KATHMANDU (REUTERS) - China will increase official aid to Nepal by more than five times from fiscal 2015-16, officials said on Friday, to develop infrastructure in the landlocked nation where regional rival India has long wielded political influence.
The jump in assistance was announced after talks between visiting Chinese Foreign Minister Wang Yi and his Nepali counterpart Mahendra Bahadur Pandey, part of a deepening engagement which is expected to lead to a visit by President Xi Jinping next year.
Both India and China have been courting the Himalayan nation as they worry about its slow transition from a constitutional monarchy to a republic and the end of a 10-year civil war in 2006 that has left deep divides.
China is concerned about the presence of Tibetans in Nepal, many of whom have crossed the treacherous Himalayas from their homeland. On Friday, Wang laid the foundations of a police academy to train officers of Nepal's Armed Police Force that guards districts bordering Tibet.
Beijing will build the police academy as a gift on top of the annual aid of $128 million, up from the current US$24 million (S$ 32 million), Krishna Prasad Devakota, a Nepal finance ministry official, said. "As neighbours China and Nepal have common security needs ... we need to work together to crack down on illegal border crossings and transnational crimes," Mr Wang told reporters.
Traditionally, Tibetan exiles captured by Nepali police were handed to the United Nation's High Commissioner for Refugees for their onward journey to India where the Tibetans' spiritual leader, the Dalai Lama, is based.
But China says the refugees are illegal migrants and has been pressing Nepal to crush their movement. The number of Tibetans entering Nepal from China has fallen from about 2,500 six years ago to just about 200 a year.
Beijing's greater involvement in Nepal comes as India steps up its own engagement with its neighbours.
India has signed a deal to allow the import and export of electricity, a long pending demand of Nepal, and is expected to boost investment in Nepal's hydropower sector with a potential to generate up to 42,000 megawatts of electricity.
India, which shares a long and porous border with Nepal, has also announced a US$1 billion soft loan, part of moves to woo back its neighbour.