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Growing proximity between Nepal and China: An Analysis

Nepal has just come out of its two greatest crises namely natural crisis in the form of earthquake & constitutional crisis. Both the events have shaken the roots of Himalayan country.  However, two events had contrastingly affected the India-Nepal relations. Cooperation & timely support during the earthquake proved India’s worth for Nepal & its irreplaceable geostrategic position. However, forming of new constitution & its implementation created a tense scenario between the two nations & overshadowed the Indian rescue efforts during earthquake.

In both the events China took advantage to deepen its ties with Nepal & put India on the strategically disadvantageous position, whereas, Nepal also seems to play the China card with India on India’s suggestions for the demands of Terai people and constitutional reforms i.e. for more representation of Terai people in parliament, provincial territory demarcations and issues related to citizenship rights.

Now it is necessary to analyze the current situation whether growing proximity of China & Nepal is a real threat for India or it’s just an overemphasized perception and if it’s a new reality in triangular relations how India is going to be affected by it.

Evolution of China Nepal relations:

For it a brief overview of these triangular relations would help to focus the areas of analysis & discussion. India and Nepal are not only linked due to the proximity of land, but it is the cultural affinity that binds the two nations. The common linguistic and ethnic identities, Hindu religious practices, similar festivals, affinity of food, resemblance of dresses, and the overall way of thinking, all make inseparable ties between India and Nepal.

While China-Nepal relations dwell into the border conflicts that resulted in Nepal-Tibet-China war (1789-1792) over territorial dispute. Further advancement in time will give even grimmer picture of Nepal-Tibetan war of 1855 that was concluded in 1856 with the Treaty of Thapathali with the special status of China as a mediator. Thereafter, by the early 19th century, Nepal broke all relations with China. Can such hostile relations shake the foundation of two thousand year old ties between India and Nepal? Not really, unless we see the developments of Nepal-China relations in the present times and reassess the grounds on which the current relations are established.

Nepal and China resumed diplomatic relations in the mid 1950s. The basis of signing the Treaty of Peace and Friendship in 1960 was Nepal’s recognition of Tibet as a part of China and a resolution to the long-standing border problem. Thereafter, China has constantly spread its sphere of influence on the Himalayan Kingdom by expanding greater economic linkages and extending substantial military assistance to Nepal. In the 1970s, when King Birendra of Nepal proposed Nepal as a “zone of peace” between India and China, India did not show keen interest, while China was quite supportive. These and many such issues created a rift in Nepal-India ties; while at the same time China has been pro-active to support and aid Nepal.

Why is China keen to increase the proximity now & its efforts in this direction?

Although Nepal and India have an open border and free mobility of populace across borders; it is China that is increasingly working to take over India’s position of the largest trading partner of Nepal. As India is largest economy of south Asia & has been emerging as a leader of south Asian countries, China wants to contain the India’s growing power & status which may become a threat to Chinese dream of becoming the superpower.

•   In 2011-2012, India-Nepal trade was USD 3 billion and the total volume of trade between Nepal and China amounted to USD 1.2 billion. To enhance these ties, China has offered zero-tariff treatment to 60 per cent products of Nepal.

•   When there was blockade of fuel & necessary supplies on India-Nepal border due to protest by Madhesi, Beijing gave 1.3 million litres of petrol to Nepal as a grant, with the promise of following up after a commercial arrangement was signed between companies on the two sides.

•   In 2014, China overtook India as the biggest source of Nepal’s foreign investment. Nepalis see Chinese aid as positive because of its focus on infrastructure development, an area in which Chinese seem to have done a good job.

•   China’s open diplomatic policy in Nepal remains to exploit the resources of Nepal and take advantage of Indian market. Hence, it has completed 22-km road in central Nepal connecting its southern plains with Kyirong, county of Tibet, making the shortest motorable overland route between China and India.

•   China also has deeper motives than just business cooperation. The Tibetan community in Nepal is a serious concern for the Chinese authorities. In particular, the clandestine operations that have its roots in Nepal pose greater challenges for the unity of China’s southern periphery. In April 2008, China could use its influence on Nepalese administration to crackdown on Tibetan activities. Hence, it is not wrong to posit that China’s business ties are redefining the power equations with that of Nepal.

•   Simultaneously there is added emphasis on boosting cultural exchanges. There are now almost 19 China Study Centers (CSC) and Confucius Institutes in Nepal to promote Chinese language and culture.

•   Beijing has announced Nepal as an “official destination” for its nationals. The town of Pokhara became a hot attraction after Chinese online guidebooks described it as one of the top ten places “to see before you die”. Signboards in Mandarin are now a common sight in Pokhara. More than a dozen hotels in the town have Chinese owners.

•   The aim now is to have a comprehensive cooperation that serves mutual development and prosperity with the promotion of trade and tourism, joint border management, development of hydropower projects, building infrastructure for greater connectivity, and bringing in overall socio-economic growth of Nepal.

Why is Nepal increasing its interests in China?

•   For Nepal, China serves as a potential supplier of goods and assistance that it badly needs in order to recover its economy. Almost half the population of Nepal is unemployed and more than half is illiterate. At the same time, more than 30 per cent of the people in Nepal live in abject poverty. To deal with its internal problems, Nepal surely has serious business to engage with China to overcome its poverty & unemployment.

•   Another factor to increase the interest is China card which most of the south Asian counties are playing with India to gain the mileage in negotiations & counter India’s Big Brother approach.

Why cannot China replace India?

•   Most strong argument in this is the deep linguistic & cultural similarity, religious affinity, historical ties & geographical proximity and family connections between Nepal and India — whose trade or economic ties with China alone cannot entirely overwhelm. People-to-people contacts of India & Nepal is way ahead than contact on Chinese side.

•   China-Nepal relations are also limited as of now by certain practical problems. Even if Nepal Oil Corporation and Petro China Company Ltd. were to sign an agreement, the issue of dual taxation in Tibet which raises the cost of fuel — remains unresolved. While the Indian refinery of Barauni is only 374 km away, the nearest Chinese refinery is more than 2,000 km from Nepal. Assuming China sees no reason for a massive oil subsidy to Nepal, this distance alone will make Chinese fuel more expensive than Indian.

•   Another factor is difficult border terrain between China & Nepal. Routes are frequently obstructed by landslides so keeping the routes open & maintenance of it a difficult & expansive task.

Areas of Common Interest and Way forward:

•   Both China and India would like Nepal to have a constitution and political stability. China’s security concerns are related to stability in Tibet & India’s security concern include smuggling of fake currency, drugs & terrorism so India and China have realized that only a stable Nepal can take care of their security concerns.

•   China proposed the establishment of an economic corridor among the three countries to promote trilateral cooperation and common prosperity. Nepal can become a stage for mutually beneficial cooperation between China and India, rather than an arena for competition. 

•    However, India should take care the special relation that it has with Nepal by focusing on resolving issues through negotiations, development activities & investment in Nepal to reduce the trade distortion for which Nepalese are accusing India.

•   In this direction Nepal and India had agreed to form the Eminent Persons Group (EPG) with four members each from Nepal and India and set up secretariats in respective countries mandated to look into Nepal-India ties in totality and reviewing all bilateral treaties. The panel will also make necessary recommendation to the respective countries about the measures to be taken to review or adjust or replace all bilateral treaties, including the Peace and Friendship Treaty of 1950 and others. The panel will visit both sides for necessary consultations and study. The panel will make specific suggestions to settle the outstanding issues and other concerns of both sides, will give non-government and people’s level perspective to both sides that is required to revisit the bilateral relations. Apart from this India should also refrain from the acts which pose him as a Big Brother in the region & work to resolve the issues through diplomacy & mutual cooperation.

 

 

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