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Nepal and China are civilizational states, enjoying age-old links. These age-old relations were formalized on August 1, 1955 on the basis of Panchsheel – the five principles of peaceful co-existence, namely mutual respect for each other’s territorial integrity and sovereignty, non-aggression; non-interference in each other’s internal affairs equality and mutual benefit; and peaceful co-existence. The diversification of Nepal’s diplomatic relations was a demonstration of its independent foreign policy, offering choices to Nepali policy makers with options to pursue national interests broadly and mobilize resources from multiple sources.
Exchange of visits between the two countries at various levels have strengthened the roots of bilateral relations, added new dimensions and introduced new dynamics in Nepal-China relations. To take the full benefits from the vast potential that exist, a number of bilateral mechanisms have been established between the two countries, which meet from time to time to deal with a wide range of issues. These mechanisms have been instrumental in furthering bilateral relations.
As a close neighbor, friend, and development partner of Nepal, China has been assisting Nepal in the process of socio-economic transformation. The Chinese financial and technical assistance has greatly contributed to Nepal's development especially in the areas of infrastructure building, enhancing connectivity, establishment of industries, human resource development, health, education, water resources, and sports among others. In 2015, in the aftermath of the devastating earthquake in Nepal, China sent relief materials, medical supplies and rescue equipment. The people and government of Nepal appreciate China’s support in the fight covid19.
Nepal and China are geographically, culturally and historically natural partners, sharing a 1414 kilometers long boundary. Despite the high and mighty Himalayas that separate them, Nepal and China are actively working to further consolidate their age-old friendship and expand areas of cooperation. No other two nations of different sizes, political and social systems, and at varying levels of development can claim such a long period of peaceful co-existence and harmonious relations side by side for centuries. Irrespective of changes in regional and international levels, Nepal-China relations have remained firm and characterized by cordiality, friendliness, mutual support, mutual respect, understanding and appreciation of each other’s aspirations and sensitivities. Nepal has consistently and unequivocally adhered to the One China Policy. Kathmandu has made it clear time and again that it does not allow its territory to be used against its neighbors. True to its words, Nepal steadfastly maintains this position.
On October 12-13, 2019, Chinese President Xi Jinping visited Nepal. Nepal-China relationship entered a new phase with the elevation of their ties from a “China-Nepal Comprehensive Partnership of Cooperation Featuring Ever-lasting Friendship to a level of Strategic Partnership of Cooperation Featuring Ever-lasting Friendship for Development and Prosperity.” They also agreed to intensify the implementation of the Belt and Road Initiative “to enhance connectivity, encompassing such vital components as ports, roads, railways, aviation and communications within the overarching framework of Trans-Himalayan Multi-Dimensional Connectivity Network with a view to significantly contributing to Nepal's development agenda.”
Changing context
In recent years, great power rivalry has resurfaced.The early months of 2025 have accelerated unfolding geopolitical trends causing tremors far and wide with far reaching implications making the world increasingly fragile with growing domestic and economic tensions, rising populist nationalism and fraying international order. The US-China rivalry is reshaping the global landscape, with the re-emergence of the concept of ‘sphere of influence.
International institutions that were established in the aftermath of the Second World War are being put to the test. The United States appears reluctant to defend the old structures. Transnational challenges often referred to as “problems without passports” such as climate change, pandemic and terrorism are not only looming larger and showing no signs of retreat, they are multiplying and compounding.
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In the past, only the affected people and countries suffered. Now developments anywhere can have an impact everywhere, as the world is increasingly interconnected and interdependent. Nations’ destinies are intertwined and no bilateral relationship can be viewed in isolation. In such a scenario, strategic partnership between Nepal and China has to be viewed through the broader lens of three key perspectives, economic benefits, global influence, and national security.
Nepal is seated in a sensitive geostrategic location. Its immediate neighbors – India and China are concerned about who comes to Nepal and what they do here. The only super power- the US which considers Nepal as a “neighbor on the other side of the globe,” remains deeply concerned about developments in the country. Their concerns were reflected in sharp exchanges between the US and China on the US Millennium Challenge Corporation (MCC) grant of $500 million to Nepal. While the US saw China’s hand in “fomenting propaganda” forMCC’s delayed ratification, China called it American “coercive diplomacy.” China’s BRI is viewed through geopolitical prisms. The involvement of other major powers and donors adds layers of competing and conflicting interests, highlighting the complex interplay of major powers’ geopolitical maneuverings and counter maneuverings in Nepal. Given the growing attention and involvement of these powers, the time has come for Nepal-China relations to be viewed within a broader global and multilateral strategic context rather than through the usual rhetoric of bilateral issues that has characterized the relationship.
Strategic partnership can have meaning only if it benefits both the parties equally. Such partnership should not be directed against any third country, nor should it imply enmity with non-partner countries. We must be clear about what we can achieve together in such a partnership for mutual benefit and respect, and how we can make it worthwhile. The Prime Minister after concluding strategic partnership with China in 2019, told the Nepali daily Kantipur that he would like to have a similar partnership with India. There must be strategic foresight, maturity and clarity in managing relations with neighbors who are both rising powers with global aspirations. Nepal’s growing relationship with China is independent of its deep and multifaceted relationship with India. No relationship can substitute the other.
China’s growing diplomatic footprints
China stands as the world’s second largest economy and is projected to surpass the USA by 2030. Ever since the launching of “reforms and opening-up”process, China has produced dramatic results. Czech president Vaclav Havel observed that China’s progress “happened so quickly that we have not yet had time to be astonished.” In just four decades, China has transformed itself from a predominately agricultural economy into a manufacturing powerhouse. Available data suggest that China feeds 22% of the world population with merely 7% of the arable land.
Ever since China joined the World Trade Organization in 2001, trade has been the primary source of its international economic strength and influence which is manifested in its growing assertiveness in foreign and security policy. As the largest trading nation, China is a central player in global supply chains in an evolving geopolitical and economic landscape.
China’s economic strength has altered the character of the global order. Economically the world has become bipolar. The rise of China and India offers huge opportunities for Nepal. Nepal needs to do its homework to benefit from economic dynamism in the neighborhood. As it is excessively dependent on them, Nepal’s economy is vulnerable to destabilization to any supply chain disruptions.
China has been the leading provider of financing and infrastructure, transforming “China fear” into “China fever.” The BRI has been the cornerstone of China’s “going out” policy of investment and financing, and it is the centerpiece of China’s engagement with countries in Asia, Africa, Latin America, Europe and Middle East. China refers to this as win-win cooperation through economic development.
China in South Asia
Traditionally, India considered South Asia its exclusive sphere of influence. In recent years, however, China has developed significant linkages with the region, enjoying over $136 billion trade with South Asia. India-China trade was only $3billion in 2001, reached $95 billion in 2018, and now stands at $127billion. Chinese exports to the region included $17 billion to Bangladesh, $ 16 billion to Pakistan and $4 billion to Sri Lanka.
According to the IMF, India exported $25 billion worth of goods to seven South Asian countries in 2018, compared to Chinese exports of about $41 billion. India’s market share in Afghanistan, Bangladesh, Nepal, Maldives and Sri Lanka was much bigger than Chinese trade. However, Chinese investment in South Asia has increased. Analysts suggest that South Asian economies including India are likely to become “increasingly integrated into the Chinese economic orbit.”
China is pursuing strategies to access the Indian Ocean through South Asian ports. A contest is already underway between China and India in South Asia, and Southeast Asia over the Indian Ocean including the Strait of Malacca which stretches all the way down to Singapore and the entrance to the South China Sea where at its narrowest point, it is 2.8 miles wide. This is the same Strait of Malacca that Chinese President Hu Jintao feared could be shut down by "certain major powers" in order “to asphyxiate the Chinese economy slowly.” This dynamic is likely to be a dominant feature of Asian geopolitics in this century. President Xi’s recent visits to Vietnam, Malaysia and Cambodia illustrates the importance China attaches to the region.
South Asia is one of the largest markets for Chinese arms exports. According to SIPRI Arms Transfer Database between 2000 and 2019, 54% of total Chinese arms exports went to South Asia. Of this 40% of total Chinese arms exports went to Pakistan alone. Rest went to Bangladesh and Sri Lanka. Chinese companies manage Pakistan's Gwadar Port under a 40 year lease and Sri Lanka’s Hambantota port under a 99 year lease. Analyst Mohan Malik writes in The China-India Nautical Games in the Indian Ocean, that “nearly two thirds of the world’s fifty major ports are either owned by China or have received some Chinese investment.” China is also increasing its deployment of warships and submarines to the Indian Ocean region. China also views South Asia as strategically important for addressing challenges related to separatism, religious extremism and international terrorism that could spill into Southern China.
China’s diplomacy is focused on the Chinese Dream with a strong emphasis on national rejuvenation. Its deft diplomatic approach has been reassuring, and is increasingly seen as that of good neighbor and reliable partner. There is a growing attractiveness to its model for poverty eradication, development promotion, investment attraction, and trade partnership.
This is because China ensures remarkable coherence in foreign policy, clarity of its initiatives and direction. Its consistent, pragmatic and effective foreign policy has paid off enormously. China has explicitly stated that it respects the sovereignty and territorial integrity of other nations and does not want to be a hegemon.
As China goes to occupy a central place in international politics, China’s deference to respecting sovereignty and territorial integrity of its friends will have to be further demonstrated. It must work to dispel fears about its intentions, allow countries to pursue their own priorities and objectives, and ensure that it does not intend to benefit at their expense. With its growing global engagements, China’s announcements of massive projects and their timely execution will help ease concerns, clarify its intentions and build a reservoir of goodwill, trust and mutual understanding.
President Xi underlined the concept of a community of shared future. According to related documents, the concept prioritizes a UN-based international order. It is interpreted as preserving much of the existing world order while reshaping it along lines favored by China, and opposing US-led alliances and interventions that go beyond UN norms. China advocates for the democratization of international relations and for inclusiveness allowing different government systems to develop, without interference. It currently heads four of the UN Specialized Agencies. China is undertaking more international responsibilities and leadership roles and enhanced its contributions to the UN, including to peacekeeping operations in line with its economic strength. Beijing recently pledged $500 million to the WHO. China asserts that peace and harmony are integral to the spirit and identity of Chinese people.
China figures prominently in foreign policy discourses of almost all countries because of its economic strength and expanding diplomatic footprints. It is no secret that great power rivalry has arrived at Nepal’s doorsteps, involving not only its neighbors-India and China, but also the United States. Other great powers also show significant interest in Nepal. Nepal stands exposed -weak and vulnerable to geopolitical maneuvering and counter-maneuvering by great powers -largely because its domestic foundations have become fragile.
Two centuries ago, British Prime Minister Lord Palmerston famously remarked, “nations have no permanent friends or enemies, only interests.” Geography makes engagements with neighbors a permanent necessity, as neighbors cannot be changed. That makes relations with neighbors a matter of priority in safeguarding national sovereignty and independence.
A nation must not be swayed by sweet-sounding statements. Realpolitik requires a rigorous intellectual debate, and demands a clear-eyed perspective. What lies beneath the surface must be dissected along with its possible implications for national interests. This requires exhaustively listing various scenarios and analyzing them in depth. An overall assessment of costs and benefits must be drawn. We must ensure that Nepal retains its strategic autonomy and does not become a camp follower or junior partner amid the rapidly shifting tides of global geopolitics.
