The good, the bad, and the ugly that define China's investment in Nepal: The Kathmandu Post

By Ajaya Bhadra Khanal 

The Kathmandu Post/Asia News Network 

Nepal Prime Minister K.P. Sharma Oli's visit to China this week, which comes at an important time, has significant implications for Nepal's economic development, relations with India, and democratisation.

While India has been adopting aggressive policies to contain China, Nepal's northern neighbour on the other hand appears to be pursuing its diplomacy quietly. Scratch below the surface, however, and you see a massive Chinese investment in Nepal that is equally aggressive.

Behind the chants of the formal mantra and the Memorandums of Understanding (MOU), many things are going wrong with Nepal's international relations, including its relations with India.

Nepal needs China's help if it is to develop and prosper. 

As a result Nepal is talking about a lot of projects, including West Seti Hydropower project, Pokhara airport, and fuel storage. 

However, China's eagerness to help Nepal poses some challenges.

The problem lies with Nepal's democracy itself and the tendency of politicians to use bilateral relations for political and financial interests.

Perhaps it is a failure of Nepali foreign policy that it allows other countries to carry out their relations through multiple channels, most of them outside the purview of the foreign ministry.

A lot of Nepali people, as well as Indians, were looking forward to PM Oli's proposed visit to China for the kinds of deals he would make. 

PM Oli's China visit comes in the wake of Nepal's strained relations with India, and his touted efforts to strengthen the country's sovereignty by seeking Chinese assistance to lessen Nepal's dependence on India, whether it is for fuel, trade, economic development, transit, or, more importantly, political stability.

More than being a benchmark of Nepal's relations with China, the deals that Nepal has signed with its northern neighbour are more indicative of PM Oli's relations with India. 

"Bilateral relation" is a misnomer because the dealings between two countries may not always be bilateral. And this does not only apply to Nepal, but also to countries like India, which have to balance associations between states like China and US.

Before he headed to China, PM Oli was expected to give India a strong message by signing agreements on fuel supply and storage facilities.

Oli's backpeddling from the fuel import deal with China gives an indication of the shadow India casts over Nepal. 

When Foreign Minister Kamal Thapa signed an MoU with China about fuel imports, it was tied to aspirations of Kathmandu as well as to the burgeoning wave of "nationalism" in the aftermath of the border problem with India.

What PM Oli's visit to China demonstrates, beyond any doubt, is that India's influence on Nepal remains tight and Oli, and by extension Nepal as a state, may not be as independent as we think. 

Last week, The Hindu quoted the Nepali ambassador in Delhi as saying that since the visit is "historic" in nature, PM Oli will brief Indian External Affairs Minister Sushma Swaraj about his trip to China.

China first built solid relations with Nepal's security sector, including the Armed Police Force, in order to suppress pro-Tibet activities in Nepal. 

China continues to put Tibet first in its relations with Nepal, as indicated by its current concern for an extradition treaty.

China, since then, has moved on to all fronts inviting exchanges from political parties, media, bureaucrats and the security sector. These visits, in a single year, number in the thousands. 

Similarly, China Radio International (CRI) has penetrated even rural mountainous areas and the southern plains of Nepal. 

Its popular hosts receive thousands of handwritten letters from Nepalis every week requesting that China help Nepal to solve its problems.

After the demise of monarchy in Nepal, China was forced to diversify its diplomatic strategy in Nepal. 

Previously, it was enough to deal with the king, but now it has to deal with a lot of different institutions and groups. 

China is quietly and confidently working with Nepal; it has now built a solid foundation with a section of the Nepali society, including bureaucrats, politicians and media.

China, beyond doubt, wants to see a more independent Nepal, and PM Oli's failure to shrug off India's leverage must have disappointed China. 

China, however, does not want to push Nepal to the extent that it invites backlash from India and makes things difficult for the Nepali people. The deals struck during the current visit must be seen in this light.

Another question that has emerged is how China will address questions of Nepal's political stability now that the Madhesis have also started directly communicating with China.

Despite political issues, China's role in Nepal's stability and economic development is significant.

If his interviews, including those with Xinhua, the official press agency of China, are any indication, PM Oli wanted to give the impression that "Nepal has ended an era of political struggle and started the phase of economic development".

China's Belt and Roads initiative can unleash economic growth and prosperity in Nepal. 

It is under this umbrella that Nepal can expect to have a railroad link with China in the next four years and develop infrastructure related to trade, transit, and energy. 

The possibility of forging transport linkages with Tibet, including a railway line, has raised the hopes of the Nepali people.

Nepali politicians have a habit of trying to please their donors. Maybe because China has now opened a new international bank and launched the Belt and Roads initiative, Nepal is repeating these mantras more often than the Chinese.

Nepal's relations with China, to a great extent, are more and more influenced by brokers behind huge financial deals and big projects, including by money-making public Chinese entities. This has clouded Chinese aid to Nepal as it embarks on a new phase of economic development.

While these might appear beneficial in the short term, in the long term Nepal will be trapped in a relation of adverse incorporation. So while many of the projects may actually benefit the Nepali people and Nepal, others may also trap Nepal in an adverse relationship with the global economy, to the extent that it could undermine Nepal's ability to develop.

For example, the controversial Pokhara airport is now to be built with a loan from China at the cost of US$216 million (S$296 million). 

Experts worry that the airport will not be financially feasible and will drag down the Civil Aviation Authority of Nepal (CAAN), similar to the way fuel expenses have dragged down the Nepal Oil Corporation. 

Since the government has made a political decision to build the airport, the burden of repayment of the loans has to be taken on by the government directly and not by the CAAN. 

In order to be economically feasible, the airport will need to operate at least 30 international flights per day.

Similarly, PM Oli's opting to choose Himalaya Airlines, a joint venture between Nepal and China, also violates the code of conduct. 

According to the airline, it is offering its services for free, and that is precisely where the problem lies.  People holding public office are not allowed to receive expensive gifts because they are almost always bribes in disguise.

PM Oli, in this instance, has blatantly violated a fundamental principle of good governance.