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Nepal's delicate balancing act between China and India
Image: picture-alliance/AP Photo/N. Shrestha

Nepal's delicate balancing act between China and India

Ankita Mukhopadhyay New Delhi
March 9, 2020

Ties between Nepal and China have been on the upswing, particularly when it comes to trade, investment and regional connectivity. But Beijing's growing clout in the Himalayan country has stoked concerns in India.

The Kathmandu Post, an English-language newspaper in Nepal, ruffled Chinese feathers in February when it published an article criticizing Beijing's handling of the COVID-19 virus outbreak. The article blamed China's authoritarian political system for contributing to the spread of the virus and turning it into a pandemic.    

The Chinese Embassy in Nepal spared little time in putting out a statement condemning the Kathmandu Post for its scathing editorial. The embassy threatened to take further action against the newspaper and singled out Anup Kaphle, its editor-in-chief, for being "biased on China-related issues."

China's harsh response toward the Nepali newspaper came at a time when Beijing has greatly ramped up its investments in Nepal. The Kathmandu Post has alleged that Chinese aid to Nepal comes with "strings attached."

Kapil Shrestha, professor of political science at Tribhuwan University in Kathmandu, agreed with paper's view. "Nepalis interpret the embassy's statement as an unwarranted interference in the sovereignty of Nepal. It's an act of intimidation to the extent that it blackmails Nepal," Shrestha told DW.

Beijing's growing clout

In the current fiscal year, over 90% of foreign direct investment (FDI) in Nepal is from China. Beijing pledged nearly $500 million (€436.9 million) in financial aid to Nepal in October last year when Chinese President Xi Jinping visited the Himalayan country.

China has already pumped millions of yuan into infrastructure and hydropower projects in Nepal. Both countries share ever closer trading relations and Nepal has signed up for the Belt and Road Initiative (BRI), a Beijing-led gigantic infrastructure program that includes the building and upgrading of transportation and commercial links.  

"China is a rising power and it is looking to project its power primarily through investments. China is sharing its prosperity with smaller countries like Nepal and these countries are trying to maximize benefits from China," K. Yhome, a senior fellow with the Observer Research Foundation, a Delhi-based think tank, told DW.

However, with big investments comes big influence, particularly if the investor is China. Nepal, whose economy relies significantly on trade, has a growing trade deficit with China. This gives Beijing leverage over Nepal, say observers.  

Akhilesh Upadhyay, a Kathmandu-based journalist who follows Nepal-China relations, believes that one can't draw a dichotomy between economic and political power. "Nepal is benefiting from strong trade ties with China, and this is benefiting both countries," he told DW.

"We should look at Nepal-China trade and investment as a win-win situation for both countries. One area that Nepal needs to continue to work in is improving its trade deficit. The government has to negotiate the best deal so that we can increase our exports," he added.

"India and Nepal also have good trade relations. Culturally and in terms of shared values, India and Nepal are quite close and it will be difficult for China to replace India in that sphere," Upadhyay stressed.

Nepal, Tibet and trade routes

For decades, Nepal has been dependent on Indian ports for its commerce, with two-thirds of goods to and from Nepal passing through them. In a bid to cut back on this reliance, Kathmandu signed a transit protocol with Beijing last year.

The protocol, which came into force on February 1, gives Nepal access to four sea ports and three land ports in China. The protocol was inked just months after India lifted a blockade on the supply of essential items such as fuel and medicines to Nepal. India had imposed the blockade after Nepal refused to make amendments to its constitution.

The transit protocol, which will reduce the time spent on bringing goods into Nepal, has been met with mixed reactions in the country. "The new transit protocol gives Nepal the alternative to use China's ports if there is any altercation with India. The transit protocol is also seen as a political achievement for the government," Prakash Bhattarai, a former Asia Global Fellow at the University of Hong Kong, told DW.

However, the border between Nepal and China is expected to become more porous with the agreement. This is an issue for Tibetans, who try to escape China by entering Nepal, say experts.

Kathmandu: Living and breathing in one of the world's most polluted cities

Nepal's capital Kathmandu is one of the fastest-developing cities in the world — and also one of the dirtiest. The city's inhabitants are battling with the health consequences.

Image: Marco Panzetti

Then and now

Looking down on Kathmandu from Swayambhu temple, a sacred Buddhist pilgrimage site in the west of the city, — last year and in 1967. Green spaces have been built over, and mountains have disappeared behind a veil of smog. In 2018, Nepal ranked as having the worst air quality of the 180 countries in the global Environmental Performance Index.

Image: Marco Panzetti

City of cars

The Nepalese capital is set in a valley, where air pollution gets trapped between the mountains. Much of it is dust from unpaved, dirt roads. Brick kilns on the outskirts of the city also foul up the air. But the biggest culprit is traffic.

Image: Marco Panzetti

No walk in the park

The number of vehicles in Kathmandu is rising by 14% each year, three times faster than the population. As the amount of traffic grows, pedestrians face cars whizzing by in terrifying proximity, deafening noise and smog that makes the eyes water and the breath shorter.

Image: Marco Panzetti

Poisonous air

Pollution takes it toll on residents' health. "My nose is dry, I suffer from headaches and my lungs are not well. So I am using a mask to protect myself from dust," says 63-year-old Narayan Dahal, walking through Kathmandu's busy Kalanki district.

Image: Marco Panzetti

Limited protection

After two days wear in Kathmandu, a face mask is grimy from the air. While dust causes discomfort, these masks do little to protect the wearer from the fine particles in smog that go much deeper into the lungs and can cause heart and respiratory diseases, and even cancer.

Image: Marco Panzetti

Getting a lungfull

Many in Kathmandu don't bother with masks at all, and for street traders like this young cotton candy seller at one of Kathmandu's busiest crossroads, the fumes are an occupational hazard.

Image: Marco Panzetti

Rushing into the modern age

Just half a century ago, the Nepalese capital was a town of only a few hundred thousand people. Today, it's a metropolis of 3 million. Without proper planning, urbanization has exploded out of control. The city's main arteries, like Kanti Path, are choked with exhaust fumes.

Image: Marco Panzetti

Gasping for breath

A woman on a break from work holds her throat as she surveys the polluted city from above. Kathmandu is still being rebuilt after a catastrophic earthquake hit Nepal in April 2015, killing 9,000 people. Some hoped new builds would adopt cleaner burning brick kilns, for instance. But for now, pollution remains a big problem.

Image: Marco Panzetti

Memories of fresh air

"I used to come to Kathmandu as a kid, and the air was not bad," says 29-year-old Buddhist monk Pasang Thunglu. "But when I came back in 2015, the air was unbreathable. The earthquake made things worse because now construction sites produce lots of dust."

Image: Marco Panzetti

Dirty and devine

Even the deities aren't safe. In a Kathmandu craftsman's showroom, this brass statue of the goddess Tara is wrapped in paper to prevent dust from ruining the painted details of her face.

Image: Marco Panzetti
10 images

China has always pushed Nepal to increase monitoring on its border. According to a confidential document published by WikiLeaks in 2010, Beijing demanded that Kathmandu strengthen border troops. The document also stated that China would reward Nepali forces if they handed over Tibetans fleeing across the border.

Nepal has already signed several security agreements with China and operationalized border security cooperation over the course of several years. The Himalayan nation has also affirmed its commitment to the "one China principle," acknowledging that Tibet is China's internal issue. Furthermore, Nepal has promised to not allow any anti-China activities on its soil.

"The Nepali government definitely doesn't want Tibet to be an issue with China. This can be seen from the swift suppression of protests by Tibetans in Nepal during the 2008 Beijing Olympics. They will do their best to control the Tibetan population within Nepal," Krzysztof Iwanek, head of the Asia Research Center at War Studies University in Poland, told DW.

Nepal has yet to see an impact of political interference from China, but its policies are already veering toward appeasing China, say analysts. This spells trouble for China critics in the country and over 20,000 Tibetans living there.

Indian interests vis-a-vis China's

New Delhi has taken note of China's steadily growing influence in Nepal. As part of India's "neighborhood-first" policy, New Delhi is stepping up its political, economic and even military engagement with its neighbors.

However, India is lagging behind China when it comes to expanding its trade and investment links with its regional partners, particularly with Nepal.

China hopes Nepal is the way to India's heart


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"China and Nepal have a direct internet connection now, which means that Nepal no longer has to be dependent on India for the internet. Earlier, India theoretically had the capacity to disconnect services to Nepal. That is no longer possible as China has established a direct connection with Nepal, despite the barrier of the Himalayas," Iwanek told DW.

An area where India continues to have an upper hand over China is its presence in Nepal's culture, language and social life.

Lack of Mandarin language fluency in Nepal has been cited by some experts as a barrier to deepening China-Nepal relations. But China seems set to reduce this barrier. Some private schools in Nepal have reportedly agreed to make Mandarin a compulsory subject in classes in return for China footing the salary for the language teacher.

"China is slowly increasing its political and cultural ties to Nepal. There is already a relationship between the Communist Party of China and the Nepal Communist Party. China is also growing its soft influence in Nepal through China study centers and businesses," Bhattarai told DW.

Nepal's unique position as a geopolitical balancer between India and China will make it an important ally for both countries in the future. Whether Nepal leans toward one country or chooses to remain non-aligned will affect the trajectory of its political and socioeconomic growth and development.

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