As Nepal faces political turmoil, China and India are scrambling

Kinling Lo
·5-min read

When a coalition of two communist parties swept to power in Nepal three years ago, it was seen as a geopolitical win for Beijing over New Delhi in their competition for regional influence in South Asia.

But Beijing may be about to lose that advantage after the ruling Nepal Communist Party – which won the 2017 election with an anti-India nationalist campaign – split in a political crisis that erupted last month. Nepal is now counting down to early elections in April and May, more than a year ahead of the expected vote.

Political turmoil in South Asia has always been a challenge for Beijing’s push to expand its influence in the region, and landlocked Nepal, wedged between China and India, is no exception. The election in late 2017 was the first held under Nepal’s new constitution adopted in 2015 after years of bloody civil war and a rocky transition to becoming a federal democratic state that has seen a series of short-lived governments.

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China’s investment in Nepal is now five times that from India. Photo: AP
China’s investment in Nepal is now five times that from India. Photo: AP

Beijing’s response to the latest political crisis was swift. Days after Nepalese Prime Minister K.P. Sharma Oli abruptly called for parliament to be dissolved on December 20, sparking nationwide protests and political chaos, China sent a delegation to Kathmandu.

Oli decided he could no longer work with rival factions within the ruling NCP, a coalition of Marxist-Leninist and Maoist parties. His opponents accused him of sidelining the party and launched a legal challenge against the early elections, to be heard in January.

Beijing sent four members of its International Department Central Committee, which manages relationships with foreign political parties of all hues, to speak with leaders in Kathmandu, drawing accusations of meddling from rival New Delhi. It said China was trying to play “mediator” and “interfering with internal politics”, but Beijing said the delegation, led by vice-minister Guo Yezhou, was simply to “exchange views” on issues of mutual interest such as the coronavirus pandemic. India’s foreign ministry later sent its own team to Kathmandu for “observation”.

China’s ambassador to Nepal Hou Yanqi has also reportedly held a series of meetings with communist leaders in the country in the past year aiming to encourage party unity.

Hou Yanqi, China’s envoy in Nepal, has reportedly met communist leaders over the past year in a bid to encourage party unity. Photo: Handout
Hou Yanqi, China’s envoy in Nepal, has reportedly met communist leaders over the past year in a bid to encourage party unity. Photo: Handout

The ruling NPC retaining power would be desirable for China after the communist alliance won a two-thirds majority in parliament on a wave of nationalistic and anti-India rhetoric. Nepal has become a battleground for strategic rivalry between its neighbours, and India has been pushing back against China’s growing clout in the Himalayan country.

Analysts are divided over China’s involvement in Nepalese politics.

Constantino Xavier, an analyst at independent think tank the Centre for Social and Economic Progress in New Delhi, said China’s investments in Nepal were far smaller than in other South Asian countries and that Beijing’s interest in Nepal was more strategic than economic.

“It rather looks like China is interfering politically, and certainly more openly than before, to also send a signal to India amidst growing bilateral tensions,” he said. “This would be a strategic explanation for Beijing’s unusual depth of interference, to ‘keep India busy’.”

India-China border stand-off spurs New Delhi to over neighbours

Relations between Beijing and New Delhi plunged to a new low last year after a deadly clash in the Galwan Valley in June, where a military stand-off continues over their disputed Himalayan border.

“But Nepal’s volatile politics are relatively new territory for China, which may be under the illusion that it can find quick fixes to keep the communist party together,” Xavier said. “Beijing may also be overrating ideological affinities with the recently unified [NPC].”

However, according to Wang Dehua, a South Asia specialist at the Shanghai Municipal Centre for International Studies, Beijing would not interfere politically.

“Nepal has been very supportive of the Belt and Road Initiative in the past few years, and of course Beijing wishes to see stability – and this political turmoil will hit investor confidence,” Wang said. “But no matter what, Beijing will continue to uphold its investment promises in Nepal.”

Chinese President Xi Jinping shakes hands with Nepalese Prime Minister K.P. Sharma Oli during a visit to Kathmandu in 2019. Photo: Reuters
Chinese President Xi Jinping shakes hands with Nepalese Prime Minister K.P. Sharma Oli during a visit to Kathmandu in 2019. Photo: Reuters

The 2017 election came six months after Kathmandu signed up for Beijing’s controversial belt and road scheme and Nepal has since seen increasing investment from China – it is now five times that from India.

While India is still Nepal’s biggest trading partner, the ruling NPC has signed a number of major deals with China in the last few years including reviving two railway projects, connecting Nepal with China and with India. Oli’s government has also reinstated the US$2.5 billion Budhi Gandaki hydropower project, funded by a Chinese company, after it was scrapped by the previous administration over concerns that it did not have an open tender process.

Closer cooperation between Beijing and Kathmandu can also be seen in last month’s joint announcement on the official height of Mount Everest. The two sides have long disagreed over the exact measurements of the world’s tallest mountain, which straddles their border, but after conducting new surveys they agreed to increase its height by almost a metre.

Meanwhile, the China International Development Cooperation Agency has confirmed it will finance 15 pilot development projects in Nepal’s northern region, The Kathmandu Post reported on Tuesday.

Lekhanath Pandey, an assistant professor at Tribhuvan University in Nepal, said the early elections may not go ahead for reasons including the pandemic, the lack of time to prepare, and the “intent of the caretaker prime minister”.

But he said manoeuvring by external players – China and India – was certain to be part of the political instability ahead.

“China is likely to be engaged in forming a sort of left alliance, while India might try to prevent this from happening,” according to Pandey. He said that while China used to employ “quiet diplomacy”, India made “provocative diplomatic postures” in Kathmandu.

“But in recent times, this has changed. In the current political developments, China is quite visible, while India has largely refrained from the public eye,” Pandey said. “Following the unfolding and shocking [political] developments … New Delhi’s influence might increase in Kathmandu.”

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