On a visit to Kathmandu last week, the Chinese foreign minister, Wang Yi, announced Beijing would increase its aid five-fold to Nepal. Meeting a long held desire of the Nepali political elite, he also said that Nepal could serve as the 'bridge' between China and South Asia.
The visit has come in the wake of the increased Chinese investment, tourist inflow and high level visits to Nepal, as well as Kathmandu’s partial willingness to lobby for SAARC’s enhanced engagement with China. China has also expressed its readiness to extend its rail network from Shigatse to Nepal. It has increased scholarship slots for Nepali students. Marking sixty years of diplomatic ties, the Chinese president, Xi Jinping, will also visit Nepal next year.
It is tempting to play up the Delhi-Beijing rivalry in this case, but it may be first useful to remember three fundamental facts.
One, India and Nepal share an open border; over two-thirds of Nepal’s trade is with India; close to 50 percent investment to Nepal comes from India; each political stream in Nepal has links with political movements in India; and the Delhi establishment has a huge influence on Nepal’s politics.
Two, China’s engagement with Nepal is not unique. As Jayant Prasad, former Indian ambassador to Nepal, says, “This is a part of China’s increasing footprint all over the world. This engagement does not exclude South Asia, and in fact, includes India too.” He adds that when Nepal is done with its constitution, and turns its attention to development, Indian investment is sure to increase in the country as well.
And three, there is no reason yet to believe that there is a deep underlying strategic competition between India and China in Nepal. In fact, on broad themes, the two countries are on the same page. The Indian and Chinese ambassadors in Kathmandu meet for a meal every few months to discuss their perspectives. Both countries pushed Nepal to hold elections at the end of 2013. While India has said there must be a constitution by consensus, China has said Nepali parties must find a common point in constitution drafting. For both, the bottom-line is a friendly, stable regime in Kathmandu which can take care of their security interests.
A former official told HT, “China is not likely to upset the existing balance in the relationship since it does not benefit them. They already try to use Pakistan to neutralize us. Opening another front is pointless for them.”
But there are some departures too. Till two years ago, while Chinese engagement was growing, it was not using this influence to shape Nepali politics – as India has traditionally done. But now, Beijing has quite openly expressed views on Nepal’s federal debate. If at all state restructuring has to happen, Beijing would prefer a strong centre with administrative zones. The reason goes back to a core Chinese concern in Nepal – Tibetan refugees.
20,000 Tibetan residents live in Nepal; China wants Kathmandu to crack down on them. It also does not want Nepal to allow Tibetans to use their territory to go to Dharamshala or return from there. Nepal, much to the anger of US and human rights organisations, has played ball with the Chinese. This Tibet factor also influences Chinese views on Nepali federalism.
“Right now, they can deal with Kathmandu directly and force it to send anyone back who is crossing the border from Tibet. Tomorrow, it will have to deal with provincial governments. It is also skeptical that ethnic groups in charge of future states may be friendly to Tibetans,” says a Nepali official. This is music to the ears of the Nepali establishment which would like to preserve its elite domination through a unitary structure. India, however, believes that federalism - already incorporated in Nepal's interim constitution as a core principal - is essential for stability.
Delhi policymakers know they have to use India’s existing advantages in Nepal to bolster the relationship. Narendra Modi’s recent visits have helped. An Indian official says, “We have to keep careful watch. But there is no point getting paranoid. There will be overlap as we expand our engagement and they expand their own.”