Nepal’s Prime Minister, Khadga Prasad Sharma Oli, is set to embark on a significant four-day official visit to China next Month, marking a strategic departure from the tradition of Nepali leaders making India their first foreign destination upon assuming office. The announcement was made on Friday by the Ministry of Foreign Affairs, highlighting the evolving dynamics of Nepal’s foreign policy.
Oli’s visit, his first official trip abroad since returning to power in July, includes meetings with Chinese President Xi Jinping and Premier Li Qiang. This visit is poised to reshape Nepal’s diplomatic landscape, signaling a recalibration of its historical balance between its two influential neighbors, India and China.
Oli’s Diplomatic Balancing Act
Serving as Nepal’s Prime Minister for the third time, Oli has a history of navigating the fine line between New Delhi and Beijing. However, during his previous terms, he often tilted toward China, striving to reduce Nepal’s reliance on India. His latest decision to visit China first further underscores a possible pivot in Nepal’s diplomatic approach.
Pradeep Gyawali, Deputy Secretary of Oli’s Communist Party of Nepal-Unified Marxist Leninist (CPN-UML), explained the primary agenda of the visit: “This visit will be focused on implementing earlier agreements that have slowed because of the pandemic and political changes in Nepal.”
One notable agreement under consideration is the funding arrangement for the newly constructed international airport in Pokhara. Built with Chinese financing, there are talks of converting the loan underpinning the project into a grant, signaling stronger economic cooperation between Nepal and China.
India-China
Sandwiched between two global giants, Nepal has long faced the challenge of balancing its ties with India and China. Both nations exert significant influence in the Himalayan country, but their strategies differ.
India’s Dominance
- Trade Relations: India accounts for nearly 65% of Nepal’s total trade, making it Nepal’s largest trading partner.
- Investment: In the last fiscal year, India invested over $750 million in Nepal, significantly surpassing China’s $250 million.
- Cultural and Historical Ties: Shared history, open borders, and cultural similarities bolster India’s influence.
China’s Strategic Push
- Trade Growth: Though comprising only 15% of Nepal’s trade, Chinese exports have steadily increased.
- Sectoral Leadership: Chinese companies dominate Nepal’s electric vehicle market, with a 70% share.
- Infrastructure Investment: China has been instrumental in developing Nepal’s infrastructure, including roads, airports, and hydropower projects.
Why Beijing First?
Nepali media speculate that Oli’s choice to prioritize China might stem from the lack of a formal invitation from India. Traditionally, Nepali leaders have chosen New Delhi as their maiden destination, reflecting Nepal’s deep-rooted ties with India. However, Oli’s history and political ideology lean toward fostering closer ties with Beijing.
Political analysts suggest this move is designed to assert Nepal’s sovereignty in its foreign policy. “Both our neighbors should respect the fact that Nepal does harbor small-state anxieties as a nation sandwiched between two world powers,” said Akhilesh Upadhyay, an expert at the Institute for Integrated Development Studies (IIDS) in Kathmandu.
“But our choices should be guided by our national interest. We should not feel caught up in the great-power rivalry,” he added, emphasizing the importance of pragmatism in Nepal’s diplomatic engagements.
Focus of Oli’s Visit
The visit is expected to center around reviving stalled projects and strengthening bilateral ties. Some key areas of focus include:
- Implementation of Past Agreements:
- Reinvigorating commitments made under China’s Belt and Road Initiative (BRI).
- Advancing the Trans-Himalayan Multi-Dimensional Connectivity Network.
- Economic Cooperation:
- Exploring further investment in Nepal’s infrastructure.
- Negotiating favorable financial terms for existing projects.
- Tourism and Trade:
- Promoting Chinese tourism in Nepal, particularly after the pandemic.
- Addressing trade imbalances and expanding export opportunities for Nepali products in China.
- Energy Collaboration:
- Discussing hydropower projects and electricity export mechanisms.
Oli’s decision is likely to raise eyebrows in New Delhi, where policymakers have historically viewed Nepal as part of India’s sphere of influence. Analysts warn, however, that the move could deepen the perceived rift between the two nations.
Despite this, economic interdependence remains a compelling factor. Nepal relies heavily on India for essential goods, energy, and access to global markets through Indian ports.
Observers believe Oli’s overture to China may serve as a bargaining chip to extract better terms from India on trade, transit, and investment.
As global power dynamics intensify, smaller nations like Nepal often find themselves in precarious positions. The rivalry between India and China has manifested in various forms across South Asia, from infrastructure investments to military presence in the region.
For Nepal, maintaining a neutral stance while reaping benefits from both sides is critical. The challenge lies in resisting overdependence on either neighbor while securing national interests.
- Economic Pressures: Nepal must balance foreign investments without falling into debt traps or compromising sovereignty.
- Political Stability: Internal political divisions can undermine long-term strategies with either neighbor.
- Strategic Autonomy: Nepal must assert its independence in policy-making while managing external expectations.
Oli’s visit to China represents more than a shift in protocol—it reflects Nepal’s strategic recalibration in the face of changing regional dynamics. Whether this move strengthens Nepal’s position or complicates its relationship with India remains to be seen.
As Nepal navigates its path between two powerful neighbors, the coming months will be pivotal in determining the success of Oli’s diplomacy. The focus will remain on how effectively Nepal leverages its unique position to foster economic growth and political stability while maintaining a delicate balance in South Asia.
