In examining Sino-Nepal relations, the bulk of international commentary tends to focus narrowly on the Tibet issue without acknowledging that Nepal possesses its own logic in building a strong partnership with China, among other reasons because of the varied opportunities that lay in the broader China-India-Nepal triangle which Kathmandu seeks to nurture. At the same time, Sino-Nepal relations have been adversely affected to a certain extent due to protests launched by Nepal-domiciled Tibetan activists, precisely at a time when Nepal requires strong support from its neighbors to consolidate its own fragile peace process. While reports have claimed that an expanding Chinese presence in Nepal would be especially alarming to India, given that India and Nepal share a long and porous border(Yardley 2010)such reports have failed to identify the reverse aspect of this argument, namely that China is also affected unfavorably by the same open border. Thus, the questions that routinely fail to get addressed concern the reciprocal advantages deriving from Nepal-China relations as also from Nepal-China-India relations, and failure to acknowledge these is to ignore truly historic developments currently underway in the very heart of Asia.



China-Nepal-India Trilateral Cooperation – A Potential Railway Axis

A great deal has already been written in Nepal about the considerable economic and trade benefits that will accrue to both Nepal and China in light of the extension of the Tibet Railway to the Nepalese border by 2013. It is worth considering this statement about the early history of American railroads, ‘The rails carried more than goods; they provided a conduit for ideas, a pathway for discourse…The completion of [this] great railroad... gave birth to a transcontinental culture. And the route further engendered another profound change. Here was manifest destiny wrought in iron…Distances shrank, but identification to land and fellow [peoples] grew in inverse proportion’ (PBS Online 2003).  Admittedly, to quantify the economic benefits of a truly historic endeavor that seeks to link by rail two countries like Nepal and China separated by the tallest mountains in the world is a much simpler and less speculative exercise than to talk about the broader transformations that this would engender. However, just as the American Trans-continental Railroad or the Trans-Siberian Railway and others wrought profound and epochal transformations whether political, economic, social, or cultural—the Tibet-Nepal Railway is also set to do the same, though of course the environmental and other drawbacks of this have also to be acknowledged(Ministry of Environmental Protection of the People’s Republic of China2009).


To turn to a larger concern, it should be mentioned that in spite of reported plans in the pipeline for a high-speed rail link that intends to connect China and India, specifically Kunming in south-western China to New Delhi(Krishnan 2010), the fact is that a railway line that connects China with India via Nepal is something which could materialize much more rapidly. In fact, once the Tibet Railway arrives at the Nepal border, the total length of the ‘missing link’ that would connect the three countries would stand at just 220 kilometers (Raxual in Bihar to Kathmandu 80 km, and Kathmandu to Kodari on the Sino-Nepal border, 140 km). As has been pointed out before, this would represent the achievement of an earlier vision of the British Royal Geographical Society dating back to around 1885 to establish a rail link between India and China(Hallett 1885; Koirala 2008). Clearly, in achieving this, several objectives would be met simultaneously, namely the further cementing of Sino-Nepal relations and of Indo-Nepal relations and perhaps more importantly, the establishment of a cooperative trilateral axis that would cut vertically across the heart of Asia and naturally transform Nepal into an earnest ‘Zone of Peace’. For Nepal in particular, if it becomes a transit state between India and China, some have argued that foreign investors could very well see greater prospects in investing in Nepal. The Nepalese Foreign Ministry has noted that ‘multinational companies may [decide to] produce in large quantities to capture the big markets of two gigantic economies. It might increase the possibilities of [amplification] in foreign investment in service sector industries [and] the creation of investment opportunities will [likewise] strengthen the tax base’ (Nepal 2006).


India Factor in Sino-Nepal relations

It is a truism that the India factor is pivotal in Sino-Nepal relations (just as the China factor is pivotal in Indo-Nepal relations). This becomes clear if we simply account for the fact that India is by far the largest trading partner for Nepal both in terms of imports and exports and the country’s largest trade deficit is with India currently worth a staggering US$1.73 billion(Government of Nepal, Ministry of Commerce and Supplies, Trade and Export Promotion Centre, November 2009).For better or worse, India has also been closely involved at nearly every juncture of Nepal’s modern political history. Nonetheless, what has been amply demonstrated by events of the recent and more distant past is that to achieve true and long-term stability in Nepal (which is vital from a security perspective for both China and India) there must be a high degree of convergence and coordination between these two, the most populous countries of the world that sandwich Nepal with a population of just 27 million. The narrow geographic space Nepal occupies as a sovereign state between India and China can be thought of as being both very consequential and quite inconsequential. It is consequential in the sense that, from a security standpoint, excessive and to that extent, unhealthy, jockeying and competition by China and India in Nepal (and the instability that must follow) would not bode well for either country in the face of this geographic reality. It is however inconsequential, in the sense that genuine cooperation between China and India in the Nepalese theatre can be relatively easy to achieve, and there are multiple ways to do so, the China-Nepal-India railway being just one example. The main argument here from a Nepalese perspective is that sustained cooperation between its two neighbors on the question of Nepal would almost certainly constitute the key ingredient of the country’s long-term stability and prosperity.

It would be appropriate here to highlight two old Chinese proverbs which can be normatively employed to discuss Sino-Nepal relations within the context of what is referred to as the ‘India factor’, the ‘US factor’ and ‘Other External Power’ factors. The first proverb says that ‘better good neighbors near, than relations far away’, while the second states that ‘distant water won’t quench your immediate thirst’. Indeed, Nepal’s relations with both China and India stand unambiguously as the cornerstone of the country’s foreign policy. From the perspective of Kathmandu, however, the problem is that it is not enough for Nepal merely to have ‘good neighbors’ in the form of Beijing and New Delhi. That is to say, at a certain level, it may be largely irrelevant if China and India are ‘good’ to Nepal without also being good to each other. To evoke another Chinese proverb, ‘it never rains on your neighbors without you getting your feet wet’. To put it differently, if dark clouds hover over Sino-India relations, Nepal will certainly suffer the consequences, no matter how good each neighbor is to Nepal itself. As a matter of fact, the rampant instability we have seen in Nepal over the past decade can be traced somewhat broadly to miscommunication and disjointed efforts by China and India in the Nepalese arena. And this instability has spawned a very unfortunate and undesirable phenomenon which is precisely Nepal’s sort of compulsion to cultivate ‘relations far away’ to address her many development challenges. During these years of sharp turmoil, substantial foreign aid and assistance supplied to Nepal by countries in many case continents away, has still not delivered stability to Nepal, and stability being the principle ‘thirst’ of the Nepalese people, it has in fact been borne out that distant water does not actually quench your immediate thirst. The case must be made therefore that in light of the centrality of the ‘India factor’ in Sino-Nepal relations (and vice-versa), ultimately genuine cooperation and partnership between the three countries must be the basis of the process to ensure stability in Nepal and therefore security for both China and India.


Shift in China’s South Asian Regional Strategy?    

Finally, with regards to the question of the shifts in the dynamics of China’s South Asian regional strategy within which Sino-Nepal relations are arguably embedded, one should begin by acknowledging overarching processes of contemporary Chinese foreign policy. China’s interactions with South Asia in the form of SAARC are quite limited and lackluster, relative to China’s diplomatic engagements in its other peripheral regions such as in Southeast Asia, Central Asia and beyond in Africa and the Pacific Island region. China is presently merely an observer in SAARC, just as the US, Japan, the European Union, Australia and Iran are, though China’s relations with virtually all South Asian states are steadily acquiring much greater depth, situated as it is in geographic proximity to the region unlike the other observers. However, if one examines China’s relations with Africa, for example, what is evident is that not only have these relations advanced rapidly and embraced a diverse range of issues, they have also been institutionalized and regularized within the ‘Forum on China-Africa Cooperation’. The same is true for China’s relations with Pacific Island countries in what is called the ‘China-Pacific Island Countries Economic Development and Cooperation Forum’. It is thus somewhat of an anomaly to find that in spite of the aforementioned geographical reality, institutionally, linkages between SAARC and China are considerably weak at the present time. Therefore, the question must be posed as to whether and how China wishes to institutionalize relations with SAARC in ways more consistent with Chinese diplomacy as evidenced in other parts of the world. This would give a clearer picture as to whether there is any significant shift in China’s South Asian regional strategy. The fact that China dispatched senior Vice Foreign Minister Wang Guangya to lead the Chinese delegation to the 16th SAARC Summit in Bhutan in April 2010 is significant in this regard, given Minister Wang’s current major role in policy planning at the Chinese Ministry of Foreign Affairs. Minister Wang’s comments in Bhutan are also noteworthy and suggest that China is indeed looking at cooperation with SAARC in nothing short of historical terms.

At the Opening Ceremony of the Summit on April 28, 2010, in a speech entitled ‘For Friendship, Cooperation and Common Prosperity’, Minister Wang said that ‘today's world is undergoing major changes, adjustments and development. Asia, including South Asia, is witnessing a steady rise of its international standing and influence. Cooperation between China and SAARC thus faces a historical opportunity. China is South Asia's biggest neighbor. Our traditional friendship boasts a history of more than a thousand years. Our good-neighborly relations are deep-rooted. With a combined population that accounts for over 40% of the world's total, we have a major responsibility to promote world peace and development. We all face the task of growing economy and improving people's livelihood. There is a lot we can learn from each other. There is even more we can do together. All in all, we have everything it takes to foster greater cooperation – the right time, favorable geographical conditions and most importantly, support from our people’ (Wang 2010).

Finally, it can be argued that China’s South Asia regional strategy, as well as various dimensions of its policy in Nepal are really part and parcel of greater macro trends in Chinese diplomacy. It therefore, comes as somewhat of a surprise when analysts outside Nepal take a simplistic view by interpreting any kind of traction in Sino-Nepal relations as being directed against a third country or as a deliberate attempt to disrupt extant geostrategic balances(Singh 2010; Agarwal 2009). Obviously it cannot be denied that the rise of China and indeed the rise of India, are profoundly altering old geostrategic patterns and constellations, but to ascribe ill-intentions to the motives of both Kathmandu and Beijing in their desire to expand Sino-Nepal relations is to miss the point. To a large extent current Nepalese political leaders have also been unable to properly consolidate the larger China-India-Nepal triangle, because in practice they have not always been consistent in hewing to the quite forward-looking principle of Nepal serving as a ‘Zone of Peace’ which was articulated by King Birendra(Sharma 2009). It should be acknowledged that the overall political dynamics of Nepal over the past decade have been very complicated, that political leaders have not risen above their narrow agendas of advancing their own personal and party interests, and that they have appeared unable (maybe even unwilling) to keep China and India on the same page insofar as this concerns Nepal. Normatively speaking, this is a wrong approach and one which is not in the long-term interest of Nepal or of the more crucial India-China-Nepal triangle.






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