Nepalese Prime Minister K.P. Sharma Oli’s first foreign visit to China from Monday to Thursday last week made major headlines in the media. It is seen as a break from tradition, as Oli chose China over India, signaling a significant shift in Nepal’s diplomatic outlook. As a landlocked nation, Nepal’s geopolitics has always been shaped by the dominant influence of its southern neighbor, India, and the rising power to its north, China, but by choosing Beijing, is Oli charting a new course or walking into a well-laid trap?
The visit carried immense symbolic weight, mainly because Oli was known for his pro-China stance, which largely defined his politics. By signing deals like the Belt and Road Initiative, Oli wants to redefine Nepal’s reliance on India and balance it with China.
However, Nepal’s lack of bargaining with China led to Beijing dominating the outcomes and securing greater security cooperation. At the same time, Nepal sidestepped thornier issues, such as Beijing’s alleged encroachments on Nepalese territory.
The joint statement issued after Oli’s meetings with Chinese President Xi Jinping (習近平), Chinese Premier Li Qiang (李強) and Chinese National People’s Congress Standing Committee Chairman Zhao Leji (趙樂際) was a classic case of Chinese insecurities vis-a-vis Nepal. It mainly sought Kathmandu’s reaffirmation of the “one China principle.”
“Nepal reaffirmed its firm commitment to the one China principle, recognizing that the Government of the People’s Republic of China is the sole legal government representing the whole of China and Taiwan is an inalienable part of China’s territory. Nepal firmly supports China’s efforts to achieve its national reunification and opposes Taiwan independence,” the statement said.
Besides Taiwan, Nepal also reiterated that “Xizang [Tibetan] affairs are internal affairs of China and that it will never allow any separatist activities against China on Nepal’s soil.”
Beijing’s focus on Nepal’s assurances regarding Tibet remains central to its Nepal policy, given their shared historical border and Nepal’s role as a key transit point for Tibetans seeking refuge with the Tibetan government-in-exile in Dharamsala, India.
For China, Tibetan refugees in Nepal pose a threat to stability in Tibet, particularly as third countries such as the US continue to criticize Beijing’s human rights record. In the 1950s and 1960s, Nepal was at the heart of CIA operations to train Tibetans fighting against the communist regime in Lhasa.
So why is Nepal’s commitment to the so-called “one China principle” so critical for Beijing?
Simply put, Nepal’s strategic position makes it indispensable. Beijing fears that Tibetan refugees in Nepal, already resisting Chinese oppression, could also align with Taiwan’s cause, amplifying dissent against its territorial claims. Beijing also fears that third countries might use Nepal against its interests.
While Oli’s visit was a success for China, it was more symbolic for Nepal. Oli signed a Belt and Road Initiative framework agreement in which China agreed to fund projects under “aid assistance financing” — a mutually agreed-upon term.
However, this is not an outcome that Oli’s coalition partner in the government, the Nepali Congress, expected. Oli was supposed to press China to be more generous in carrying out development works by offering more aid and assistance than loans, but the devil lies in the details. With the specifics of the framework agreement veiled in secrecy, particularly regarding “aid assistance financing” and other terms, Nepal must tread cautiously. China’s stance is clear — no funds leave Beijing without strings attached.
However, what stands out is the contrast with the US’ Millennium Challenge Corp, which is offering a US$500 million grant to Nepal for infrastructure development.
Beijing has called Millennium Challenge Corp a “trojan horse” that is against Chinese interests. However, unlike the Belt and Road Initiative, its financial and contractual details are easily accessible to the public — a transparency that bolsters its credibility.
At the same time, Beijing finds ways to promote a shared vision of sovereignty and strategic independence, aiming to counterbalance India’s traditional influence, but this narrative often falls short when reports of Beijing’s “salami-slicing” tactics make headlines.
The New York Times in October in a report titled “China’s ‘New Great Wall’ Casts a Shadow on Nepal” revealed how China’s infrastructure projects encroach on Nepalese land near the border.
In conclusion, smaller South Asian nations, including Nepal, face the challenge of navigating China’s strategic ambitions, often serving Beijing’s interests more than their own. Political parties with a pro-China stance must prioritize national interests and remain vigilant about China’s broader strategic goals to avoid long-term compromises.
Rishi Gupta is the Taiwan MOFA Fellow 2024 at the Center for India Studies at National Chengchi University in Taipei and assistant director of the Asia Society Policy Institute in New Delhi.
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