China, the Good Neighbor? What China is Up to in Nepal

China, the Good Neighbor? What China is Up to in Nepal
Photo Credit: Cobris/達志影像

What you need to know

Chinese aid and development projects demonstrate a convergence of foreign investment and political power.

April 2017 marked the two-year anniversary of the powerful earthquakes that devastated Nepal and set the stage for China to act as a global humanitarian player. The earthquakes inflicted significant damage in Nepal’s central and northern districts and motivated Beijing to mobilize its largest-ever humanitarian effort on foreign soil. Underscoring Beijing’s immediate emergency response, in June 2015 the Chinese Foreign Minister committed 4.7 billion yuan (US$480 million) to infrastructure repair and development across Nepal. These seismic events and humanitarian responses set in motion the ongoing reshaping of relations between Kathmandu, Beijing and New Delhi.

Since 2015, ongoing Chinese efforts to provide humanitarian assistance, develop infrastructure and reopen transport corridors with Nepal symbolize an increasingly close relationship. The earthquakes, in addition to causing nearly 9000 deaths and incalculable losses to infrastructure, triggered dozens of landslides and blocked all roads connecting Nepal and China. Utilizing air assets to evacuate Chinese personnel from infrastructure projects under construction in several border districts, Chinese security forces were also deployed to open overland routes and thereby alleviate an economic and mobility crisis that threatened to further exacerbate Nepal’s humanitarian emergency.

China’s earthquake emergency assistance to Nepal builds upon precedents set in 2013 and 2014. In 2013, the Chinese Embassy in Kathmandu renewed a pilot five-year food aid plan to Nepal’s northern districts in 2013. In 2014, China became Nepal’s largest source of foreign direct investment (FDI), exceeding Indian FDI for the first time ever. In November 2014, China and Nepal signed a new memorandum of understanding committing 10 million yuan (US$1.45 million) annually from 2014–2018 for the development of Nepal’s northern districts. Finally, 2014 also marked the year Nepal became an early signatory to China’s Belt and Road Initiative (B&RI).

Sino–Nepal relations are today closer than at any point in the last 50 years. Marking the 60th year of bilateral relations and barely one month before the April 2015 earthquake, Beijing committed in March 2015 to a five-fold increase in its annual grant assistance to Nepal. A dramatic expansion from 150 million yuan (US$22 million) annually, the pledge boosted Beijing’s annual grant assistance to Kathmandu to 800 million yuan (US$116 million).

Following 2015 and Beijing’s unprecedented humanitarian efforts, in the first half of the 2016–17 fiscal year Nepal received over two-thirds of its total FDI from China. Recent talks on the B&RI have also brought large delegations of Nepali officials to Beijing for bilateral talks on forthcoming projects including roads and hydropower facilities, a rail line from central Tibet to Lumbini, and a new transit-trade treaty for expanding international throughput.

Chinese interventions in Nepal, particularly those geared towards infrastructure development, have become more closely tied to national concerns with state security and control over Tibetan exile populations. Since 2008, the Nepali government has placed increasingly strict limitations on Tibetan communities within its territory. This is largely a result of Chinese pressure following widespread protests against the Chinese Communist Party that erupted across the Tibetan Plateau in Spring 2008, and which continue to ignite self-immolation both within China and in exile communities throughout South Asia. Nepali state restrictions now include prohibitions on Tibetan public assemblies for spiritual and community celebrations as well as the widespread detention of Tibetan refugees under dubious criminal accusations.

Couched in terms of mutual respect for sovereignty and increased cooperation and connectivity, the Joint Statement between the People’s Republic of China and Nepal released in March 2016 draws a direct link between Chinese investment, infrastructure development, and the management of Tibetan populations in Nepal. Articles 3–9 state Nepal’s respect for Beijing’s "One China" policy and ideology of national unity while Beijing outlines its commitment to infrastructure development and energy security in Nepal — particularly in Tibetan border areas.

Drafted during a time of extreme tension between Kathmandu and Delhi, the statement also signals Nepal’s frustration with its political relationship with India. Tightening Sino–Nepali relations reflect earnest efforts to counterbalance Kathmandu’s historical dependencies on Delhi.

The new terms expressed in the Joint Statement raise significant questions as to what kind of extra-territorial soft power Beijing seeks to wield in Nepal and what kind of gifts will be made to gain that power. Implemented across trans-Himalayan landscapes rich in natural resource endowments — but which are also home to Tibetan refugee communities — Chinese aid and development projects demonstrate a convergence of foreign investment and political power. They also represent the expansion of economic and transport connectivity between South Asia and East Asia, and wider realignments of geopolitical relations. Reflecting broader outward patterns of "development with Chinese characteristics," this all makes what is happening in Nepal today an important process to watch.

The News Lens has been authorized to republish this article from East Asia Forum. East Asia Forum is a platform for analysis and research on politics, economics, business, law, security, international relations and society relevant to public policy, centered on the Asia Pacific region.

TNL Editor: Edward White


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