Sovereignty above all: PM Oli’s state visit to China

Prime Minister KP Sharma Oli’s scheduled state visit to China from December 2 to December 6 stands as an important turning point in Nepal’s diplomatic and developmental strategy. Against the backdrop of a rapidly evolving geopolitical landscape in South Asia, this visit has the potential to redefine Nepal-China relations. However, it is equally important for Nepal to maintain its balanced foreign policy, ensuring that strengthening ties with China does not overshadow its unique and historically significant relationship with India. This state visit to China holds immense promise but also requires careful navigation to avoid the perception that Nepal is aligning slightly with China. Nepal shares with India not only an open border but also deep cultural and historical bonds.

Reluctant India and Prompt China:

Indian authorities have expressed a preference for Nepal’s Prime Ministers to make start of their foreign visit from India. While this tradition stems from the open border, economic, trade, political, and cultural ties between the two countries, there is no political obligation for this practice. India has traditionally invited Nepal’s new Prime Ministers for a state visit either with congratulations shortly after the formation of new government or within the early hundred days of their tenure. However, this time, no such invitation was extended.

Prime Minister Oli has already extended invitation to Indian Prime Minister Modi on two separate occasions- first on August 11, during a courtesy meeting, through Indian Foreign Ministry Secretary Vikram Misri and later during a personal meeting with Prime Minister Modi in New York. Although Prime Minister Modi graciously accepted the invitations, a reciprocal invitation for PM Oli’s state visit to India was not issued Iit seems that Modi may have reservations about extending an invitation to new Prime Minister Oli for a state visit to India.  However, India’s delay in extending an invitation raises questions about whether India feels uneasy or strained in its relations with the current coalition government in Nepal. In the absence of an invitation from India, China extended a state visit invitation to Prime Minister Oli, which he accepted, reflecting Nepal’s active engagement in fostering bilateral ties with its northern neighbor. Had an invitation from India been received earlier, obviously, PM Oli’s first state visit would have been to India, in line with past practices. China’s prompt invitation led to the decision for a visit to Beijing first, followed by a visit to Delhi once India extends its invitation. This approach reflects Nepal’s commitment to maintaining balanced relations with its neighbors. So, viewing the visit to the northern neighbor, China, through the lens of Nepal-India relations is superfluous. While the delay in India’s invitation may have led to perceptions of a diplomatic pause, Nepal remains committed to its non-aligned foreign policy. It is vital that this visit to China highlights Nepal’s balanced approach to nurturing strong, cooperative, and equitable relationships with both its northern and southern neighbors.The preparations for a visit to neighboring countries by the Prime Minister of Nepal, an independent and sovereign nation, should be viewed as normal.

Nepal’s Dilemma Between MCC and BRI:

Nepal finds itself in a complex diplomatic terrain as it needs to maintain balance relationships with global powers like the United States, India, and China. Despite public resistance, the U.S.-backed Millennium Challenge Corporation (MCC) compact was passed through Nepal’s Parliament in 2022 and has reached the implementation stage. In contrast, the Chinese Belt and Road Initiative (BRI), officially endorsed alongside MCC in 2017, remains stalled, raising concerns about Nepal’s diplomatic equilibrium. Both initiatives were officially endorsed by Nepal in 2017, but the disparity in their progression has sparked debate and tension in Nepal’s foreign policy. India’s and America’s subtle resistance to Nepal’s involvement in the BRI reflects their geopolitical concern to discourage Nepal from advancing BRI projects so as to lessen expanding Chinese influence in the region.  Nepal’s hesitation to engage fully with the BRI may be perceived as favoring one global bloc over the other. To maintain non-aligned foreign policy and uphold strong, balanced relationships with all partners, Nepal must move forward with projects under the BRI, ensuring equitable engagement with both Western and Chinese-led initiatives.

Amid this backdrop, Prime Minister Oli’s visit to China offers an opportunity to recalibrate Nepal’s foreign policy and strengthen its bilateral relations with its northern neighbor. The visit should focus on addressing Nepal’s commitment to the BRI and exploring avenues for equitable collaboration, ensuring that Nepal’s ties with China are as smooth as those with the U.S. and India. Besides, this visit must provide an opportunity to explore how Nepal can maximize benefits from this initiative while ensuring financial and strategic confidence. By taking decisive steps during this visit, PM Oli can reinforce Nepal’s role as a neutral actor, maintain geopolitical balance, and uphold its non-aligned foreign policy amidst growing global competition. This state visit should focus on utilizing opportunities to strengthen Nepal’s neutral and sovereign stance. It should uphold Nepal’s non-aligned foreign policy. The visit must address the aspirations of both Western and Chinese partners. This approach will help mitigate upheavals in Nepal’s diplomatic relations and reaffirm its commitment to a balanced foreign policy.

China’s support under the BRI has the potential to transform Nepal’s infrastructure landscape. Projects such as the ambitious Kerung-Kathmandu railway, the modernization of the Arniko Highway, and the development of border dry ports are to be prioritized as critical components of Nepal’s economic aspirations.

Nepal’s Cautious Position on BRI Financing:

PM Oli is expected to prioritize securing cautious and favorable financing terms for BRI projects, focusing on grants or soft loans with low interest rates with flexible repayment options. Since Nepal has already been borrowing loans from institutions like the World Bank, Asian Development Bank, and EXIM Bank, lower-interest loans under the BRI framework would remain competitive. However, Nepal must remain cautious, learning from the debt challenges faced by Sri Lanka and Pakistan in similar projects and must avoid pitfalls experienced by these nations. By insisting on feasibility studies, cost-benefit analyses, and transparent terms, Nepal can ensure successful projects while protecting its economic sovereignty and long-term interests.

Revitalizing the Airports for Economic Growth:

Nepal’s aviation infrastructure has seen significant contributions from China, particularly through soft loans. Major airports such as Gautam Buddha International Airport in Lumbini and Pokhara International Airport are notable examples of Chinese-backed projects. However, these airports have faced challenges in operating at full capacity. For instance, Gautam Buddha International Airport, despite its potential to serve as a gateway for Buddhist tourism, struggles with low passenger numbers and inadequate connectivity. Similarly, Pokhara International Airport, inaugurated with high expectations, has yet to attract sufficient international airlines. The underutilization of these airports raises concerns about their ability to generate revenue and repay loans. China has operated some chartered flights at Pokhara Airport, and there have been requests for regular flights, but none are currently operational. With no international flights at the airport, domestic flights alone are insufficient to manage the debt. This visit is expected to result in tangible progress toward alleviating the airport’s financial burden. If efforts to secure a waiver for the nearly 28 billion loans taken from China for the airport’s construction are successful, it would be a significant achievement. If China refuses, citing precedents with other countries, an alternative could be debt relief through grant funding.

Boosting Tourism and Herbal Production:

China is an important market for Nepal’s tourism industry. During PM Oli’s visit, discussions on boosting tourism cooperation could yield significant benefits. Simplifying visa procedures for Chinese tourists, increasing direct flights between major cities, and launching joint promotional campaigns could attract more visitors from China. Additionally, promoting Buddhist heritage sites such as Lumbini as part of cultural tourism circuits can appeal to Chinese tourists interested in Buddhism.

Beyond tourism, Nepal’s rich biodiversity offers immense potential for collaboration in herbal production. Nepal is home to a wide range of medicinal plants, many of which are in high demand in China’s traditional medicine industry. By partnering with China, Nepal can develop its herbal production and processing capabilities. Establishing joint ventures, setting up research and development centers, and creating export-oriented value chains can transform Nepal’s herbal industry into a significant contributor to its economy. This visit is anticipated to comprehensively address these pressing and significant issues, offering potential solutions and fostering deeper collaboration between China and Nepal.

 Cross-Border Infrastructure:

PM Oli’s visit is also expected to focus on advancing cross-border infrastructure development, which could transform Nepal’s geographical limitations into a strategic advantage. A key project in this vision is the Kerung-Kathmandu railway, a crucial initiative to connect Nepal’s capital with the Chinese border town of Kerung. This railway could revolutionize trade, tourism, and investment, cutting transportation costs and time. Alongside the railway, upgrading the Arniko Highway and modernizing dry ports like Tatopani and Rasuwagadhi will be essential to enhance trade connectivity with China. Securing financial and technical support from China will be pivotal in realizing these ambitious infrastructure goals, positioning Nepal as a vital trade corridor between China and South Asia. PM Oli’s government must emphasize Nepal’s sovereign and non-aligned foreign policy, which prioritizes national interest above external pressures.

Conclusion: Balanced Ties, Bright Future:

PM Oli’s government must emphasize Nepal’s sovereign and non-aligned foreign policy, which prioritizes national interest above external pressures. Although tradition dictates that Nepal’s Prime Minister typically makes India the first destination for a state visit, PM Oli’s decision to visit China first marks a significant departure from this norm. This break with tradition highlights Nepal’s sovereignty and independence, reaffirming the country’s long-standing history of maintaining its autonomy and making diplomatic decisions based on its own interests. The move underscores Nepal’s commitment to a balanced foreign policy and reflects its ability to chart its own course in the evolving geopolitical landscape, free from external pressures. By adopting a pragmatic and balanced approach, PM Oli’s visit to China should help position Nepal as a key hub of connectivity and economic activity in South Asia. This engagement with China could mark a new era of progress, prosperity, and balanced international relations for Nepal.