Pivoting from India, Nepali PM heads to China to seek investment

Nepalese communist politician KP Sharma Oli, returning as prime minister this year for the fourth time, aims to persuade Beijing to give new impetus to planned infrastructure projects during a one-day visit to China.

Oli’s visit was the first to a foreign country since he was sworn in in July, a departure from the usual destination of New Delhi, with which Kathmandu has centuries-old ties.

He is expected to meet Chinese President Xi Jinping and Premier Li Qiang on Tuesday for in-depth talks, Beijing said. Xi has previously said China would help Nepal transform from a landlocked country to a “land-bound” country.

Kathmandu, which signed China’s Belt and Road infrastructure initiative in 2017, says no project has yet been implemented since signing a framework agreement.

Oli wants to deepen and recalibrate economic ties with Nepal’s northern neighbor just as much as he seeks to reduce its traditional dependence on India to the south.

India accounts for two-thirds of Nepal’s international trade, while China accounts for only a 14 percent share. But China is a larger bilateral creditor, having lent more than $310 million, according to World Bank data, or $30 million more than New Delhi.

During his first term as prime minister in 2016, Oli struck an oil deal with China after New Delhi imposed a six-month oil blockade on Kathmandu a year earlier.

The move upended India’s status as Nepal’s sole fuel supplier and paved the way for increased cooperation with Beijing.

China has since given Nepal a $216 million loan to build an international airport in Pokhara, the second-largest city about 200 km (124 miles) west of Kathmandu, which began operating on last year.

But the Chinese-built airport, claimed by Beijing as a symbol of Belt and Road success, is grappling with problems, such as a lack of international flights, due to India’s refusal to let planes use its airspace to reach Pokhara.

Debt problems have also sparked debate among political parties, including Oli’s Communist Party of Nepal (Unified Marxist-Leninist), over whether to embark on Belt and Road projects. of the Road using loans from China rather than grants.

Sri Lanka, a major recipient of Belt and Road loans to finance transport and power projects, defaulted on its external debt in May 2022, reminding us of the risks of borrowing not viable.