Kathmandu, 23 September. Nepal and China are currently facing a substantial impasse in their discussions regarding the advancement of the Belt and Road Initiative (BRI). Anticipated progress during Prime Minister Pushpa Kamal Dahal’s recent visit to China, which took place from October 6, has yet to materialize, casting doubt on Nepal’s continued participation in the BRI.
Nepal’s stance on the matter has raised significant questions, as it has expressed a willingness to accept grants under the BRI but not loans, effectively signaling a departure from the initiative. This decision is rooted in Nepal’s interpretation of the BRI’s fundamental principles, which do not explicitly include any form of subsidy.
Experts assert that China perceives Nepal’s request for subsidies within the BRI framework as a clear indication of its intention to disengage from the initiative. Madan Regmi, former president of the Nepal China Study Center, elucidates, “The historical context suggests that none of the projects associated with BRI have received subsidies, and it is highly unlikely that Nepal would be an exception. Pursuing direct subsidies for BRI projects appears to signal a disinterest in engaging with the initiative.”
Recognizing Prime Minister Prachanda’s limited authority in making decisive commitments regarding BRI projects, China appears to have downplayed his role in the discussions. His visit to China, ostensibly invited to attend the opening ceremony of the Asian Games, is seen as a formality.
This is not the first time Nepal has raised concerns about the BRI agreement. When Sher Bahadur Deuba, the current chairman of the Nepali Congress and the Prime Minister at the time, met with Chinese Foreign Minister Wang during his visit to Nepal in 25 – 27 March , 2022, he also expressed reservations about taking loans under the BRI but expressed willingness to accept grants. Notably, none of the nine contracts signed during that visit were associated with the BRI.
Deuba’s position on the matter remains unchanged, even as he holds the key to the government. Consequently, Prime Minister Prachanda, who holds authority in name only, is obliged to align with Deuba’s stance to retain his position. Deuba is widely regarded as a leader with pro-Indian-American leanings, while Prachanda is seen as having a more pragmatic approach.
According to sources within the Foreign Ministry, Prime Minister Prachanda is scheduled to meet with Chinese President Xi Jinping on Saturday at 4 pm to create the illusion of a formal and official visit. A formal bilateral meeting with his Chinese counterpart, Li Qiang, who leads a significant delegation, is set for Monday at 10 am in Beijing. These meetings hold the potential to shed further light on Nepal’s future within the BRI, a matter of great interest to both nations.