China’s Nepal deal meant to tap Indian market

BEIJING (TIP): China is looking at its recent deal on cross-border railway with Nepal as a starting point to tap the vast Indian market in future. It plans to extend the railway line from the China-Nepal border in order to connect with the Indian Railways at a later date, according to a government-run Chinese think tank.

“The purpose is to connect the whole region. We hope to link the Chinese border to Nepal, and from there to India, Bangladesh and Myanmar,” Hu Shisheng, director of the Institute of South and Southeast Asian and Oceanic Studies, told TNN in an interview.

“It would be possible to reach the Arabian Sea, and even the Indian Ocean through this route in future,” Hu said.

China last week entered into a range of agreements with the visiting Nepal prime Minister K.P. Prasad Oli. They include plans to build a cross-border railway, and establish a rail network inside Nepal to connect its three major cities, Kathmandu, Pokhara and Lalitpur.

“We also expect to shift some of the Chinese manufacturing capacity to Nepal where it may be less expensive to produce,” Hu said.

But Oli’s critics see his moves in Beijing in a different vein. He is upset about the recent blockade on the India-Nepal border, which had resulted in severe shortages of petroleum and other essential commodities in Nepal.

“Oli is merely trying to irritate India, and send a signal to New Delhi that he will open up an alternative route. But this is politics. He does not have a long-term plan to implement agreements signed with China,” Amreesh Singh, a member of parliament of the opposition Nepali Congress, told TNN.

For China, the blockade in Nepal’s southern border and bitterness it caused against India in Nepal was an opportunity to move in. China quickly opened up its crossing in Nepal’s northern border, which had earlier been damaged by earthquake. It dispatched some amount of petroleum products to Nepal to ease shortages.

“If the southern part of Nepal is blocked, then Nepalis can get some contribution and assistance from China in its northern side,” Hu said.

China has also agreed to revive an unfulfilled promise of funding the construction of the Pokhara airport, and help Nepal in repairs of three major highways. The two countries have also taken the initial step to discuss a future free trade agreement.

Pramod Jaiswal, senior research officer at Institute of Peace and Conflict Studies in New Delhi, said China is unlikely to start implementing the agreements it has signed with Nepal very soon.

“China is not very keen on the tiny market of Nepal. It really wants a big share of the Indian market for its goods. It will do nothing in Nepal that would make India uncomfortable,” he said.

Jaiswal said China will take carefully calibrated steps in Nepal keeping a close eye on India’s reactions.

An important point is whether Oli has the mandate to implement the agreements he has signed in Beijing. Even when he was in China last week, an important partner in his coalition government, the United Communist Party of Nepal (Maoist) threatened to withdraw support on the plea that little has been done to construct shelters for one million people affected by earthquake that shook the Himalayan nation in April last year.


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