Chinese investments in Nepal have steadily risen and China has become Nepal’s biggest investment partner in terms of commitment. China has plans to heavily invest in Nepal to enhance infrastructure connectivity and trade and investment, under the framework of the Belt and Road Initiative. However, Chinese actions contradict its commitments towards Nepal.
Reports say that “China has been creating obstructions in Rasuwagadhi-Kerung and Tatopani border points which is a blatant violation of China’s commitment to bringing them into operation as a major international border under BRI”. The checkpoints at Kerung and Tatopani, which had been closed at the beginning of the Covid-19 pandemic have since reopened, however, traders and locals claim that they are not fully operational. Reports say that the checkpoints which were used to import 200 to 250 truckloads of goods daily are only allowing 20 vehicles at present. While China had earlier cited Covid-19 concerns for restricted transportation, the reopening of checkpoints has not increased the flow of vehicles. Furthermore, trade at the Northern border appears to be happening on Chinese terms with increasing imports and negligible export. Nepali officials have said that the lack of diplomatic initiative from the Nepali government is to blame for the stalemate.
Nepal-China relations have also suffered blows on the diplomatic front. Nepal is currently embroiled in a border dispute with China wherein local government officials in Humla district of Karnali Province have alleged Chinese encroachment on Nepali territory. Protests over the matter urged the Chinese Embassy in Nepal to release a statement denying the allegations. The Foreign Ministry of Nepal soon released a statement in line with the Chinese Embassy. However, allegations persist with inconsistency among positions held by Nepali authorities. Such occurrences have also led analysts to believe that Nepal-China ties have deteriorated, especially under the new ruling dispensation led by Sher Bahadur Deuba.
While Nepal’s relationship with India and the United States appears to be thawing despite outstanding bilateral issues, there has been limited engagement with China. Nepal has participated in two disaster response related exercises with the United States and has also participated in a traditional military exercise with India. Similarly, the Nepal-India Bilateral Consultative Group’s meeting on security issues took place under the leadership of Foreign Ministry after being halted for two years. Furthermore, trade with India has smoothened with the ease of restrictions along the southern border. Moreover, the visit of the Secretary-general of BIMSTEC to Nepal in the first month of the year was also perceived as a positive signal towards the rejuvenation of BIMSTEC. Whereas, Nepal has failed to headway on existing commitments and resolve outstanding issues with China.