Navin Subedi

The visit by Chinese President Xi Jinping is historic in many respects. First, the Chinese head of state is visiting Nepal after a hiatus of 23 years. Second, China's stature in the world economy and political affairs has grown markedly during this period. China even did not feature in the list of top five economies 23 years ago. Currently, it is the second-largest economy trailing behind the United States and is set to become the most significant global economy in the coming decade. Third, Nepal and China need to agree in detail the financing modality and detailed plans for the implementation of the Trans Himalayan Multi-Dimensional Corridor and Nepal-China Railway Project. Both projects are part of the BRI master plan.
On top of this, Nepal has undergone a seismic political transformation during the past 23 years - from a monarchy to the fledging federal republic. The rumor mill in Kathmandu was rife with speculation that China was unhappy with Nepal becoming a federal republic. Hence this historic visit by China's top leadership to familiarise and engage with the institutions created by Nepal's constitution (2015) is a welcome step.
Nepal enjoys a trouble-free relation with China. Nepal was an essential gateway to South Asia for China since time immemorial until the 1950s and an entrepot centre between the vast Gangetic plains and the Tibetan plateau. Nepal facilitated the spread of Buddhism in Tibet from the enormous Gangetic plain and was a primary foreign trade source of Tibet.
Nepal's foreign policy since the opening-up in the 1950s has been to create an equidistance between the two neighbors. Geography was a significant barrier for Nepal to expand her relationship with China, with the Himalayas acting as a natural boundary between Tibetan Plateau and the Gaganatic Plain. However, Nepal's desire of maintaining a good relationship with both neighbors in general and China, in particular, is often termed as 'playing a China card' by Nepal against India by the large section of Indian media. The logical question to this argument is-- does Nepal have an inclination to play one neighbor against the other? If that is the case, how has Nepal benefitted from such an act? The propaganda of Nepal playing a China card against India and increasing Chinese influence in Nepal is likely to be played again during President Xi's visit by certain quarters.
Nepal, along with South Asia, is taking a center-stage in China's foreign policy this week. Pakistan's Prime Minister visited China early this week while the Chinese head of state is making a back to back visit to India and Nepal. China Pakistan Economic Corridor (CEPEC) is an early harvest project and demonstrator project for the BRI in the region. India has not signed in the BRI citing the inclusion of disputed Kashmir in the CEPC as an infringement upon its sovereignty.
In India, the Chinese President and the Indian Prime Minister will engage in a wide-ranging discussion in the spirit of Wuhan summit. The Wuhan summit was organised between the Chinese President and the Indian Prime Minister in April 2018 to restore strategic trust between the two countries in the aftermath of Dokhlam broader stand-off in August 2017. The informal summit allows top leadership of both countries to engage in freewheeling discussions in a range of issues in an intimate setting far from intrusive eyes of media. Both the countries agreeing to the second informal summit of their top leadership indicates that the outcomes of the Wuhan meeting were positive.
The environment of deepened trust between China and India is a good sign for South Asia in general and Nepal in particular. It is difficult for the analysts to accept the fact that Nepal's relationship with both neighbors is geo-economics. The geo-economic school of thought agrees with the potential of advancing economic relationship, which is influenced by geographies. The successful implementation of BRI projects will support Nepal's Sustainable Development Goal (SDGs).
During his stay in Nepal, the Chinese President will hold discussions with top leadership. The agenda of the visit has not been made public, but the economic dimension will be central. Nepal has a huge trade deficit with China. Nepal has not been able to benefit from China's decision to allow a large number of Nepali produce duty-free due to fragile manufacturing sector. Hence, China's supports in encouraging its companies to invest in Nepal would be a welcome move. Similarly, Nepal receives an annual grant of Chinese renminbi one billion. Given Nepal's massive trade deficit with China and the need for infrastructure development, the amount of yearly award needs to be increased at least by two folds.
Besides, Nepal and China could agree on financing modality for the projects to be implemented under BRI. However, the most important event which Nepali public will carefully follow, during President Xi's stay in Nepal, is the discussions around Kathmandu – China Railway. Nepali society will welcome any decisions about developing a detailed project report and tentative financing modality for the project. For a significant and far-reaching project such as the trans-border railway, Nepal must also be prepared to bear some of the project cost – around 10 to 15 per cent in line with the agreement between China and Laos to build China-Laos-Thailand Railway. Nepal has all the reason to benefit from the rapid economic development of both China and India. Improving connectivity is an important measure to realise Nepal’s desire to benefit from the economic growth of India and China. It is certain that the visit by the Chinese head of state will be historic as it will take the bilateral relationship to a new height.

(Subedi is a political-economy analyst)