China's engagement in Nepal is a critical component of its "major-country diplomacy" and its grand vision to build a "community with a shared future for mankind" and an "equal and orderly multipolar world," subtly challenging the existing US-led global order, and curtailing India’s regional influence.

China’s absolute priority is ensuring the security and stability of the Tibet Autonomous Region, preventing any separatist activities against China from Nepali soil, and strengthening borders. Nepal is viewed as a crucial buffer state for this objective.

China also seeks to integrate Nepal's economy and leverage its strategic location as a gateway to South Asian markets, primarily through the development of the Trans-Himalayan Multi-Dimensional Connectivity Network (THMDCN). This aims to facilitate land access to India and the broader South Asian market.

China’s pivotal interest is to exert influence in South Asia through initiatives like the Belt and Road Initiative (BRI) and Trans-Himalayan Multidimensional Connectivity Network. It reinforces its stated aim to make the neighborhood a "demonstration zone" for its global initiatives. For this, as an immediate neighbor, China sees Nepal as a critical partner.

China seeks Nepal's support for China's global strategic initiatives, including the Global Development Initiative (GDI), Global Security Initiative (GSI), and Global Civilization Initiative (GCI), subtly aligning Nepal's foreign policy with Beijing's normative framework for global governance. Regarding this, Nepal's selective engagement, even if cautious, implies a tacit endorsement. However, while GDI projects have already been implemented, Nepal is cautious regarding the GSI, which is often seen as a security alliance.

China approaches its relationship with Nepal with a long-term strategy, viewing each agreement as a temporary arrangement that contributes to broader, enduring strategic goals.

Strategic Engagement Patterns & Influence

China employs a sophisticated, multi-layered engagement strategy, often characterized by a notable discrepancy between aid and investment commitments versus actual disbursements. This suggests that commitments frequently serve a strategic purpose, rather than always translating into immediate, full-scale implementation.

Belt and Road Initiative (BRI) as a Strategic Framework

The formal signing of the "Framework for Belt and Road Cooperation" (significantly trimmed from China's initial "Implementation Plan") demonstrates China's tactical flexibility to keep the BRI window open for future engagements, adapting to Nepal's fiscal caution and internal political divisions.

China for a long time has explicitly used the BRI implementation plan as a prerequisite for broader economic cooperation and the execution of other committed projects in Nepal.

Furthermore, amid global scrutiny of large-scale loans and implementation challenges, China has strategically adapted its BRI focus towards "small yet smart" livelihood projects (e.g., "Silk Roadster"). This aims to maintain goodwill and influence with lower investments but higher visibility and direct community impact. This is explicitly visible in its Nepal policy to diversify its engagements through small-scale community-based projects across diverse geographical regions.

Party-to-Party Diplomacy

The International Department of the CCP Central Committee is the primary channel for official party-to-party diplomacy, facilitating reciprocal visits, governance seminars, and mutual learning workshops.

Ideological training is central to CCP's engagement, exposing Nepali cadres to China's governance model, development philosophy, and flagship initiatives like BRI and GCI. This fosters alignment, with Nepali leftist parties increasingly mirroring Chinese political narratives on anti-imperialism, multipolarity, and critiques of Western dominance.

CCP strives to build cross-party relationships beyond ideological affinity to ensure continuity of strategic interests across different regimes. This involves cultivating rising leaders who consistently advocate for China's priorities, thereby shaping Nepal’s foreign policy consensus to reflect Chinese interests, particularly on sensitive issues like Tibet and Taiwan.

This direct party-to-party engagement often influences and, at times, overrides formal diplomatic channels, leading to less scrutinized agreements and potentially undermining Nepal's institutional integrity and democratic oversight.

Border Policy and Engagement in Borderlands 

Photo Credit: Galen Murton

China's border policy is fundamentally driven by its paramount interest in protecting Tibet and ensuring national unity. This translates into extensive border infrastructure development with dual economic and security purposes.

China asserts control over border security, management, and transit, unilaterally shaping the flows of goods, people, ideas, and capital according to its strategic interests.

China's unilateral control and securitization of the borderlands have severely disrupted traditional cross-border trade, marriages, and livelihoods, forcing local inhabitants to seek alternative means.  

Traditional informal trade has become difficult due to strict Chinese demands for certifications, leading to economic hardship in border communities.  

This transforms traditional social and economic relations, creating new dependencies and potentially leading to social disruptions and migration.  

Infrastructure Engagements

Chinese state-owned enterprises have secured large infrastructure contracts, often amidst allegations of procurement irregularities and opaque conditionalities. Chinese diplomatic influence is frequently used to diffuse pressure and protect the interests of Chinese firms, even when performance is unsatisfactory.

Moreover, China is increasingly engaging in Nepal's Terai and southern districts, initiating projects that erode Nepal's informal policy of limiting India's small-scale aid to the south and China's to the north. This signifies a broader strategic shift to diversify influence across Nepal.

The proposed projects like the China-Nepal Friendship Industrial Park in Damak are strategically located for potential access to Indian and Bangladeshi markets, but face significant geopolitical hurdles.

Public Diplomacy & Soft Power to shape public narratives

Photo Credit: The Rising Nepal

China's public diplomacy is multi-faceted, leveraging cultural, educational, media, and developmental initiatives to shape public perception and foster goodwill.

The Confucius Institutes serve as key instruments to promote Chinese culture, language, and values, subtly shaping favorable narratives and cultivating a generation of Nepali students and future leaders attuned to Chinese perspectives.

A strategic effort through financial investments, partnerships, and direct content control to promote pro-China narratives and counter Western influence. Chinese ambassadors directly intervene in Nepali media to counter negative narratives and diffuse pressure on Chinese-involved projects.

Furthermore, "Small yet smart" livelihood projects implemented by organizations like the China Foundation for Rural Development (CFRD) are strategically designed to connect the Chinese state with the general populace, creating a brand association through humanitarian support, often in geopolitically critical regions, increasingly more on Southern bordering districts.

Challenges posed by Chinese engagements in Nepal

The direct party-to-party engagements often with the left parties, often bypasses formal diplomatic channels and state institutions, potentially undermining Nepal's institutional integrity and democratic oversight.  

Furthermore, as per the comprehensive study conducted by Centre for Social Innovation and Foreign Policy (CESIF) on China’s engagement in Nepal’s infrastructure sector, Chinese projects are frequently linked to opaque contracts, and persistent allegations of corruption and commission-based partnerships are common in large infrastructure deals with China.  These questionable deals to proceed with minimal public scrutiny and accountability corrodes public trust in state institutions and weakens Nepal's capacity to protect its national interests.  

Photo Credit: The Kathmandu Post

The instances like Chinese Communist Party channeling disaster relief directly to Nepali political parties, bypassing state mechanisms sets a dangerous precedent for foreign involvement in Nepal’s political process and raises concerns about external manipulation.  

China asserts total control over border security, management, and transit, unilaterally shaping cross-border flows. Border port operations are often unilateral, with reportedly Chinese authorities not consulting Nepal on openings or closings.  

Furthermore, Chinese ambassadors have directly engaged with Nepali media and public figures, even resorting to undiplomatic responses, to counter negative narratives and diffuse pressure on Chinese-involved projects including Pokhara International Airport loan terms.

This increasing assertiveness and direct influence, from imposing arbitrary rules at borders to undiplomatic responses directly challenges Nepal's democratic governance, risks eroding sovereignty, and can lead to a less accountable political system.  

Finally

It is crucial to prioritize diplomatic channels and established state mechanisms over informal or party-to-party negotiations. The Ministry of Foreign Affairs should maintain central oversight of all international negotiations.

Meanwhile there is an urgent need to prioritize interest-based negotiations with China over ideologically driven connections, focusing on concrete national benefits.

It is important to prioritize executing existing agreements and aid commitments before entering new negotiations, establishing clear action matrices, monitoring mechanisms, and accountability measures.  

In overall, Nepal should be able to build broad political consensus to define clear boundaries and priorities regarding its involvement with China that upholds Nepal’s strategic autonomy and supports Nepal’s agenda of prosperity.