China-Nepal Relations: New Normal May Be Troubling For India – Analysis

By Anuradha Rai*

Beginning a new level of bilateral military engagement, Nepal will hold its first ever joint military exercise with China on February 10, 2017 named Pratikar-1 that will be on training Nepali forces in dealing with hostage scenarios involving international terror groups.

Although the military drill with China does not violate the 1950 India-Nepal Treaty of Peace and Friendship, it does appear unconventional to the Indian side. However, what seems unconventional to India now, is becoming a convention in China-Nepal relations. There is no denying the fact that China is making inroads in not only Nepal but in most of the South-Asian countries, be it Sri Lanka, Bangladesh, Afghanistan or Bhutan.

From the Silk Road Economic Belt (SREB) and Maritime Silk Route (MSR), to One Belt One Road (OBOR) and the current BRI (Belt and Road Initiative), the Chinese strategy to create a link in South Asia will not be limited to trade and commerce only. China is looking much beyond its trade relations and it is eyeing Nepal as a centre to promote its ambitions in the South Asian region. The geographical proximity of Nepal to China gives China additional leverage to strengthen its stronghold in Nepal.

However, the current trend and cozying up of Nepal and China is troubling for India. Nepal is considered as a natural ally of India and conventionally close to it. The killing of King Birendra and the royal family in June 2001 and accession to the throne of Gyanendra, who was considered to be pro-China, had troubled India.

India had supported the pro-democracy movement of Nepal with the assumption that the new democratic government that will come up with Indian support will strengthen India’s position in a democratic Nepal. However, it seems that India had miscalculated Nepal, as the coming governments in Nepal have kept playing the China card and Nepal is now falling slowly into Chinese hands.

India-Nepal relations took another nosedive in the latter half of 2015 when trade with India was effectively halted in the wake of protests over Nepal’s new constitution by Madhesi protestors. Nepal accused India of providing unofficial support in orchestrating a blockade, while India said protests near the border were the result of ignorance of problems of the Madhesis which was preventing normal trade relations. During the crisis, China — Nepal’s only other neighbour — appeared as an attractive alternative trading partner and for the first time, Nepal sought to import gasoline from China, the first concrete sign that Kathmandu would look to Beijing to decrease reliance on Indian trade.

The situation is getting worrisome for India because from mere words in the past, Nepal has now started to develop its economic and political ties with China. In the recent past, China has also showed similar eagerness to provide an alternative to India for Nepal by providing new trade routes and developing its strategic ties. The recent development to have joint military exercise is one such measure.

On March 21, 2016, Nepal secured transit rights through China following an agreement in Beijing between Prime Minister K.P. Sharma Oli and his Chinese counterpart Li Keqiang. Other than this, as validated by the BRI Vision Plan, much of China’s connection with South Asia through the Tibetan Autonomous Region (TAR) has been primarily with Nepal, both in terms of trade and connectivity. Plans to further improve connectivity are at an advanced stage.

Furthermore, in its move to develop the infrastructure in the country, on August 5, 2016, China Daily reported that China CAMC Engineering Co. and China Railway Construction Corp. have already applied to Nepal’s Railway Department for the construction of the Kathmandu-Rasuwagadhi railway. The TAR has accounted for over 90 percent of China’s foreign trade with Nepal since the opening of the Xining-Lhasa railway in 2006, implying that the railway facilitated the transportation of goods from coastal China to the TAR and on to Nepal.

India feels that India-Nepal ties could not be compared or curtailed by Nepal’s agreements with China. “After all, 98 per cent of Nepal’s third-country trade goes through India and through Kolkata port,” an official pointed out. India at present has two rail lines under construction and three more are being planned to increase Nepal’s trade ties. During the February 2016 visit of Prime Minister Oli to New Delhi, India agreed to give Nepal dedicated access to Vizag port. It has also been pointed out that in comparison to the Nepal-China agreement, India and Nepal had 25 crossing points, two integrated checkpoints and 2 more checkpoints were under construction.

Nevertheless, there is no denying the fact that the current development of new normal in China-Nepal relations is troubling for India as Nepal’s dependence on India will reduce and thus its obligations towards India resulting in the loss of Indian influence in Nepal in particular and South Asia in general.

*Anuradha Rai is a Senior Research Fellow at Jawaharlal Nehru University, New Delhi. Comments and suggestions on this article can be sent to [email protected]


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One thought on “China-Nepal Relations: New Normal May Be Troubling For India – Analysis

  • January 5, 2017 at 6:47 am
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    This article doesn’t quite well reflect the current status of Nepal India relations. In fact, the current regime in Nepal is believed to have “formed” by India replacing a government led by a person often touted as “nationalist” PM in Nepal. Nationalist in the sense that he did not cower with India during the 6 month long blocade and in fact did some of the historic agreements with China -opening up immense of possibilities of trade, transit and diversification of Nepali trade — which was otherwise solely dependent with India. Majority of Nepalis populace now believes that India doesn’t want Nepal to be an independent nation. Nepal has remained an independent country throughout the history (never colonized); possesses huge natural resources such as water, forest/medicinal herbs, tourism and more than that it possesses the strength of a much more “cultured”, “honest” & “humble” human resource; and equally a well educated/trained population which has now getting well equipped with modern day education. Literacy rate is already better than India. Nepalis are all over the world -just like Indians–doing excellent job in science, technology, academia, entrepreneurship, and innovation. One of the stereotypical view that is still hanging over the Indian intellectuals and common public is that of a “Bahadur” persona who often served (es) in India as a quiet, illiterate and ignorant servant in Indian households and businesses. I have felt even in the USA -particularly when I come across some Indian “babujis” who are often bossy, imposing, a bit feudalistic, and ill-mannered people. What I can assume is that -the sort of feeling must be more than I explained -in the government and administration. Nepalis used to go to India for higher education in the past but that has changed dramatically. There is a huge flow of Nepalis students going to the Western countries (USA, Aus, UK etc) —in thousands and thousands each year (not hundreds) for higher education. For instance, I can say that there is hardly a single state in the US where there is no Nepali faculty and almost no university where there is no Nepali student. This is just an example. Same is the case with tech industries, and others. People of skills and knowledge are returning to homeland recently to build the nation. Remittance money that flows into the country (although it has some negative long term impacts) has changed the purchasing power and financial independence of the people….etc….less and less people go to Indian market for the jobs… (and other changes in Nepal) has dramatically brought an attitudinal shift in responding to a “commonplace” perception of India towards Nepal.
    My point is: a sovereign nation like Nepal can build relationship with both China and India keeping the best interest of its own and respecting the security or other interests of its neighbors. If you truly acknowledge this status you will not see China making “inroads” in Nepal. That is all natural progress. Nepal should not allow China to make a damaging “inroad” at the cost of India. Nepal must be alert with this. But the popular belief (and evidences, history, and all activities indicate) is that India wants to keep Nepal under its grip for one reason: WATER. We all know that India is already starving! I don’t know how Nepal should deal with India on this question but one thing is very clear -Nepalis are the sons of “Bahadurs” and “Gurkhas” so they will fight against India for its Independence till the last drop….This is the strength of Nepal. Please note this very carefully!

    Therefore, the first question -the question of acknowledging the fact that Nepal is a “sovereign nation” -if it is truly felt and acknowledged -it answers many questions and it quells many suspicions. There is no need to worry. Nepal cannot be an enemy of India -EVER! Nepalis love Indian music, films, food what not?? But yet, Nepalis have a Deep sense of fear due to India’s attitude toward Nepal. FIX this first -India!

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