Nepal's veteran communist politician KP Sharma Oli, became the country's prime minister for the fourth time this year. He tried to launch infrastructure projects this week to strengthen ties with China. Breaking with tradition, Oli has chosen China over India for the first foreign tour since his July swearing-in.
Oli arrived in China on a four-day visit last Monday. The purpose of his visit is to get out of India's sphere of influence and reduce Nepal's historical dependence.
Oli had to hear the old promise repeated during his visit to China. No new investment has been announced. On Tuesday, Nepal and China jointly signed nine agreements, which were agreed upon by the two countries earlier.
Meeting with Chinese President Xi Jinping on Tuesday. During the meeting, Xi said that China will help Nepal transform from a 'landlocked' country to a 'land-linked' country. Xi also promised that Beijing will continue to support Nepal's economic development as much as possible.
Nepal signed China's Belt and Road Initiative (BRI) in 2017. This initiative aims to build China's infrastructure and trade links with the world. However, no project under this has been fully implemented so far. Nepal has expressed its willingness to initiate projects such as road development and creation of new transport corridors.
Despite its historical ties with India, Nepal is trying to rebuild its economic and trade ties. Currently, two-thirds of Nepal's international trade is done with India, while China's share is only 14 percent. But according to World Bank data, China has given more loans to Nepal than India. China's debt is over $310 million, which is $30 million more than India's.
During Oli's first term in 2016, India signed a petroleum deal with China after a six-month oil embargo. The deal ends India's role as a monopoly supplier of oil and opens new avenues of cooperation with China.
China has already loaned $216 million to build an international airport in Pokhara, which began operations last year. But the airport, which is claimed to be a symbol of the success of China's Belt and Road project, has run into problems. International flights remain low due to India not allowing use of its airspace. It is hampering the operation of the airport.
Meanwhile, concerns have arisen among Nepal's ruling coalition over the Chinese loan. The pro-Oli Nepali Congress in particular opposed the Chinese loan-based scheme. It has been decided to accept donations instead for projects in China.
The example of China's Belt and Road debt crisis in countries like Sri Lanka has made Nepal even more alarmed. In May 2022, Sri Lanka declared bankruptcy due to its debt burden. Nepal has decided to only accept donations from China to avoid such a situation.
However, Oli's visit to China is seen as an important strategic move for Nepal.
