Diplomatic Eye-EP 10

The Visit of Nepal’s Prime Minister to China and Shortcomings in the Joint Communiqué

From September 23 to September 30, 2023, Nepal’s Prime Minister Pushpakamal Dahal, “Prachanda,” paid an official visit to China. While being there, he attended the opening ceremony of the 19th Asian Games. Prior to his visit to China, PM Dahal had attended the United Nations General Assembly’s 78th session in New York, USA. With the exception of his efforts to advance his own and his party’s brand, observers don’t seem overly enthusiastic about the PM’s tour to China for the sake of the country.

High-level visits: Purpose and perception
China and Nepal had increased bilateral interactions over the past few months. However, we must closely monitor how things develop. Visits by high-ranking US dignitaries were discussed with the Chinese officials as well.

Victoria Nuland, the Deputy Secretary of State for Political Affairs of the United States who paid a two-day visit to Kathmandu on January 29 and 30 this year is a senior US Diplomat. The director of USAID, Samantha Power, met with key authorities while in Kathmandu for a two-day visit shortly after Nuland’s departure. In terms of the MCC-Nepal Compact’s successful launch, CEO Alice Albright came to Kathmandu on 1st October,2023 for a five-day visit.

The deputy assistant secretary for South and Central Asian Affairs (SCA), Afreen Akhter had travelled to Kathmandu in February. Also, in February Indian Foreign Secretary Vinay Mohan Kwatra returned home after spending two days in Nepal.

It is also said that US representatives questioned Nepal’s decision to not take part in the State Partnership Programme (SPP) during a number of sessions. The previous Sher Bahadur Deuba government had rejected the SPP, which is thought to be a part of a security and military alliance.

China doesn’t seem to be comfortable when Nepal Army Chief General Prabhu Ram Sharma attended the Conference of the Indo-Pacific Army Chiefs in New Delhi. A three-day event, held by the Indian Army with the US Army as a co-host, concluded on September 27. Among thirty countries taking part, 18 countries were represented by Chiefs of Armies, while 12 countries were represented by Heads of Delegation.

We need to cautiously wait and see how both countries take initiatives to implement the letter and spirit of the joint statements. In short, this visit did not establish the foundation necessary to advance the BRI projects that have stalled.

PM’s Visit to China: Was it Geo-political or Economy oriented?
I believe that the Prime Minister’s visit to China was intended to serve geopolitical as well as economic purposes. China is closely monitoring what the United States and India are doing in Nepal. Because of Nepal’s strategic location and the US and India’s membership in the Quad, China appears to be more concerned about the travel of their top officials here.

Given Nepal’s participation in China’s Belt and Road Initiatives (BRI) and its proximity to China, I believe it is also driven by economic considerations. The BRI framework was signed by Nepal in 2017, however not a single project has moved forward. China is curious to understand more about the unique problems that exist in this circumstance.  Authorities and experts claim that Beijing is concerned “third parties” would damage bilateral relations. Beijing speculated that the US and India might be the third parties, despite the fact that it did not specify who they were.

With Chinese President Xi Xinping, the prime minister hardly had time for bilateral discussions since it lasted only for 20 minutes. Why did he stay in China for eight days? One diplomat conveyed the idea that it was more of a personal vacation than an official one.

Chinese Confusion
It is believed that the Chinese were curious in the new communist front and wanted to know how it would evolve and what impact it would have on Nepali politics. These parties don’t follow either their manifesto or their values. Their senior leaders’ self-serving goals complicated the unity. Perhaps China doesn’t comprehend the dynamics of this situation. Besides, China wants to have equal interest and influence in Nepal vis a vis India.

Let’s get back to the talk about the PM’s trip to China. On September 26, a joint statement with 13 points was released. On the Joint communiqué, I would like to offer some commentaries.

What does the Joint Statement contain?

1. The first 3 points are background information of the joint statement. The communiqué included the felicitatory words. Municipal elections were held on May 13, 2022. Members of the House of Representatives and the Province Assembly were chosen at the same time on November 20, 2022. Even the coalition has already shifted under PM Prachanda. One feels uneasy about these earlier events being mentioned in the communiqué.

2. The fourth point referred to President Xi Jinping’s historic state visit to Nepal in 2019, during which the bilateral relationship was raised to a Strategic Partnership of Cooperation with Everlasting Friendship for Development and Prosperity.

3. As far as point no 5 is concerned, it is all fine, but lacks precise information on BRI, the causes of the delay, and the timeline for implementing 8 projects of BRI. Regarding BRI implementation, the Communique appeared to be almost mute.

4. Point 6 basically recognizes the history of mutual assistance in difficult times- the two parties reaffirmed their commitment to respecting and accommodating each other’s concerns and basic interests. Nepal’s adherence to the principle of one China has been reaffirmed.

5. Point number 7 states that Nepal and China have agreed to accelerate consultations on the Belt and Road Initiative (BRI) Implementation Plan, exchange development strategies, and strengthen connectivity in areas like ports, roads, and railways. They will also work together to ensure safety and contribute to Nepal’s development agenda, including graduating from the least developed country status.

The communique highlights that both countries are committed to delivering greater benefits to their peoples. It further states that Chinese and Nepali sides have agreed to improve port facilities, reopen trade points, and maintain communication for Chentang-Kimathanka and Riwu-Olangchungola ports. They will accelerate feasibility studies for the Tokha-Chhare Tunnel and Kathmandu Ring Road projects, expand air rights arrangements, and promote energy cooperation. The China-Nepal Joint Implementation Mechanism will be used for exchanges. It is unclear when BRI projects will begin. Signing the BRI framework agreement in 2017 but failing to build a single project since then, demonstrates our lack of sincerity. Nepal should toss away its begging bowl.

6. Point number 8 mentioned that both sides agreed to enhance cooperation in various sectors, including economy, trade, investment, agriculture, tourism, poverty alleviation, health, and education, expressing satisfaction with the existing bilateral cooperation.

The Chinese and Nepali governments are pleased with the recent Second Working Group Meeting on Trade Facilitation in China, pledging to provide a fair, transparent, and non-discriminatory business environment. It stated that the first batch of transit cargo arrived in Nepal on September 7, 2023. It added that Nepal’s participation in the 7th China-South Asia Expo and 6th China International Import Expo in Shanghai will further boost economic and trade cooperation. Although this is positive, there is no reason for a big celebration for the Cargo arrival.

The Cargo mentioned in the joint statement is more of a metaphor than a tangible accomplishment. If not daily operations, this must be used on a regular basis. There is a lot of ambiguity in the language regarding the Trade and Payment Agreement. We also anticipate some real financial advantage from the fair planned on November 23, 2023.’Agriculture Industrial Demonstration Park’ as a concept sounds promising.

How far along is Nepal with this preparation? Are there any well-informed discussions occurring? As a step towards eliminating economic imbalances between the two nations, Nepal and China stated their willingness to expedite the clearance procedure for the export of cooked buffalo meat products from Nepal to China. Yes, this is a worthwhile endeavor. It ought not to be an uncommon rhetoric. To lessen the trade imbalance, however, this will not be sufficient on its own. What steps are being taken to set up the necessary infrastructure, including advanced laboratories?

China and Nepal have decided to work together to develop standardized scale farming methods for Yak, Nak, and mountain goats. The “Lighting Up the Future” initiative and the “Vibrant Village” demonstration project were both warmly embraced. They expressed a willingness to increase collaboration in the areas of development, improving livelihoods, and reviving rural areas. They praised one another’s assistance in the fight against COVID-19 and expressed joy at the conclusion of a project with Chinese assistance. In order to support Madan Bhandari University for Science and Technology, they are also looking at combined educational techniques.

7. The assertion made in point no. 9 is that the Nepali side recognized China’s significant contribution to the economic and social advancement of Nepal. The two sides agreed that the implementation of the pre-planned reconstruction projects following the earthquake’s aftermath needed to be accelerated.

8. The subsequent point indicates that to improve border management and collaboration, the two sides decided to carry out joint inspections of the China-Nepal border, put into effect the Agreement on the Boundary Management System, and continue discussions on the establishment of a three-level boundary contact system.The location of the border dispute between China and Nepal is not made clear here. In the demarcation of the Nepal-China border, the Nepali government has not specifically identified the locations of the disputed border areas.

9. In reference to point number 11, it is said that Nepal and China have agreed to discuss cooperation in the digital economy, infrastructure, and artificial intelligence as they express satisfaction with the agreement they signed on cooperation in areas like education, science and technology, telecommunication, culture, tourism, radio, television, and youth. The governments of China and Nepal have committed to advance cordial relations and collaboration, which include assisting Nepal’s cultural and tourism organizations, planning tourism-related events, and enticing Chinese visitors to Nepal. A Memorandum of Understanding on the publication and translation of classics was also signed.

10. In accordance with point number 12, the significance of multilateralism, democracy, and fair global governance was emphasized by both parties. They also decided to reject protectionism, promote the multilateral trading system, and step up their cooperation inside the UN. They sought to advance harmony, safety, progress, wealth, and a shared future. In Nepal, the issue of governance is severe.  What does greater democracy entail exactly? The Joint statement does not make it explicitly evident.

11. The communiqué’s last point is that Nepal and China have advanced their Strategic Partnership of Cooperation, expressing satisfaction with the results of Prime Minister Prachanda’s visit to China. Both sides extended an invitation to Chinese leaders to visit Nepal, and will continue to communicate through diplomatic channels. This is nothing more than praise for the visit to China by the Prime Minister of Nepal. Will this just remain a formality or can we expect solid actions from both sides?

We need to cautiously wait and see how both countries take initiatives to implement the letter and spirit of the joint statements. In short, this visit did not establish the foundation necessary to advance the BRI projects that have stalled. The message that there was no concern in Nepal on longer absence was conveyed by the Prime Minister’s and high level officials’ needlessly extended stay in China. Big initiatives are not recommended, given the current status of the economy of Nepal. However, if China is willing to provide financial support for railways, Nepal should grab the opportunity. Along with Nepal, India will benefit from Nepal’s railway connectivity to China. With regard to long-term commerce, Nepal’s proximity to two powerful countries may be economically advantageous to all three countries. If BRI in Nepal concentrates on home demand and interest, it has a promising future. It is necessary to conduct a thorough evaluation before starting a project. The point is Nepal can’t solely rely on China and China undoubtedly needs to comprehend it correctly, too. Due to its challenging topography, language barriers, and cultural disparities, Nepal is unable to engage in significant bilateral trade with China based on reciprocity. However, experts believe that China has replaced India as the most significant participant in Nepal’s investment and development sectors as well as a major player in its domestic politics between the profound changes that began in 2006 and the present.

For Nepal, it is necessary to exercise more prudently when accepting loans from any countries including China. It is best to choose projects that can be successfully commercialized. I don’t believe that aid will add to Nepal’s development. Since it has long received foreign aid, if this were the case, it would have been one of the world’s most developed countries. Before winding up, I would like to conclude with a special mention on the BRI. The BRI project has been so much talked about for the past six years. However, no solid actions have been taken from both ends. Will the BRI just end up within its conceptual framework in Nepal, or will both the sides finally start working out seriously on this highly elongated project? It is up to the concerned authorities to decide. All projects ought to have money from Nepal’s end. You will benefit from the pride of ownership that comes with it. It’s necessary to get rid of the begging bowl for economic and moral dignity of the country.