Beijing

In 2024, there has been a rise in exchanges between Nepal and China, although it is unclear on who is truly benefiting from these visits. 

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The two countries just concluded their 16th Meeting of the Diplomatic Consultation Mechanism (DCM), where they reviewed the entirety of their bilateral relations and assessed the progress made on agreements and Memoranda of Understanding (MoUs) signed in the past.

However, there have been no concrete outcomes or decisions on pressing issues. China, for instance, promised to launch commercial flights from China to Pokhara and Bhairahwa International Airports in Nepal. Despite this, both airports, which were constructed with significant Chinese funding—US$216 million for Pokhara International Airport, opened on January 1, 2023, and US$76.1 million for Gautam Buddha International Airport in Bhairahawa—have failed to handle international flights.

China’s statement on the diplomatic consultation mentions the Belt and Road Initiative (BRI) twice, whereas Nepal's statement does not mention it at all. Nepal signed the BRI agreement with China on May 12, 2017, initially proposing 35 projects under BRI, now reduced to nine. Despite this, progress has stalled.

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“The two sides agreed to further implement the important common understandings reached between the leaders of the two countries, take the opportunity of jointly celebrating the 70th anniversary of the establishment of diplomatic relations in 2025, consolidate political mutual trust, deepen Belt and Road cooperation, and push for new achievements in practical cooperation in various fields,” stated China’s press release.

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“Nepal is willing to work with China to advance Belt and Road cooperation and deepen exchanges and cooperation in connectivity, economy, trade and investment, agriculture, tourism, people-to-people, and other fields and at the sub-national level to bring more benefits to the two peoples,” added the statement.

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Nepal hasn’t, however, made any such declaration in its statement. 

Nepal also underlined the necessity to further activate existing bilateral mechanisms and establish new ones, including a Joint Commission at the level of Foreign Ministers. Both countries have expressed hope for deepening intra-party exchanges and cooperation to promote the development of bilateral relations.

Bilateral exchanges have dramatically increased in 2024, with many Nepali political leaders, such as those from Communist Party of Nepal (Unified Marxist–Leninist) led by KP Sharma Oli and Communist Party Nepal- Maoist (CPN-M) led by Pushpa Kamal Dahal, frequently visiting China on extended tours. 

Currently, a team of CPN UML leaders led by party’s Deputy Secretary General Bishu Rimal is in China on a 10-day tour, at the invitation of the International Department, Central Committee of CPC.

“On the invitation of the International Department of the Chinese Communist Party, a 30-member high-level delegation led by CPN (UML) Deputy Secretary General Bishnu Rimal left for Beijing tonight for a 10-day visit,” said CPN UML central committee member Rajan Bhattarai on X.

This month, Bater, Vice Chairman of the Chinese People's Political Consultative Conference, visited Nepal and met with key leaders, including Prime Minister Prachanda. Soon after, a five-member team led by Ye Hanbing, Vice-Governor of Sichuan Province and Commissioner of the Public Security Department, visited Kathmandu. 

Concurrently, Justice Liu Guixiang, a member of China’s Supreme Court's adjudication committee, also landed in Kathmandu with a team and held meetings with Nepal’s Supreme Court officials. 

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A delegation from Nepal traveled to Beijing, on June 19, for a Joint Commission border inspection meeting. Later, on June 25, Vice Foreign Minister of China, Sun Weidong, travelled to Kathmandu for the 16th round of Diplomatic Consultation Mechanism talks. 

Party head and former prime minister KP Sharma Oli is now anticipated to visit China shortly, and plans are in place for his travel, according to CPN UML officials.

This coincides with discussions in Kathmandu about former President Bidya Devi Bhandari possibly joining politics actively and visiting China in the coming weeks.

In a recent meeting in Kathmandu, both sides agreed to maintain the tradition of regular high-level visits, as per Nepal’s Foreign Ministry. In September, China’s Foreign Minister Wang Yi is scheduled to visit Nepal, with all eyes on the signing of the BRI implementation plan.

The frequency of visits from China to Nepal is notably higher compared to Nepalese officials visiting China, indicating a stronger engagement with China over Nepal's southern neighbor. Political analysts, Chandra Dev Bhatta believes this dynamic suggests a one-sided interaction.

“No significant issues are being resolved with China; these meetings primarily provide China with opportunities to assert and protect its interests in Nepal, offering little benefit to Nepal itself. The pressing issues facing Nepal remain unaddressed for instance border issue,” he added. 

Meanwhile, Nepal PM reiterated country’s commitment on ‘One China Policy’, “The Nepali side firmly upholds the one-China principle, believes that both Taiwan and Xizang are inalienable parts of China, opposes "Taiwan independence" and will never allow any force to use the Nepali territory for anti-China activities.”

China has been pressing Nepal to sign the BRI implementation plan, as no projects have been executed under this flagship initiative. This situation reflects a failure on China's part in Nepal, showcasing issues in executing agreements with the Himalayan nation. 

Despite numerous bilateral visits, concrete outcomes remain elusive, primarily due to uncertain financial modalities of the BRI.

Nepal has repeatedly clarified that it cannot bear heavy loans from China at high-interest rates and has requested grants instead.

Speaking at the parliament, Nepal PM Prachanda highlighted that he has conveyed this message to the Chinese: “Our first priority is grants, not loans. If we do need to take loans, we will not pay an interest rate higher than what we are paying to the World Bank and Asian Development Bank. Nepal is not in a state to accept loans beyond 1.5 percent annual interest rate proposed for BRI projects.”

The prime minister also stated that Nepal is mindful of and aware of the debt trap: “We will push the agreement by ensuring that we won’t fall into a debt trap.” 

Both countries have failed to reach a consensus on critical aspects of the BRI implementation plan, such as loans, grants, and concessional loans. PM Prachanda mentioned that there are some reservations from the Chinese side regarding the financing and investment modalities.

Now, Nepal’s Parliament members are deliberating on BRI after opposition leaders raised questions on its financial modalities. 

Opposition Nepali Congress leader Rajendra Bajgain has raised concerns on BRI terms in the parliament, says ‘this agreement could potentially bind future (of) Nepalese governments without proper discussions and transparency. 

The Nepal Prime Minister has announced that preparations are underway to sign the implementation of the BRI.