As India-Nepal Ties Suffer, China Gets Ready to Fill the Vacuum

Nepalese Prime Minister KP Oli’s repeated assertion that Nepal seeks a balance between a distant China and next-door neighbour India, is a significant signal of how fast the power balance is shifting in Nepal.


Playing the ‘China card’ is not a new phenomenon in Nepal’s politics. However, things are changing fast as is manifest in Oli’s just concluded first-ever 5-day official bilateral visit to China, since becoming prime minister in February. During this visit, Nepal and China signed many important agreements on infrastructure development and connectivity, including one on a feasibility study for a rail link between Xigaze (Tibet) and Kathmandu.


Budding Ties Between China and Nepal


Connectivity is the new mantra in Oli’s Nepal. In an interview to China’s state run Global Times, Oli said that Nepal, which has “broad, comprehensive and multi-faceted” relations with both India and China “can serve as a bridge between our two neighbours. In fact, we want to move from the state of a land-locked to a land-linked country through the development of adequate cross-border connectivity. Our friendship with both neighbours places us in an advantageous position to realise this goal.”


It is amply clear from the above statement that Oli has not forgotten Nepal’s suffering and humiliation during the notorious economic blockade of 2015.


Just before leaving for China, Oli reiterated Nepal’s long-standing commitment for the ‘One-China’ policy, and declared that Kathmandu and Beijing “have common views on the concept of Trans-Himalayan Multi-Dimensional Transport Network.” “Based on this broad framework, we want to seek cooperation with China on cross-border connectivity of railway, road, transmission lines and other related areas for mutual benefit,” Oli had added.


China Cashes in on India-Nepal Tension


Indian Prime Minister Narendra Modi’s initial outreach to Nepal in 2014 had managed to hit the right notes. After the devastating earthquake caused havoc in Nepal in 2015, India’s generous financial, technical and humanitarian assistance was much appreciated by Nepal. But things took an ugly turn when the Madhesi people began to protest against Nepal’s new Constitution, and stopped all essential supplies from India from reaching Nepal. Though the Modi government never officially admitted that India was blockading Nepal, New Delhi’s soft corner for the Madhesi people’s demands for constitutional changes was viewed and remembered in Nepal as an India-backed blockade.


At the height of the economic blockade, which triggered a wave of anti-India sentiments in Nepal, Oli was seen as standing up to India. He strengthened Nepal’s ties with China, courting infrastructure investments and signing deals on energy. When political machinations forced him to resign, he blamed India for his downfall. However, his popularity continued to soar, that eventually helped him get re-elected in 2017. The Modi government soon read the writing on the wall, and serious diplomatic efforts were made to ensure that Oli would choose India as his first foreign destination post re-election. External Affairs Minister Sushma Swaraj’s surprise visit to Kathmandu in early February to ‘congratulate’ Oli was spontaneous and an indirect expression of regret over previous misunderstandings between the neighbours.


Nepal's Pakistan Leanings


Consequently, Oli chose India for his first foreign tour, but not before hosting Pakistan’s Prime Minister Shahid Khaqan Abbasi for a two-day official bilateral visit in the first week of March. In fact, Abbasi became the first high level foreign leader to visit Nepal after Oli assumed office, and also the first Pakistani head of state in over two decades, to make an official visit to Nepal. Although, both Nepal and Pakistan’s heads of state visit each other’s capitals for the SAARC summits, solely bilateral visits have been rare – the last Pakistani prime minister to visit Nepal on an official tour was Benazir Bhutto in 1994.


This high-profile visit gave ample indication of Oli’s agenda.


Modi's Nepal Outreach


Oli finally arrived in New Delhi in April 2018, on his first foreign visit, and promised to follow a more balanced policy between India and China. When he declared at the joint press conference, “I remember sharing this podium with Modi ji two years ago. Since then, Nepal has experienced great transformation,” – there was little doubt as to what ‘transformation’ he was referring to. The adoption of a new constitution despite many hurdles, the huge electoral triumph for the left alliance, and the emergence of a new, assertive brand of Nepalese nationalism under Oli’s able leadership are only some of the noticeable changes that have come about in Nepal in a short time. 


Expressing India’s willingness to work as Nepal’s “Sherpa”, Modi promised to resolve, by 19 September, all pending issues, some of these being – the exchange of demonetised Indian currency notes parked in Nepal’s financial institutions, the widening trade gap, various duties imposed by India and the lethargic pace of India-funded projects in Nepal. 19 September is Nepal’s Constitution Day – so the date mentioned by Modi was an implicit expression of India’s endorsement of Nepal’s new constitution. Also, by visiting the three most revered religious places in three different regions of Nepal, Modi unmistakably signaled that India is notrunning a Madhesi-centric foreign policy toward Nepal.


China Eager to Replace India


However, suspicions continued to linger. When Sushma Swaraj, during the MEA’s annual press conference, highlighting her government’s achievements on its fourth anniversary, said that Modi addressed ‘Indians’ in Janakpur on 11 May, it raised several eyebrows in Nepal. Anticipating a new backlash from Nepal at a time when efforts were on from both sides to mend ties, Swaraj quickly apologised for the mistake.


After these projects conclude, India’s monopoly over Nepal’s hydro-power projects will come to an end. A Chinese team visited Nepal in May to conduct a pre-feasibility study of railway links between the two countries.


India’s massive economic clout has given New Delhi an out-sized voice in Nepalese politics. Of late, however, this influence has exacerbated tensions, particularly between the traditional elite, and the ethnic Madhesis. Due to India’s inconsistent policies, Nepal has witnessed the emergence of a new generation of politicians and opinion-shapers, who are either exposed to the western world or have little emotional bonding with India.


Taking advantage of anti-India sentiments in Nepal coupled with India’s abysmal track record in aid delivery, China has been attempting to spread its economic and strategic footprints into the Himalayan nation – the strategic implications of which are only too obvious.

- This piece was originally published on