Nepal’s Prime Minister K P Sharma Oli is set to visit China on December 2 for a significant four-day trip, aiming to revitalize the Belt and Road Initiative (BRI) projects between the two nations. The projects have remained dormant despite their signing seven years ago with considerable anticipation. Oli’s official meetings in China include talks with President Xi Jinping and Premier Li Qiang, as confirmed by Foreign Ministry spokesperson Mao Ning on Friday.
Strengthening Ties Amid Economic Priorities
Oli, a leader known for his pro-China stance, heads a coalition government formed by his Communist Party of Nepal and the Nepali Congress. His tenure reflects a delicate balancing act in Nepal’s foreign relations, as the country navigates its ties between China and neighboring India. Notably, this visit marks a deviation from the norm, as Nepali prime ministers typically visit India first after taking office. Media reports indicate that Oli did not receive an invitation to New Delhi, underscoring the shift in regional dynamics.
Foreign Ministry spokesperson Mao Ning acknowledged Oli’s contributions to strengthening Sino-Nepal relations, including his efforts to sign a transit treaty that reduces Nepal’s reliance on India. Mao said, “Oli has visited China twice as Nepal’s Prime Minister and made important contributions to advancing the growth of China-Nepal relations.” She added, “The two countries’ leaders will have in-depth exchanges of views on deepening our traditional friendship, expanding Belt and Road cooperation and exchanges and cooperation in various fields, as well as international and regional issues of mutual interest.”
Restoring BRI: What Lies in the Future
The focus of Oli’s visit is to revive the stalled BRI projects, which were initially signed in 2017 when Nepal became an early supporter of the mega connectivity initiative. According to reports from The Kathmandu Post, none of the BRI projects have been implemented to date. Nepal now hopes to sign a second framework agreement that emphasizes securing Chinese grants to fund these projects, rather than loans—a significant development amid concerns over debt sustainability.
Road projects that might be prioritized during this visit include those connected to the Koshi Corridor, aiming to link Nepal with Shigatse in Tibet. However, the ambitious railway project, estimated to cost over USD 3 billion, remains uncertain. The feasibility study for the railway was funded by China, but the costs are expected to be shared with Nepal, raising questions about potential debt risks.
A Plea for Grants Over Loans
Ahead of his trip, Prime Minister Oli emphasized Nepal’s financial constraints. He stated, “We signed the BRI framework in 2017 and whatever assistance and support we receive from China now is in the periphery of the BRI. Things have not moved beyond that.” Foreign Minister Arzu Rana Deuba, who met with Chinese Foreign Minister Wang Yi in Chengdu prior to the visit, conveyed Nepal’s position to the Chinese leadership. “In my meeting with Wang, I have made it clear that we are not in a position to take loans to fund the projects. They listened to our concerns carefully,” Deuba explained.
Nepal’s debt is currently at 41% of GDP, a figure that Deuba labeled as alarming. “The private sector can take loans but the government is not in a position to do so,” she added. This stance indicates that while Nepal is eager to advance the BRI projects, it remains cautious about financial risks.
Conclusion: A Defining Moment for Nepal-China Relations
Prime Minister Oli’s visit marks a critical moment in Nepal’s diplomatic efforts to advance stalled BRI projects and secure necessary funding through grants, rather than loans. As discussions continue, Nepal’s approach and the responses from Beijing will likely shape the future of the two countries’ economic partnership.
