China’s Inroads into Nepal: India’s Concerns

Dr. Abanti Bhattacharya is Associate Professor at the Department of East Asian Studies, University of Delhi. Prior to this she was Associate Fellow at Institute for Defence Studies and Analyses.
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  • May 18, 2009

    The political crisis that triggered off in Nepal with Prime Minster Prachanda’s resignation yet again indicates not only the trials and tribulations of a fledgling democratic process but also points to the geopolitical vulnerability of the country sandwiched as it is between the two Asian giants. While India considers Nepal a part of its sphere of influence, it is increasingly being challenged by China’s inroads into Nepal. In fact, the growing Nepal-China nexus should be seen in the context of India-China power competition in Asia. Essentially Nepal facilitates China’s security interests in the South Asian region. This can be clearly glimpsed from Chinese ambassador, Zheng Xianglin’s statement delivered at the Council of World Affairs in August 2008 that “Nepal is situated in a favourable geographical position in South Asia, and a passage linking China and South Asia.”

    Nepal constitutes an important element of China’s South Asia policy. One may recall Mao Zedong’s five finger policy in which Nepal constituted one of the five fingers along with Ladakh, Bhutan, Sikkim and Arunachal Pradesh. The five fingers were essentially meant to serve as a ‘new buffer’ zone between India and China after the ‘old buffer’ (Tibet) came under China’s sovereign control in 1951. With growing tensions in Tibet, particularly after the March 2008 uprising, China’s conception of Nepal as a new buffer acquired particular significance. Its policy towards Nepal came to be driven by the need to curb the clandestine activities of some 20,000 Tibetan refugees (the second largest Tibetan refugee community in the world) in Nepal. Consequently, China has been increasingly playing a significant role in determining the future shape of Nepali politics. During each of the high-level meetings China has extracted assurances from Nepal that it adheres to the one-China principle, acknowledges Tibet as an inalienable part of China, and will ensure that no anti-China activity is allowed on its soil. Underscored in China’s South Asia policy is the strategy to marginalize India’s influence in Nepal. Marginalizing India would allow China not only to dominate South Asia but also provide easy access to Nepal’s roughly 83,000 megawatts of hydroelectric potential.

    It is interesting to note that China pronounces its foreign policy towards Nepal in a manner which presents not only a benign image of itself but which also helps assuage Nepal’s fears of a domineering India. For instance, the December 2008 Yang Jiechi’s assurance to protect Nepal’s “sovereignty and independence” not only strengthened Beijing’s diplomacy but also sought to obviate India’s influence. News reports from Nepal even go further to suggest that “China intended to develop relations with Nepal in a way that would serve as a role model for bilateral ties between big and small countries.” China has, in fact, laid down a four-fold policy to strengthen its bilateral relations with Nepal: “First, accommodate each other’s political concern. Second, enhance the economic cooperation on the basis of mutual benefit. Third, boost people-to-people and cultural exchanges. Fourth, strengthen the coordination and cooperation in international and regional affairs.”

    Apart from stating a clear policy towards Nepal, China has been systematically pursuing a multi-dimensional engagement with Nepal. There has been a flurry of visits between China and Nepal in recent times. According to one news report, about 38 Chinese delegations visited Nepal in 2008 alone. China has been cultivating ties with not only the Communist Party of Nepal-Maoist (CPN-M) but also with the Communist Party of Nepal-United Marxist-Leninist (CPN-UML) and the Madhesi People’s Rights Forum. Lately, China has begun taking interest in Terai politics. There are reports of a high level Chinese delegation visiting the General Convention of the Madhesi People’s Rights Forum in early 2009. In April 2009, a CPN-UML delegation led by Jhala Nath Khanal visited Beijing when China had impressed upon the delegation that it wants “a new kind of relationship” with Nepal.

    Besides high level visits, China’s inroads into Nepal are being greatly facilitated by the systematic promotion of China Study Centers (CSCs) which are completely funded by China. The number of CSCs in Nepal has increased in recent times. According to the CSC website, there are ten local branches located in Butwal, Banepa, Sankhuwasabha, Pokhara, Biratnagar, Morang, Sunsari, Chitwan, Nepalgunj and Lumbini, besides the central organization of the CSC-Nepal in Kathmandu. According to Bhim Prasad Bhurtel, the executive director of the Nepal South Asia Centre, Kathmandu, “33 China Study Centres have been established in southern Nepal adjoining the Indian border.” He also mentions that China Radio International has launched a local FM radio station in Kathmandu with the purpose of bringing China closer to Nepal. Besides CSCs, a Nepal-China Mutual Cooperation Society (NCMCS), funded by the Chinese Embassy in Nepal, was established in March 2005. The primary aim of NCMCS is to strengthen diplomatic relations between the two countries as well as to disseminate an image of a friendly China as opposed to hegemonic India. Besides, there are other associations like the Nepal-China Executives Council in Kathmandu, the Nepal-China Friendship Association in Lumbini and the Nepal-China Youth Friendship Association in Pokhara. Further, to promote bilateral cooperation and exchanges the Nepal-China bilateral consultation mechanism was constituted in 1996. Such multi-layered engagement enabled China to not only strengthen its diplomacy in the region but also project a benign and cooperative image. It may be noted that India does not have such multi-layered levels of contact and lacks innovative ways (cultural or diplomatic) of reaching out to the Nepali government and people. In fact, similar culture and traditions in Nepal create a kind of extended cultural zone for India and often therefore many of the natural linkages that exist between India and Nepal are taken for granted.

    China’s proactive policy in Nepal can also be discerned from the military assistance it has been providing. On December 7, 2008 during a meeting in Kathmandu between Nepal Defence Minister Ram Bahadur Thapa and the deputy commander of China’s People Liberation Army, Lieutenant General Ma Xiaotian, China pledged to provide US $2.6 million as military assistance for Nepal’s security sector. Earlier in September 2008, China had announced military aid worth $ 1.3 million, the first such assistance to the Maoist government in Nepal. It may be recalled that in 2006 China had provided clandestine military assistance to the Maoists in a bid to placate them. In recent times, Beijing has shown keen support for the Maoist governments’ proposal to integrate some 19,000 Maoist guerrillas with the Nepal Army.

    As part of economic assistance, ahead of Prachanda’s now-cancelled second visit to China, China had announced a doubling of aid to Nepal amounting to $21.94 million. To attract Chinese investment in Nepal, on April 7, 2009, the Nepal-China Executives Council (NCEC) and the Chinese People’s Association for Friendship with Foreign Countries (CPAFFC) signed a MoU. The trade volume between the two countries currently stands at $401 million with China selling goods worth about $386 million, and Nepal exporting a mere $15 million. To bridge the trade deficit, China has agreed in April 2009 to provide duty free access to 497 Nepali goods in the Chinese market. There are also proposals for a second South Asian Countries Commodity Fair to be held from 6 to 10th June 2009 at Kunming where 40 Nepali enterprises are slated to participate with 30 stalls. China is the third largest country to provide FDI to Nepal, India and the US being the first and second, respectively.

    Also, not to forget, China’s initiative in building a road link between Lhasa and Khasa, a border town located some 80 kilometres north of Kathmandu. China has also accepted Nepal’s proposal in April 2009 to open up two more custom points in addition to the existing five. China is also building a 65 km second road link, the Syafrubesi-Rasuwagadi road, which is the shortest route from Tibet to Kathmandu. As part of promoting Nepal’s hydro-power projects, in 2008, China’s Assistant Minister for Foreign Affairs, He Yafei, pledged to provide Nepal a loan of $125 million for Upper Trishuli 3 ‘A’ and $62 million for Upper Trishuli 3 ‘B’. The plants would start operating from 2012.

    There has thus evolved a multi-layered engagement between China and Nepal, causing considerable concern in the Indian establishment. Even if Prachanda’s statement is to be believed that “not a single (Chinese) delegation came to Nepal on my invitation,” it nonetheless does not rule out China’s growing inroads into Nepal. China’s growing ties with Nepal undoubtedly supports its wider South Asia policy, much to the concern of India.

    More importantly, China’s strategic interest has been facilitated by the rise of the Maoists in Nepal. In fact, the January 2008 speech of Prachanda which got leaked has fuelled India’s concern about the possibility of Nepal inching towards a Maoist dictatorship. Indeed, ideological similarity with Communist China lends suspicion to the growing affinity between the two countries. Unlike Royal Nepal, the Maoists under Prachanda have shown in no ambiguous terms their strategic goal of reducing dependence on India and increasing ties with China. In this context, it is worth noting the draft proposal for a China-Nepal friendship treaty submitted on February 27, 2009 by the visiting Chinese delegation to Nepal led by Assistant Chinese Foreign Minister Liu Jieyi. The official reason provided was the need for a fresh treaty to meet the changing political environment in Nepal after the Maoists came to power. For Nepal, signing a treaty with China on the lines of the 1950 India-Nepal treaty undoubtedly curtails India’s special relations with Nepal. At the same time, by pledging to overhaul the 1950 treaty with India on the ground that it “does not represent the aspirations of the Nepalese people anymore” Maoist Nepal clearly seeks to reduce India’s influence in Nepal. Prachanda’s May 09, 2009 interview to the Times of India in which he asked, “Why should Nepal seek India’s consent on its security?” seems to hint at the Maoist’s search for independent foreign policy. And on the other hand are reports about China pledging support for Prachanda’s decision to sack the army chief when India was trying hard to prevent it.

    In sum, observing the growing trends of Nepal-China ties, it may be argued that Nepal under the Maoist government has been clearly seeking closer ties with China at the cost of India and is far from pursuing a policy of equidistance. Further, Nepal’s geo-political location coupled with China’s proactive South Asia policy has clearly accentuated the security dilemma in the region. At this juncture, when Nepal is in turmoil, a great deal of foreign policy dexterity is required on the part of the Indian establishment to preserve its influence in South Asia and at the same time ensure a democratic Nepal that would deter China’s inroads into Nepal.