Why China is Interested In Nepal?

Nepal is situated between India and China and works as a buffer state between these two big rival nations. Nepal shares many similarities with India like Hinduism’s religion, Civilization, and culture are very much similar in both countries. Nepal-India has open borders people can visit either nation without any passport or restriction. Nepal and China also have some old people-to-people relations where old monks and scholars from Nepal and china used to visit each other’s nations. Nepal always claimed that they have tried to maintain neutral relations with both India and china. But in recent times many geopolitical experts have noticed the relationship between India and Nepal has weakened under KP Oli’s government and Nepal has come close to china under the same government rule. Over the past few years, Chinese influence on Nepal has relatively increased. With this article, we will specifically analyze the increasing hard power and soft power influence of China in Nepal and How India is Countering China in Nepal?

Why China is Interested In Nepal?

China is an expansionist nation, which keeps doing expansion. Nepal very important part of five finger strategy of china. Mao Zedong who was the first president and founder of the people’s republic of china consider Nepal to be part of Tibet. He used to consider Tibet as the palm of the right hand and Ladakh, Nepal, Sikkim, Bhutan, and Arunachal Pradesh as the 5 fingers of that hand and all these belong to china according to him. Now current president of China Xi Jinping follows the same ideology as Mao Zedong. China also wants to encircle India, because china sees India as their biggest rival, not as their friendly nation. China wants to increase its presence in Nepal as it did in Sri Lanka and Pakistan to counter India from every side. By debt-trap diplomacy, China wants to control Nepal and could deploy its military in Nepal as it did in Pakistan and Sri Lanka. Which is a massive security threat to India and the biggest strategic win for China.

Chinese Investments in Nepal

Nepal has joined china’s ambitious project Belt and Road Initiative (BRI). Under BRI china is going to build China-Nepal Friendship Industrial Park under this friendship Industrial park china will set up small, medium, and large size of factories and china also build Railways, and Highways, Roads in Nepal. China also plans to tap Indian state UP and Bihar markets through Nepal. In January 2018, Nepal and China’s internet infrastructure were linked via an OFC cable with a 1.5 GB/sec bandwidth through the Kyirong-Rasuwagadhi border point. China ranks as Nepal’s second-largest trading partner, with 282 billionsNPR in imports and 1 billion NPR in exports; Nepal has a considerable trade deficit with China

China has also built and is building many hydropower plants in Nepal 600 MW Marsyangdi Cascade project, 50 MW Khimti-2, and the 111 MW Rasuwagadhi projects are some examples it is all to counter all of India’s hydropower plant projects in Nepal. China has also given many seaports access to Nepal for trade with the world.

Overall Chinese investments in Nepal have increased drastically from 7.5 Million Dollars in 2008-09 to 174.91 Million Dollars in 2020-21. During the visit of Chinese Foreign Minister Wang Yi to Nepal, China approved massive 15 billion dollars of grant to Nepal to invest in various projects, 118 million dollars for BRI projects in Nepal, and 3 million RMB (Yuan) as a disaster relief package.

According to reports in the fiscal year, 2021-22 Nepal’s export to china was 1 Billion NPR and China exported around 233.92 billion NPR which creates a 232.9 Billion NPR trade deficit for Nepal which is also one of the key problems between Nepal-China trades. Other than the trade deficit during the covid crisis, Nepal was not able to send any exports to China because of the zero covid policy by the Chinese government, whereas china was sending their exports to Nepal which resulted in a loss of 18.5% in imports from China and 50% in exports from China from July to December 2020, which also affect the economy of Nepal.

In 2019 when Nepal received 30% FDI from India they received 40% of FDI from china. Nepal has also approved more FDI investments from china than India under KP Oli’s government which results in more than 90% of FDI coming from just China in the first quarter of 2020. China has also increased its soft and hard power influence aggressively through Industrial process plants, Infrastructure, Sports, Health, Education, and water resources, and providing technical and financial support to Nepal. China is building and doing all these by providing heavy loans to Nepal which is part of china’s debt-trap diplomacy.

Also Read, China’s Debt Trap – Masterstroke Or Blunder?

Chinese Investment In Nepal Military

China and Nepal began working together militarily in 1988 after signing a contract to sell military equipment. Ishwar Pokhrel, the defence minister of Nepal, attended the Xiangshan Forum of Defense at the defence ministerial level in Beijing in October 2019 and signed an agreement to upgrade the two countries relations from a “comprehensive partnership of cooperation” to a “strategic partnership of cooperation.“

The Chief of Army Staff of Nepal, Purna Chandra Thapa, was subsequently met in Beijing by Chinese State Councilor and Defense Minister Wei Fenghe. It was said that topics including military exchanges and Chinese training assistance were addressed. In November 2020, during COVID, a visit to Nepal was made in return.

Following the 1988 agreement, military aid and hardware transfers began in 1989 with the general specifics listed below:

  • Anti-aircraft weapons, rockets, and AK-47 rifles were among the equipment in 1989
  • In order to help Nepal combat the Maoist insurgency, China promised military support of USD 9.89 million in 2005
  • A contract to provide the Nepal Army with military aid of USD 2.6 M was inked in December 2008
  • Then, in 2009 and 2011, military aid of RMB 20.8 million (USD 3 million) and RMB 7 million (USD 1 million), respectively, followed
  • China promised the Nepal Army further aid in 2017 in the amount of USD 32.3 M
  • During the Xiangshan Forum of Defense in October 2019, the two defense ministers agreed to a military aid agreement worth RMB 150 million

Chinese Soft Power Influence In Nepal

By building many development projects in Nepal and building railway lines between Kathmandu and Lhasa. To counter India’s traditional Influence on Nepal and to improve people-to-people relations between Nepal and China, China has also given training to 200 tourism entrepreneurs in the Chinese language, China also provides scholarships to 100 Nepali to study in china, China also promoting aggressively their Mondrian language in Nepali schools, and China is also organizing inter-state friendly visits, Exhibitions, cultural, Film shows, Food festivals of cultural, spiritual, public life people.

Chinese Influence on Nepal’s Politics and India-Nepal Relations Under KP Oli Government

Under KP Oli’s government, India-Nepal relations fell drastically as NCP (Nepal communist party) was more inclined toward the Chinese communist party. Under KP Oli’s government, the ties between Nepali and Chinese communist parties have enhanced. China was involved in the politics of Nepal. China is also trying to control Nepali politics. When Chinese president Xi Jinping visited Nepal in 2019 NCP (Nepal communist party) distributed copies of the philosophy of Xi Jinping to their party members. To stay in power KP Oli asked for and took help from china during the political crisis in Nepal in 2020-2021. China supported and the Chinese ambassador to Nepal helped KP Oli’s NCP government a lot so KP Oli can stay in power and china can achieve its goals in Nepal because KP Oil’s NCP government was very pro-china government.

KP Oil’s government released a new map of Nepal in which they claimed and showed the Indian territories Limpiyadhura, Lipulekh, and Kalapani as Nepali territory. The most surprising thing was this map and aggression which weekend India-Nepal relations came when there was high tension between India and China in Galwan valley, which clearly shows the Chinese influence on Nepal and that time ruling party on Nepal.

Also Read, XI JINPING – Man Of Menace

How India is Countering China in Nepal?

Nepal is extremely important for India from cultural, foreign relations, economic and strategic
points of view. India does not only have economic and political relations but more than that
India and Nepal have cultural, historical, martial, and spiritual relations. India is also the largest
trading partner of Nepal.

When the new party came into power in Nepal in 2021 which is the Nepali congress which is a very much neutral and friendly government toward India, stated in august 2021 that China cannot take India’s place as a special neighbor. The new government decided that they will talk through diplomatic channels with India resolves all border issues and will not give unnecessary statements against India.

In a recent time when the new government in Nepal came into power, the relations between Nepal-China also came down because recently the US government also offered loans at cheap interest rates and promised to build good roads, and electricity Infrastructure in Nepal under MCC (Millennium Challenge Corporation). And China is not happy with this because china sees MCC as a counter to China’s BRI and to contain china in the Indo-Pacific region.

India has also built many hydropower plants in Nepal and through India Energy Exchange (IEE) India is buying electricity FROM Nepal and Nepal is earning through this. India has also given billions of dollars to Nepal for many Infrastructure projects in Nepal, and to cope with the 2015 earthquake disaster, through these projects that India is building in Nepal India provides many employment opportunities in Nepal. India has also given many lines of credit to Nepal. India also recruits many Gurkha soldiers from Nepal which provide employment opportunities in Nepal.

Now to enhance this relationship with Nepal and to reduce the influence of China on Nepal India needs to work more efficiently in Nepal and complete all incomplete and delaying projects in Nepal and increase bilateral relations with Nepal. India-Nepal also needs to talk about and solve all border issues and provide easy cross-border travel, trade, and business to their people, which also improves people-to people relations between India and Nepal.



The Editorial Team At DefenceXP Network Consists Of Professional Writers, Defence Enthusiast And Defence Aspirants.

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