The much-talked about visit of Chinese Premier Wen Jiabao to Nepal has suddenly been called off. The Premier was to lead a 101-member delegation to Kathmandu for a three-day visit starting on 20 December. Nepal considered this visit "most important" as Premier Wen Jiabao would have been the highest Chinese dignitary visiting the Himalayan nation since his predecessor Zhu Rongji's trip in 2001.
Speculations are high in Kathmandu as to why this visit was cancelled at the last hour. Although the Chinese envoy to Nepal, Mr. Yang Houlan, has clarified that the premier had to put off the visit due to China's own pressing economic and budgetary issues and has proposed to Prime Minister Baburam Bhattarai to reschedule the visit, there are few takers for this explanation.
The political leaders in Nepal are in fact so miffed that they want the government to clarify the reasons for, what they term as, an acute international embarrassment. Reportedly, Mr. Jiabao's visit to Myanmar to attend the Greater Mekong Sub-Region (GMSR) meeting two days before his intended visit to Nepal too has been called off. However, no new or significant development inside China on the economic front has come out in the public in the last few weeks.
Mr. Jiabao's visit was announced by Prime Minister Bhattarai himself after returning from the UN General Assembly meeting in September. Accordingly, Nepal's Deputy Prime Minister and Foreign Minister, Narayankaji Shrestha, went to Beijing last month with an official invitation for Mr. Jiabao. Following this, a Chinese security team arrived in Kathmandu to take stock of the arrangements ahead of the trip. Even the agenda of the visit was worked out. The two countries were expected to sign agreements on Bilateral Investment Protection and Promotion, building of four dry ports, construction of an international airport at Pokhara and setting up of two economic zones in Nepal. But the visit was cancelled abruptly on December 13.
What went wrong?
First, the news of the visit was prematurely announced. By breaking all diplomatic norms, Prime Minister Bhattarai made public the date of the proposed visit. It is noteworthy that no official statement had come from China on the Premier's arrival or his schedule. The hasty move on the part of Mr. Bhattarai has backfired and caused embarrassment not only to the government but to the country as well. Many see it as a diplomatic failure.
Second, the Chinese of late have shown great disappointment over the rise of anti-Chinese protests by the Tibetan refugees in Nepal. The Chinese security team, which visited Nepal recently, too had taken this up with the home ministry of Nepal. China is concerned at the frequent demonstrations by the Tibetans. Reports claiming that more number of Tibetans was travelling to Kathmandu from India too made China wary of the security situation during their PM's visit. Although Nepal has consistently assured China of its One-China policy, the number of protests by the refugees has gone up significantly with reports of attempted self-immolation by some of them.
Tibet remains a top security concern for China. The past governments in Nepal had taken repressive measures to put down such protests by Tibetan refugees. Forced repatriation and handing over of the Tibetans crossing the border to the Chinese authorities are frequent. China wants Nepal to do more on the Tibetan refugee front. It wants a close check on the entry, movement and activities of the Tibetan refugees. Although the Nepalese believe that they have adequately addressed the Chinese concern, Beijing remains highly suspicious of the Tibetan refugees in Nepal creating a ruckus during the Premier's visit. Although there have been no large scale protest being organised, the Tibet issue could possibly a reason for the cancellation of the visit.
Another factor, no less important, could be Nepal's own domestic developments. Nepal remains paralysed in many senses. Although the Baburam Bhattarai government had raised expectations about an early completion of the peace process and drafting of the Constitution, lack of progress on both of these fronts have seriously undermined the Prime Minister's credibility. Mr. Bhattarai faces allegations of corruption, nepotism and feeble leadership. There are serious doubts about his ability to lead a consensus government. This political paralysis in Nepal has made the Chinese more circumspect and this could be one of the reasons why the all-important visit was put off for a more stable environment.
Will it affect Sino-Nepal relations?
The next obvious question is will the cancellation of the visit affect Sino-Nepal ties. It will not be a long lasting distress. Although Mr. Jiabao's trip has been put off this time, China is engaging at a much bigger way both at the political and institutional levels in Nepal. There has been a shift in China policy towards Nepal since the Maoist ascendance to power. China had earlier adopted a policy of 'non-intervention' in the internal affairs of Nepal. However, with the end of monarchy, China has reworked its Nepal policy, searching for a suitable position of much closer and deeper engagement. The controversial audio tape of 2009 purportedly containing a conversation between Krishna Bahadur Mahara, the International Bureau Chief of the Unified CPN-Maoist, and an unknown Chinese in which Mahara was heard asking for 500 million rupees to `buy` 50 lawmakers to help form the government under Prachanda's leadership, brought China in to Nepal's political debate. Nepalis for the first time questioned Chinese role in their internal affairs.
Twelve high-level Chinese delegations, including two military teams, visited Nepal in the course of 2008-2009. During these visits, China repeatedly assured economic, technological and military aid to Nepal. The Maoist-led government was asked to adopt a 'One-China' policy, not to allow Nepalese land for any anti-China activities, take strong action against Tibetan refugees and grant special facilities for Chinese investments in key areas. Beijing has also initiated Track-II diplomacy with Nepal and invited Nepali scholars to visit Chinese think tanks.
China also submitted to the Maoist government a draft Sino-Nepal friendship treaty, which assured that China would not attack Nepal and would respect Nepal's sovereignty and territorial integrity. In return, Nepal should recognise 'One-China' policy and not allow its territory to be used for "anti-China" activities. The draft treaty clearly has strategic overtones as it primarily addresses one of the China's core concerns in the region.
The Chinese will push hard for signing of this pact in the near future, and with anti-Indian sentiments on the rise, they would not miss an opportunity to consolidate their position in Nepal. In all probability, Chinese would extend generous military and development assistance in the near future. In 2007-08, China began constructing a 770-km railway line, connecting Lhasa with Nepali border town of Khasa, thereby connecting Nepal to China's wider national railway network. Nepal has also requested for Chinese assistance for the construction of the Dolakha-Lumbini rail link. As part of economic assistance, China announced doubling of aid to Nepal, amounting to $21.94 million after 2008. To attract Chinese investment in Nepal, the Nepal-China Executives Council and the Chinese People's Association for Friendship with Foreign Countries have signed an MoU. China contributes the third largest FDI in Nepal, after India and US respectively. The actual trade volume between the two neighbours stands at $401 million with China selling goods worth about $386 million and Nepal exporting a mere $15 million. To bridge the trade deficit, China agreed in 2009 to provide duty free access to 497 Nepali goods.
Besides, China's inroads into Nepal are greatly being facilitated by the promotion of China Study Centres (CSCs), which are funded and operated by the Chinese government. The first CSC was set up in 1999 and since then, according to some Chinese watchers in Nepal, their number had risen to 30. The CSC website however listed only 10 of its branches located in Butwal, Banepa, Sankhuwasabha, Pokhara, Biratnagar, Morang, Sunsari, Chitwan, Nepalgunj and Lumbini. Recently, China has offered a multi-billion dollar Lumbini development project aimed at transforming Lumbini into a "Mecca for Buddhists."
On the water resources front, China pledged in 2008 a loan of $125 million for Upper Trishuli 3 A and another $62 million for Upper Trishuli 3 B-both the plants were expected to begin operations by 2012.
A key feature of Sino-Nepal relationship has been the military assistance. It was in the 80s when Nepal first began importing weapons from China, despite strong opposition from India. Nepal has since sought extensive military cooperation from China to reduce dependency on India. When the US, India and the UK refused supply of lethal weapons to Nepal during King Gyanendra's emergency rule, China responded by dispatching arms to Nepal. China has established a proactive military exchange programme with Nepal Army including supply of hardware, training, infrastructure development and exchange of high-level delegations. In the recent past, Nepal's Army has received a variety of military hardware from China, including non-lethal equipment such as construction and engineering machinery. In 2008, Lieutenant General Ma Xiaotian, the deputy commander of the PLA, announced $2.6 million in non-lethal military aid to Nepal and in 2009 China pledged military aid worth $3 million for a hospital and training for the Nepal Army.
Given these developments, China is more than likely to consolidate its hold in Nepal and become more assertive in the near future. Although a direct confrontation between New Delhi and Beijing over Nepal is highly unlikely, the growing anti-India sentiments in the Himalayan state could make it easier for China to stay put in India's neighbourhood.
(Akanshya Shah is an Associate Fellow at Observer Research Foundation)
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