On December 4, 2024, Nepal and China signed a common framework for the Belt and Road Initiative (BRI) cooperation. The ruling coalition—Nepali Congress and the Communist Party of Nepal-Unified Marxist Leninist (CPN-UML)—negotiated and introduced the framework as an "Aid Financing Assistance" model. A couple of months have passed, and while the Chinese side appears determined to move forward with concrete project planning, the Nepalese government’s response to BRI has been rather tepid.
The BRI in Nepal stands at a crossroads, and questions about its future remain unresolved. Ten different projects have been proposed under the BRI framework: the Tokha-Chhahare tunnel road, Hilsa-Simikot road project, Kimathanka-Khandbari road and bridge, Jilong-Kerung-Kathmandu cross-border railway, Amargadhi City Hall in Dadeldhura, Jilong-Kerung-Rasuwagadhi-Chilime 220KV transmission line, Madan Bhandari University, Kathmandu Scientific Centre and Science Museum, China-Nepal Friendship Industrial Park in Damak, and the Jhapa Sports and Athletic Complex.
Experts and authorities in Nepal question the government’s failure to make meaningful progress. The visible neutrality—and even lassitude—of the ruling coalition reflects its insistence on pursuing BRI as a grant-based development partnership. However, this stance only raises further doubts about the clarity of the cooperation. The lack of urgency from the government stifles development opportunities that, if implemented strategically, could become milestones in Nepal's infrastructure development.
This leadership vacuum raises concerns about the clarity of Nepal’s foreign policy, development priorities, and political unity regarding BRI. It has also put opposition parties—particularly the CPN (Maoist Centre) and CPN (Unified Socialist)—on the defensive, questioning their relevance in national politics. The lack of dialogue among domestic political actors is bound to strain both national and international relationships.
The Polarization
Two clearly polarized camps have emerged regarding the BRI. On one side are the pro-China communists and socialists (including the Unified Socialist and the Maoist Centre, now in opposition); on the other, the ruling coalition led by the more reserved Nepali Congress and CPN-UML. Little to no substantial discussion has come from other parties like the Rastriya Swatantra Party, Rastriya Prajatantra Party, or Terai-based parties on BRI’s future, which is unfortunate.
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The government's sluggishness seems driven by two main reasons: first, a desire to avoid entanglement in the ongoing trade tensions between China and India, and second, a lack of internal consensus on infrastructure development.
Economic Cooperation and Tension between China and India
China and India share both economic cooperation and trade-related tensions. China remains a major exporter to India, leading to a trade deficit of $85.1 billion for India—highlighting its dependency on Chinese industrial goods. However, growth trajectories differ. China posted a 5.0% growth rate in 2024, while India, after rebounding to 8.7% in FY 2021–22, grew by 6.4% in 2024 and is projected to remain the world’s fastest-growing major economy through 2025.
Between 2014 and 2024, China’s GDP grew by about 76%, from $10.5 trillion to $18.5 trillion, with an average growth rate of 6.4%. India’s per capita GDP in 2024 was $10,123, whereas China’s stood at $25,015—about 2.5 times higher. This reflects the economic rivalry between the two nations.
China is under pressure to maintain growth, which is vital to the legitimacy of its communist regime. It aims to expand its trade networks globally, including through the BRI. India, meanwhile, is becoming a major manufacturing hub and is restricting cheap Chinese imports. India is wary of China accessing the large border population across Uttar Pradesh, Bihar, and West Bengal. Consequently, it does not favour trans-Himalayan routes connecting Tibet to India. Conversely, China is seeking new trade routes to maintain its export-driven economy. BRI could enhance China’s geopolitical clout in South Asia. However, since Nepal doesn’t serve China’s strategic interests optimally, China is unlikely to offer BRI projects as full grants despite Nepal's requests.
Domestic Dissonance
Foreign aid has long been a subject of political contention in Nepal—ranging from street protests to social media discourse. This polarization is often used by political parties to bargain with donor nations. Yet, there has been little internal reflection on the long-term consequences of such posturing, as seen in past cases like the MCC Compact.
To create a conducive environment for development, Nepal must avoid geopolitical friction and adhere to the Panchsheel principles: mutual respect for sovereignty, non-aggression, non-interference, equality, and mutual benefit.
Nepali political parties lack a shared vision for BRI. Communist parties are eager to align with Chinese diplomacy, while the Nepali Congress remains cautious not to alienate the West and India. Their foreign policies differ and are often self-serving. Political instability and internal discord have further prevented the formation of a national consensus.
Misinformation, such as debt-trap narratives, was widely circulated even before the BRI MoU was signed. The Nepali Congress continues to express concerns about high-interest loans under BRI, warning of a Sri Lanka-like scenario with Hambantota Port. Meanwhile, CPN (Maoist Centre) and CPN (Unified Socialist) argue that BRI projects are more cost-effective than those funded by Western donors. These debates need to be resolved through open, multi-stakeholder dialogue.
Interestingly, this issue has also become a platform for former President Bidya Devi Bhandari to reassert her political influence within the CPN-UML.
Conclusion
Nepal must prioritise accelerating its sluggish infrastructure development. A national consensus on the country’s development model is essential for holistic growth. To reap the benefits of cooperation with China, Nepal must first clarify its development priorities and communicate them clearly. While political negotiations around BRI are complex, a careful and strategic approach could transform Nepal's infrastructure landscape.
(The author is a student of Engineering and Economics)
