Nepal and China relations, new avenues and possibilities

At the invitation of Premier Li keqiang of the state council of China, Prime Minister KP Sharma Oli paid an official visit to China, close neighbor across the northern border of Nepal from March20 to 27,2016. During the visit, Prime Minister Oh called on Xi Jinping, President of China held official level bilateral talk with Li Keqiang and discussed on gamut of relations including political security, transit, trade, economic and cultural aspects. During China visit, Prime Minister Oh addressed to the BOAO conference, and in his presence, Nepal signed a document to enter into Shanghai Cooperation Organization as a dialogue partner.

It enhanced regional an international significance of the visit during the visit Nepal and China signed 10 bilateral agreements nd issued .15 pointjoint statement. Agreement on transit transport is a landmark achievement to a landlocked country like Nepal. Now responsibility comes to both sides to implement all agreements signed between two countries.

1. Mutual Political Support

Mutual political support, particularly willingness to accommodate each others concerns and core interests is a sound basis of neighborly relations, which is clearly stated in the joint statement between Nepal and China.

Chinese support to Nepal: - The Chinese side welcomed the promulgation of the constitution in Nepal and regarded it as a historic progress in the political transition of Nepal. The Chinese side sincerely hoped that Nepal could take this opportunity to realize its political stability and economic development.

Nepalese Support to China:

The Nepalese side reiterated its cominjtm to One China Policy. It firniJy supports the efforts made by the Chinese side to uphord state sovereignty national unity and territorial integrity, and does not allow any forces to use Nepalese territory for anti-China or separatist activities

Thus the two sides reiterated their firm commitment to respect each other’s independence, sovereignty and territorial integrity, respect and accommodate each other’s concerns and core interests.

2. Far Reaching Transit Agreeme

Nepal and China have concluded historic agreeme on transit transport which is a far- reaching importance to landlocked Nepal.

Nepal access to Chinese ports for third country trade assured in

this agreement This is the opening to China, expected to reduce Nepal’s near complete dependence to the south. Given the history of blockaded by the southern neighbor, the agreement with Chine gives assurance and confidence to the Nepalese that there is an alternative supply route. The agreement has paved the way for Nepal’s third country trade through the gateway of Chinese port for the first time in the Nepal’s history. Protocol will be signed soon to identify ports and routes for transit.

Nepal had concluded transit agreements with India and Bangladesh. But Nepal experienced blocked by the southern neighbor by and again, even interrupted third country supplies. The transit and transport agreement with China have now opted for diversification regarding the utilization of the transit rights, facilitate oversea trade of Nepal via China.

3. Connectivity Emphasized

Since the emergence of Xi Jinping as the President of China, has given a special focus on connectivity opening China to the outside world. China has a already extended its railway to Xigatse linking it to Lhasa and the rest of the country. Chinese rail network is scheduled to reach Kerung in 2020. Trans- Himalayan railway is the

rity conneCtivitY. In the joint statement, it is stated, “As regard Nepal- China bilateral cooperatb0nl both side agreed to synergize each other’s develoPm planfling formulate appropriate bilateral cooperation programs and to carcYout major projects under the frame work of tht Belt and Road initiative. Both sides agreed to strengthen confleCti further step up the land and air links and improve the land transport infrastrnct

The Chinese side agreed to accelerate the feasibilitY study on the Arniko Highway repair and opening maintenance project of Syabrubesl - asuWaga HighwaY, build the bridge over Karnali River of Hilsa of Pulanl Yari post.

The Chinese side agreed to provide financial support on preferential terms for pokhara regional internat1o airport. There is a mention of Kimathan Kbandbari- Dhankuta Road, ashuwaga Kathman And Kathman - Pokhara Lumbini railwaY project and Kathmafld ring road 2nd phase.

China iS interested to develop Kerung port as China’s gateway to South Asia with future prospect of developing trilateral cooperation between countries in the region.

4. March Toward Free Trade

In joint statement, it is stated “in • view of the trade deficit of Nepa1 the Chinese side will seriously consider to provide the enhanced market access to tradable products of Nepal as contained in the list recently provided by Nepal.

The two sides agreed to start the joint feasibility study of China- Nepal free trade agreement and conclude the study at an early date.

The volume of Nepal-China trade is enlarging every year, which is mostly in China’s favor. There is border trade from traditional passes. Modern trade is conducted from Kodari and Keyrong Highways. In trade treaties, most favored nation treatment to each other is taken as basis. Both Nepal and China are members of WTO. This time, both Nepal and China agreed to enter into free trade agreement in near future and agreed to start joint feasibility study for the purpose.

In the context of growing bilateral trade, it is desirable to conclude BIPPA treaty as soon as possible, maintaining a balance of interest between two neighbors.

5. New Initiatives in water & energy front Nepal’s southern neighbor is onductiflg diplomacY to monopolies water and energy in Nepal. This time, China also took interest in this sector, agreeing to build crossb0 transmission lines and explore the prospect of power trade. China agreed to invest in several hydro projects luding West Seti and Upper Arufl.

In joint statement, it is stated that the Nepalese side requested the Chinese side to provide assistance for the preparation of detailed project report and consttuCtlOhl of 4 Arun- Kimatha power project and 400 KV cross - border tranSffi1sS lines project at 5 Kerung Border point and conStruct 132KV double circuit transmission line, monoPok structure around Kathmand) Ring Road.’

Nepal and China have agreed to setup a joint mechanism for energy cooperation and to develop neceSSary infrastructures for bilateral energy trade. Areas of cooperation will be trans transmission line, hydro power development and harnesSing solar power among others.

Nepal and China already agreed to construct 750MW West Seti hydropower project. As per the MOU signed between IBN and CWE in August 2012, the Chinese company will have a 75 percent share in the joint venture company Nepal is proposing China to invest in Sunkoshi 111(585 MW) also

Tibet autonthnous .r power co.chief Liu Syau Ming said that Tibet is interested to construct cross- border transmission line and export surplus power to Nepal (Kantipur 24.2.2016). Chinese billionaire entrepreneur and laurate Huang Ming disclosed during Nepal visit in last February that China private sector is interested to invest in solar energy sector in Nepal (Himalayan Times 24-2-2016).

6. China As Nepal’s Development Partner

China is committed to assist in the post-disaster reconstruction of Nepal She is increasing grant assisi annually to Nepal. China is one of the major development partners in Nepal as she isincreasing investments in Nepal infrastructure development. Even private sector investment from China to Nepal is increasing particularly in tourism and agricultural sector.

In the joint statement, it is stated,” the Chinese government will continue to provide assistance to Nepal’s socio- economic development within its ability. The Chinese side will implement the 3 billion RMB grant assistance from 2016 to 2018 to support the post- disaster reconstruction of Nepal, to carry out 25 key projects areas Covering infrastructure

construction, recovery of peoples livelihood in quake stricken areas of northern Nepal, repair cultural and hi’storical sites, capacity building in disaster prevention and control as well as medial and public health cooperation. The Chinese side agreed to provide more than 32000 sets of household solar- power generation system in Nepal.

Prime Minister Dli appreciated to Chinese investors to come to Nepal and contribute in economic sector. The private sector people accompanied during Prime minister’s visit interacted with Chinese counterparts and enter into MOU to promote trade

7. Delayed Fuel Import Agreement It is saddened many Nepalese

after failed to strike a deal on the supply of fuel to Nepal through the Chinese side has already expresses its commitment to build fuel storage depots in three places in Nepal. Nepalese were quite eager to see alterni fuel supply from the north in the context of blockade from the south and hardship they faced badly.

In the joint statement it is stated, “both sides agreed to conclude a commercial deal on the supply of petroleum products from China to Nepal. in this context they encouraged companies to speed up negotiation and concerned: agencies to the study providing supporting policies on issues of pricing, taxation, transportation, quality control and custom and frontier formalities. The Chinese side agreed and builds Oh storage facilities for Nepal and will send expert to Nepal to carry out feasibility study of Oh and gas resources research”.

Prime Minister Oil said that there is no emergency situation like blockade. So there is no hurry to sign agreement to import fuel from China. There are transit agreements both with China and India, we can import items including fuel from the north and the southern ports even from third countries. He tried to console Nepalese people and informed that negotiations are going on to finalize fuel import agreement.

Chinese premier Li keqaing said that China is willing to enter into pragmatic cooperation to explore Oh and gas in Nepal. Of course, exploration and exploitation of natural resources like Oh and gas in own country helps us for self- reliance. The experiences of blockades taught us not to depend on single country for fuel supply, strategically important item.

8. Regional and international dimension

In the joint statement, it is stated that the two sides agreed to further promote cooperation in multilateral forums including in the United Nations on issues of mutual interest. They believed that cooperation among the developing countries on climate change energy, food security, etc will enhance and consolidate their solidarity and promote their collective strength in shaping global development agenda. The two sides positively view and support each other’s participation in the regional cooperation and cooperation within SCO, SAARC and other regional cooperation mechanism within the agreed frameworks and guidelines.

Nepal signed MOU with SCO to be dialogue partner in this important organization. Prime Minister Oh addressed at Boao forum. Thus his China visit has regional and international dimension also.

Concluding Remarks:

The conclusion of 10- agreements and issuing of 15-point joint statement by Nepal and China, during prime minister KP Oh’s China visit is testimony of cordial and fruitful bilateral relationship. The commitment to address each other’s core concern built strong foundation for mutual trust and fruitful cooperation. Now there is a responsibility to implement these agreements and understandings both in letter and spirit in time frame

There is a possibility of visit by President Xi Jinping to Nepal when he travels to India for attending a BRICS summit being held in Goa on October 15-16, 2016. Nepal should not miss this opportunity. Let us enhance Nepal-China Relation to higher stage properly utilizing each and every opportunities.

(Paper presented by Hiranya Lal Shrestha on the talks programme organised by Interenational Concern CenterNepal, March 31, 2016. Thanks Weekly Mirror weekly: Ed.

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