Nepal’s seasoned politician, K.P. Sharma Oli, is back in the limelight as he embarks on his fourth term as Prime Minister, marking a decisive pivot to China. His recent visit to Beijing—his first official trip abroad since being sworn in on 30 July 2024—aims to reinvigorate stalled infrastructure agreements and recalibrate Nepal’s economic outlook.
Breaking Tradition
This time, Oli’s destination is China rather than traditional ally India, a significant move given the long-standing ties between Kathmandu and New Delhi. His arrival in Beijing on 2 December signals a potential shift towards bolstering relations with its northern neighbour amidst growing concerns over Nepal’s heavy reliance on India.
A New Agenda for Cooperation
During his talks with Chinese President Xi Jinping, Oli highlighted the need for China to play a more active role in Nepal’s development. Xi reassured him of China’s commitment to help transform Nepal from a landlocked to a “land-linked” country, promising continued support for the Himalayan nation’s economic growth.
Infrastructure Developments on Hold
Despite signing nine agreements during the visit—most of which were pre-arranged—Oli’s push for new investments faced hurdles. Since Nepal joined China’s Belt and Road Initiative in 2017, no project has been implemented as of yet. Notably, key projects like road upgrades and new transport corridors are still in limbo.
- China has lent Nepal over US$310 million (S$416.89 million).
- Nepal’s international trade is primarily with India, which accounts for two-thirds.
- China’s share of trade stands at 14%, but it is a significant creditor.
Debt Concerns and Political Debates
Oli’s coalition government is currently wrestling with concerns over debt, particularly after neighbouring Sri Lanka’s significant borrowing under the Belt and Road Initiative led to a default in May 2022. With rising pressure from coalition partners, including the Nepali Congress party, discussions have revolved around preferring grants over loans for future projects. This cautious approach reflects a desire to avoid unsustainable financial commitments.
Looking Ahead
As Nepal navigates its foreign relations between two giants, the implications of Oli’s visit resonate beyond immediate agreements. Will this mark a new direction for Nepal, or will struggles with implementation and dependency persist? Only time will tell.