What does China want in Nepal?

8 July 2021

Moving beyond economic and diplomatic ties with Nepal, China has been wading into Nepali domestic politics for the last few years. This trend was seen alongside Beijing’s increasing assertiveness internationally (what has been dubbed by analysts ‘wolf warrior diplomacy’) amid the rise of President Xi Jinping as China’s paramount leader and the promotion of his "Chinese Dream". The Communist Party of China (CPC) promoted Xi's ambitious Belt and Road Initiative (BRI) as a means to wield power, and influence and in response to the country's development needs Nepal hitched its wagon to the BRI in May 2017. The desire to graduate from Least Developed Country status spurred Nepal to become a signatory to the Chinese initiative despite warnings about debt traps.

The initial euphoria in joining the ambitious project gradually gave way to apathy as Nepal's ever-fluid political situation and sluggish bureaucracy hindered progress in BRI projects. Differing views within the China-Nepal bilateral about the modality of investments in projects also persist. Even the Trade and Transportation Agreement and the use of Chinese ports have gone nowhere. A detailed project report of the much-touted trans-Himalayan railway and Gyirong-Kathmandu tunnel road has still not been undertaken. In June 2021, Nepal and China inked a deal to develop three hydropower projects on the Marsyangdi River, but given the past track record, there is no guarantee of its completion. The slow progress in ties has even been noticed by President Xi Jinping, who expressed public dissatisfaction with the lack of progress in projects during his visit to Nepal in 2019.

Realising that the smooth functioning of geoeconomic connectivity requires deft geopolitical manipulations, China had tacitly sought to engineer the coming together of all the communist parties in Nepal. However, its project of building a strong communist governing bloc in Nepal seems to be failing following the split of the Nepal Communist Party (NCP). Shell-shocked by the dismantling of its influence, Beijing has uttered not a word about the various political developments in Nepal since the Supreme Court in Kathmandu issued a decision effectively splitting the NCP in March 2021 and restoring the status quo ante, i.e. restoring the major communist parties CPN-UML and CPN-Maoist Centre before they had merged to become the NCP in May 2017. Nonetheless, Beijing is continuing with its clandestine endeavour to regroup the communist parties and illicit influence through them.

Banking on the NCP

To build ideological partners in neighbouring countries (in the tradition of communist parties seeking fraternal ties across nations) and to see the BRI project move ahead smoothly, the CPC arranged an ideological discussion workshop in September 2019 with the NCP to induce instructions to Nepali leaders about governance. Before the workshop, NCP leaders had been sparring over different ideologies but were perfectly happy to talk about "Socialism with Chinese Characteristics" as proposed by President Xi. The NCP and CPC even signed a six-point memorandum of understanding to forge high-level cooperation for the next five years.

The NCP split has come as a rare shock to China’s foreign policy. Its efforts to build an ideological force with a strong financial backing to counter New Delhi’s influence, which enjoys excellent political, social and cultural ties with Nepal have fallen flat.

Alarmed by the alliance between the NCP and CPC, the opposition Nepali Congress (NC) warned Nepal's ruling party that hewing so close to the CPC, an explicitly authoritarian party dedicated to one-party rule, will be detrimental to Nepal’s democracy. One of the gravest errors made by the CPC during this period was to virtually equate the NCP and its leadership with wider Nepalese politics and civil society. Beijing ignored all other political parties and focused solely on the NCP so much so that CPC's mouthpiece, the Global Times, moved to denounce the Nepali Congress on a couple of occasions. The Chinese ambassador in Kathmandu, Hou Yanqui, did not allow time to meet other party leaders as much as she frequented the NCP’s leadership. As a result, China risked repeating the mistakes made by India in 2015 when the latter solely backed Madhesh-based parties during the blockade, only to toss them aside later.

Ties have deteriorated between China and the NC so much that they have engaged in heated exchanges over the issue of alleged Chinese encroachment of Nepali territory in the Humla district in western Nepal. The NC had raised the issue of encroachment based on spurious documents that had been hyped up by the Indian media forgetting the fact that the Nepal-China border had been settled in the 1960s. The Chinese embassy in Kathmandu subsequently wrote a letter to the NC contesting the claim. The Global Times excoriated the NC for raising Humla, even accusing the party of creating ballyhoo at India's behest.

The issue of Tibet

One of the grievances China nurses against Nepal concerns Tibetan refugees, officially estimated at around 11,000 (unofficial estimates suggest 20,000). Chinese officials have time and again expressed discontent about anti-China activities in Nepal in the name of Tibetan refugees, who have become a cause of contention between the two countries, despite Nepal’s pledge to maintain its "One China" policy. China's concerns have been augmented by the United States' recent laws championing the Tibetan cause. Under the Consolidated Appropriations Act 2021, Washington has earmarked funds for Tibetan refugees residing in several countries including Nepal. This poses a security concern for China, especially when a possible succession crisis after the Dalai Lama's death looms on the horizon.

Xi Jinping has a special fondness for Tibet as his father Xi Zhongxun had spent time with the 14th Dalai Lama before the region was incorporated into China. With Xi pushing for fast-paced development in Tibet, the Chinese establishment fears that neighbouring Nepal could become a playground for Western powers to destabilise Tibet. China's desire to fortify Tibet's security is thus urgent and stabilising relations with Kathmandu is considered a vital step towards that goal. While China seems to have militarily secured Tibet, it wants no trouble whatsoever in the border regions beyond its immediate control. These geo-economic and geopolitical interests have inspired Beijing to back a communist political bloc in Kathmandu. Given the history of numerous mergers and splits among the myriad of communist parties in Nepal, China should have realised that this coming together of major communist parties like the CPN-UML and CPN-Maoist Centre to form the NCP would not last. An ideology that works for China cannot necessarily be relevant to Nepal. Inevitably, the enforced merger of communist parties did indeed develop cracks.

A futile effort?

Throughout 2020, China bent over backwards to keep the NCP together, even staking its reputation of not interfering in other countries affairs in order to secure an ally in Kathmandu. Chinese Ambassador Hou made frequent visits to President Bidya Devi Bhandari, Prime Minister KP Sharma Oli and other top party leaders, which were taken by critics as explicit efforts to micromanage Nepali politics. Even after Oli dissolved the parliament and there was a vertical split in the party, top brass from the CPC continued visiting Nepal to inquire whether the parliament could be reinstated and if the party could regroup. But events have progressed too far to reverse course.

The NCP split has come as a rare shock to China’s foreign policy. Its efforts to build an ideological force with a strong financial backing to counter New Delhi’s influence, which enjoys excellent political, social and cultural ties with Nepal have fallen flat. Insiders say that China is still pursuing its program to develop a communist bloc in Nepal and is trying to convince second and third-generation leaders in the major communist parties to consolidate. Interestingly, the party's local members in the Tibetan Autonomous Region rather than Beijing mandarins are said to be active in trying to push the Nepali communists together. However, it remains to be seen whether China will be successful in its endeavour or if it will have to face the ignominy of failure once again.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Bindesh Dahal is Diplomatic Editor at Lokaantar.com, Nepal's leading investigative news portal. He tweets at @bindeshdahal Image credit: Wikimedia.