Nepal China Relations Six Decades of Friendship, Partnership and Cooperation

Professor Mohan Prasad Lohani

Foreign Policy expert Nepal

It has been sixty years since Nepal and China bound by age-old ties f exemplary friendship established diplomatic relations on August 1, 1955. Over the years, bilateral relations between the two countries have remained close, cordial, cooperative and problem free. Under the Communist Party of China (CPC) led by Chairman Mao Zedong the People’s Republic of China (PRC) was founded sixty six years ago in October 1949. China as the second largest economy of the world has become a rising power and occupies the pride of place in the community of nations. The peaceful rise of China has been widely acclaimed and China’s new leadership with its significant initiatives on the diplomatic front is confidently and vigorously moving forward to fulfill the commoii aspirations of the peoples of neighboring countries for better life and better relations through mutual understanding and cooperation.

In this context, two significant contributions of President Xi Jinping deserve special mention. First, revival of the ancient Silk Road dating back to more than 2100 years during the Han Dynasty (206 BC-AD 220), the Silk Road for which the starting point was Shaanxi, President Xi’s home province linked the East and West, Asia and Europe . In a speech delivered on September 7, 2013 President Xi èalled for expanding cooperation with a more open mind and broader vision, to achieve joint progress. Since global economic integration is accelerating, and regional cooperation is booming, President Xi emphasizes the need for an innovative approach in order to build an economic belt along the Silk Road. President Xi’s proposal has received worldwide acclaim and support. Former Minister for Foreign

Affairs Dr. Prakash C. Lohanj commenting on this proposal has made the following observation:

“The idea of revitalizing the Silk Road to which the present Chinese leadership has attached considerable importance is more than sentimental attachment to the past; it reflects also the economic need of the present which is gradually emerging as the felt need of all countries in the region.”

Dr. Lohani states more emphatically:” But if sustained and rapid economic development for the next two decades is to be maintained in the region, the idea of the South Silk Road that will lead to wider economic integration becomes increasingly attractive and may become irresistible in spite of many political hurdles.” For smaller countries like Nepal, Dr. Lohani argues, the new initiative is good as it expands the size of the market over time, encourages the logic of product sharing and product fragmentation and allows smaller countries to be a part of the global supply chain.

The second contribution of President Xi relates to the establishment of Asian Infrastructure Investment Bank (AIIB).

The proposal was first announced on October 3, 201 3.It created an uproar in the West, particularly in the US which is the leading financier of the World Bank. AIIB, as Yuba NathLamsal, Acting Editor-in Chief of the Rising Nepal, says, is the first multilateral development bank of the developing countries managed by the developing countries for infrastructure building in the developing countries.’ Nepal as a founding member has welcomed the Bank’s establishment as a multilateral lending institution and looks forward to substantial assistance, including loans on concessional terms to finance its mega projects such as hydropower projects, highways, airways and railway networks which require huge sums of money in terms of billions of dollars .After signing the Agreement in June this year, Finance Minister Dr. RS Mahat made the following remark:’ Nepal is eagerly waiting formal operation of the AIIB to approach for funding to rebuild infrastructures damaged by recent earthquake.’

Nepal is, thus, greatly enthused by the Neighborhood Policy of President Xi Jinping who represents the Fifth Generation Leadership preceded by four other illustrious leaders like Chairman Mao, Paramount Leader Deng Xiaoping, President Jiang Zemin and President Hu Jintao. Nepal has admired the remarkable progress made by China during the last 3 decades and a half in all sectors of national life, particularly spectacular growth rate. Ever since the establishment of diplomatic relations, Nepal has immensely benefitted from generous grants, interest-free and concessional loans made available by China in response to the priorities and actual requirements of this country.It may not be out of place to state that since long Nepal has provided cushion for national security of our northern neighbor as it has staved off anti- Chinese activities from its soil.

Nepal regards China as a reliable development partner. China is fully aware of the economic status of this country which is categorized by the UN as one of the least developed among developing countries (LDCs). Nepal hopes to graduate from this status by 2022, but this hope can become a reality only when the country achieves 8 to 9 percent growth rate by attracting massive investment flows, including FDI.

Nepal’s export sector is still weak. No wonder that the balance of trade as of now is in China’s favor. We learn from HiranyaLalShrestha’s book ‘Sixty Years of Dynamic Partnership” recently published by Nepal-China Society that while the volume of Nepal-China trade is increasing every year, Nepal’s trade deficit with China is widening alarmingly. This writer, who served, for more than 15 years, as a member of Nepal-China Nongovernmental Cooperation Forum founded in 1996, strongly believes that as China is Nepal’s second largest trading partner, the former has expressed its readiness to help this country overcome its trade deficit and has called upon our representatives of the business community to identify and focus on export items that can find easy access to the Chinese market. This Forum mentioned above has invited Chinese investors to invest generously in such projects, including joint ventures as would expand the export base and facilitate export promotion of this country.

It is encouraging noting that China has offered the duty free and quota free facility to 8,030 Nepali goods. It is, however, a pity that Nepal has failed to benefit from this facility due to ‘low export capacity, less competent goods and non-tariff barriers related particularly to quality’. It was reported by Nepal Rastra Bank that in the last fiscal year (FY 2014-2015), Nepal’s exports to China stood at just Rs. 2.22 billion against imports of Rs. 100 billion.

During the recently held sixth meeting of Nepal China Tibet Trade Facilitation Committee (NT-TFC), the two sides, that is, Nepal and China discussed a wide range of issues such as easing customs procedures, sharing the list of industrial goods for mutual recognition of quality certification, and easing quarantine procedures. Developing infrastructure at six existing customs points and initiating study for the construction of three business roads from Chekampar and Larke area of Gorkha, Lamabagar of Dolakha and Mugu to connect Tibet were the other major agreements made during the meeting.

No less encouraging was the report that private sector companies from Nepal and China’s Tibet Autonomous Region recently signed seven memorandums of understanding (MoUs) on joint venture investment in Nepal. Nepal-China Chamber of Commerce and Industry (NCCCI) and China’s Tibet Chamber of Border Trade also signed aMoU on expanding investment and holding trade fairs. It is believed that cooperation between the two chambers will go a long way in reducing the trade gap between Nepal and China.

Nepal and the Tibet Autonomous Region of China share a common border abounding in a variety of flora and fauna along the route of Mansarovar and Kailash, the world famous tourist spots, across the border in Tibet. Nepal and China have tremendous potential to promote tourism and can work in partnership to attract thousands of tourists from different parts of the world. Apart from it, the prospect of generating hydropower for mutual benefit is quite obviously bright on both sides of the border.

 

A disastrous earthquake struck Nepal on April 25 this year. China not only expressed sorrow over the massive loss of lives and property by the deadly earthquake but it was also one of the early respondents to assist Nepal during the great calamity. China promptly sent disaster response teams in the wake of the earthquake and offered to help Nepal in reconstruction and rehabilitation. The pledge amounting to 3 billion RMB grant for a period of two years (2016 -2018), in addition to 1.7 billion RMB committed last year was made by foreign minister Wang Yi at an International Conference on Reconstruction and Rehabilitation hosted by Nepal on June 25 exactly 2 months after the devastating earthquake. The Chinese Assistant Foreign Minister Liu Jianchao made the following terse but heart-warming statement when he visited Nepal for on the spot observation on May 22 this year: ‘The government of People’s Republic of China (PRC) is ready to support Nepal during the great crisis caused by the recent earthquake.’ President Xi Jinping, in a message to President Ram BaranYadav on the 8 Republic Day, reiterated his country’s commitment to help Nepal and described Nepal’s crisis as ‘our own crisis’. In response to this, President Yadav expressed gratitude to the government and people of China for

supporting Nepal ‘in this difficult time of natural calamities’. Precisely speaking, China’s comprehensive assistance to the quake-hit Nepal in keeping with the Neighborhood Policy of President Xi Jinping drew worldwide applause.

Addressing a public function organized last year to mark the S9 Anniversary of the establishment of diplomatic relations; Chinese Ambassador to Nepal Mr. Wu Chuntai not only appreciated Nepal’s consistent support to China’s territorial integrity by curbing anti-China activities from Nepalese soil but also highlighted the growing economic cooperation between the two countries. The Chinese Ambassador was equally sincere and spoke from his heart profusely at a reception recently hosted by Foreign Minister Mahendra B. Pandey to mark the 6othAnniversary of the establishment of diplomatic relations. After President ZiangZemin’s visit, there has been no visit at the same level from China. Considering the importance ofNeighborhood Policy declared by President Xi Jinpingthe Diamond Jubilee of the establishment of diplomatic relations between Nepal and China is a fitting occasion and an opportune moment for the long awaited visit of the Chinese President. Nepal looks forward to welcoming the highly honored guest from a friendly neighbor.

Text courtesy: CSC Journal on nepal-China diplomatic relations released April 10, 2016.

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