Big Promises, Lingering Doubts, Why Nepal is Wary of Chinese Investments Despite Oli’s Visit

Kathmandu, Nepal - Nepal's Prime Minister KP Sharma Oli’s visit to China from December 2-5, 2024, has set tongues wagging about the Himalayan nation’s foreign policy tilt. With high-profile meetings and flashy agreements, the trip has been a spectacle of diplomacy. But when you peel back the layers, it seems Nepal’s engagement with its northern neighbour may be more sizzle than steak.

Oli led a delegation of 78 members, holding talks with Chinese Premier Li Qiang and President Xi Jinping. The optics of the visit were hard to miss, especially since Oli skipped the longstanding tradition of Nepalese leaders visiting India first. Many see this as a not-so-subtle message of Kathmandu’s frustration with New Delhi and a calculated pivot toward Beijing.

For over a decade, China has been cosying up to Nepal through political alliances, infrastructure promises, and cultural exchanges. This visit added more agreements to the mix, including the Tokha Chhare tunnel project for better connectivity to Tibet, $41 million in cash assistance, and the completion of the Basantpur Durbar reconstruction. On paper, it all looks great, but the ground reality might not be as rosy.

Big Promises, Bigger Doubts

China’s ambitious Belt and Road Initiative (BRI) is the centrepiece of its push into Nepal, but progress has been slow. Nepal signed on in 2017 with a wish list of 35 projects, yet political squabbles and Beijing’s tight-fisted conditions—like the infamous "harmonious clause" requiring policy alignment—have left most of these projects in limbo.

Nepal has been watching its neighbours closely, particularly Sri Lanka’s economic meltdown under Chinese debt. Lessons learned from such crises have made Nepal wary of taking loans for massive infrastructure projects, like the proposed Tibet-Kathmandu railway, which carries a price tag bigger than Nepal’s GDP. The preference now is clear: grants over loans.

Controversies and Cancellations

If there’s one thing consistent about Chinese-funded projects in Nepal, it’s controversy. The Budhi Gandhak dam project, initially signed in 2017, saw its costs balloon from $2.5 billion to $3 billion, triggering multiple cancellations and restarts. The West Seti dam project suffered a similar fate.

It doesn’t stop there. Nepal Telecom has handed contracts for mobile data services to Chinese firms, sparking concerns about digital sovereignty. Critics argue this plays right into Beijing’s hands, giving it leverage under the "Digital Silk Road" initiative.

Economic Ties: A One-Sided Affair

Let’s talk numbers. Nepal’s trade deficit with China is staggering—hovering near $2 billion annually. Investments? Not much to write home about. To make matters worse, border trade routes have been closed due to natural disasters and pandemic fallout, leaving Nepal’s economy in a bind.

The much-hyped Pokhara Regional International Airport (PRIA), built with a $200 million Chinese loan, is a glaring example of the problem. Operational since January 2023, the airport has struggled to attract regular international flights. Investigations have revealed corruption, mismanagement, and design flaws that make it unsuitable for larger aircraft. It’s a cautionary tale of ambition clashing with practicality.

Strains on Nepal’s Sovereignty

China’s growing influence in Nepal is raising eyebrows, not least in India. Oli’s reaffirmation of Nepal’s support for China’s territorial claims over Tibet and Taiwan adds fuel to the fire. At home, reports of missing border pillars in Chinese-controlled areas are stirring fears about territorial sovereignty.

Even Nepal’s media hasn’t been spared, with Chinese officials openly criticizing local coverage. Such overreach has sparked a debate about whether Nepal is gaining more than it’s losing in its relationship with Beijing.

Oli’s Gamble: What’s the Payoff?

In the end, Oli’s visit was as much about optics as it was about substance. While the agreements signed may look good on paper, the real test will be their implementation. Nepal finds itself in a precarious position—trying to play nice with both India and China while navigating internal challenges like governance and economic sustainability.

The balancing act is tricky, and Oli’s trip underscores the tightrope Nepal must walk. Whether this pivot towards Beijing will pay off or leave Nepal entangled in China’s web remains to be seen. What’s clear is that Kathmandu’s foreign policy will need to be sharper, smarter, and more self-reliant to navigate the rough terrain ahead.