Nepal in China’s strategic embrace

Nepal’s increasing alignment with China, marked by the signing of a framework agreement on the Belt and Road Initiative (BRI) during Prime Minister KP Sharma Oli's recent visit to Beijing, has raised concerns in India. The agreement deepens Nepal's ties with China, potentially diminishing India’s influence in the region, especially as the BRI passes through Pakistan-Occupied Kashmir (PoK), a point of contention for India.

Nepal’s Growing Alignment with China

• Signing of BRI Agreement: Nepal’s agreement to cooperate on China’s Belt and Road Initiative marks a significant step in Nepal-China relations, despite India’s opposition due to sovereignty concerns over PoK. This deepens China’s economic and strategic footprint in Nepal.
• Economic Implications for India: Nepal’s increasing economic cooperation with China could reduce India’s dominance in Nepal’s trade. India remains Nepal’s largest trading partner, but the growing ties with China are likely to alter this balance in the long term.
• Opening of Chinese Financial Institutions: The BRI agreement also includes provisions for Chinese banks and financial institutions to open branches in Nepal, expanding China’s financial influence and potentially reducing Nepal’s economic dependence on India.

Impact on India’s Strategic Interests

• Diminishing Indian Influence: Nepal's shift towards China risks eroding India’s traditional influence over Kathmandu, which has historically been linked to geography, economic trade, and security cooperation. The BRI’s expansion into Nepal will further consolidate China’s position in the region.
• Buddhism and Shared Heritage: Nepal’s increasing acceptance of China's efforts to promote Buddhism as a shared heritage could undermine India's attempts to build cultural and diplomatic ties based on the same heritage, adding a cultural dimension to the geopolitical competition between the two countries.
• Nepal’s Strategic Calculations: Nepal’s engagement with China also includes hopes for the completion of infrastructure projects under the BRI, which could enhance regional connectivity but simultaneously increase Nepal’s strategic dependence on China.

Geopolitical Consequences for India and the US

• India’s Concerns over Sovereignty: The BRI’s route through PoK presents a direct challenge to India’s sovereignty, as it involves infrastructural projects in disputed territories. India’s strategic interests are further threatened by Nepal’s growing closeness with China.
• US and Nepal’s Geopolitical Equation: The United States, which had successfully engaged Nepal in its Millennium Challenge Corporation (MCC) Compact for infrastructure development, may now face challenges in countering China’s broader BRI presence in Nepal. Nepal’s tilt towards China could complicate US-Nepal relations as well.
• Regional Stability: The increasing Chinese influence in Nepal could affect regional stability, with both India and the US closely monitoring the implications of this growing relationship, especially given the strategic location of Nepal between India and China.

Practice Question:

Q. Evaluate the geopolitical implications of Nepal’s growing ties with China, particularly through the Belt and Road Initiative, for India’s strategic interests and regional security. How can India recalibrate its policy to counter this growing influence?