Ever since the eruption of anti-China protests in Kathmandu on the eve of the 2008 Summer Olympics in Beijing, China has ramped up its political and security engagement with Nepal. This has been evident in the spurt in high-level Chinese visits, with everyone from its army chief Chen Bingde to Prime Minister Wen Jiabao making the trip to Nepal in the last four years. The northern neighbor is clearly concerned about the use of Nepali soil for pro-Tibet independence activities that threatens to earn it international calumny. But while Tibet is easily China’s biggest concern, it has not failed to notice the risk of letting India dictate terms in Nepal, which, among other things, could ease the movement of pro-Tibet activists through the porous Indo-Nepal border.
While China’s relationship with India has thawed considerably since their 1962 war, and bilateral trade has ballooned to US $73.90 billion (with the mark expected to hit US $100 billion by 2015), neither desires the supremacy of the other in this sensitive country bordering Tibet. Democratic India has expectedly found it easier to deal with another democracy, even in the absence of its reliable pillar in monarchy. But China, still a one-party dictatorship, is yet to come to terms with the abolition of an institution which it relied on overwhelmingly for stability in Nepal. With monarchy out of the way, China seems to be cautiously feeling its way back into Nepali politics.
It is in this context that Chinese vice foreign minister Fu Ying is visiting Nepal as a part of a delegation to the 9th meeting of Foreign Secretary level Nepal-China Consultative Mechanism. Since her arrival in Kathmandu, Fu has been at pains to emphasize that while China wants to invest more in Nepal, it is not trying to compete with India for greater influence here. There is also a lot to read between the lines of Prime Minister Baburam Bhattarai’s statement that Nepal seeks ‘balanced relationship’ with both India and China and is in favor of a ‘multi-polar world’. Bhattarai, who has traditionally been considered close to New Delhi, seems very keen to project himself as a neutral actor vis-à-vis India and China at a time he has come under heavy criticism, including from within his own party, for his ‘pro-India’ bias.
Geopolitical calculations aside, greater engagement with China is clearly in Nepal’s best interest. During Fu Ying’s meeting with Nepali delegates, there were discussions on expanding cooperation in areas of trade, investment, economic cooperation and people-to-people contact. Whatever China’s motives, its willingness to invest more in infrastructure projects in Nepal is welcome news. So is its commitment to reduce Nepal’s sizable trade deficit with it (Rs 44 billion in 2010/11). But it is also up to Nepal to prove its readiness for greater engagement with China: Although China provides zero-tariff access to nearly 5,000 goods from LCDs, Nepal exports under 400, a dismal utilization of its advantageous geopolitical position.
Nepal has the tricky job of increasing its trade and cooperation with both its giant neighbors while also remaining committed to not undermining their national interests. Rather than trying to play one side against the other, as successive governments in Nepal seem to have done in the past, a wiser course would be to sincerely work towards buttressing the country’s trade and business linkages from its advantageous perch