SEATTLE — A new railroad is to be built in the Himalayas, connecting Nepal to China-controlled Tibet. The railroad, expected to be complete in 2022, suggests an improvement in Nepal’s relations with China.
Railway Could Be an Economic Boon to Nepal
Nepal’s Prime Minister Oli visited China in June in order to iron out the details of this new infrastructural project. Oli noted that the railway agreement between the two countries will not only improve transportation, but will aid tourism and trade between China and Nepal. Businesses in China and Nepal will benefit from the new railroad, as goods will be able to move between the Gyirong trading port in the Tibetan city Xigaze and Nepal’s capital, Kathmandu. Moreover, Nepal, an impoverished mountainous country, may see increased economic assistance from China in the coming years, as agreements like the recent railroad continue.
Economic assistance, particularly humanitarian aid for the poor, is something Nepal desperately needs. According to the Asian Development Bank, more than 25 percent of the country’s population lives below the national poverty line; around 15 percent of its employed population earns less than $1.90 per day, making Nepal one of the poorest countries in the region—and the world.
The exact details of the railway agreement are not public. This has raised some concern over funding the railroad; Oli has presented the agreement as a key linkage for aid between Nepal and China, implying the project may be funded by China. Yet, opposition in the Nepali Congress notes that if the railroads constructed within Nepal are to be paid via loans from China or other international sources, the country will not be able to pay these loans back. As the exact numbers in the agreement are still hush-hush, these concerns are certainly worth airing.
Improvements in Nepal’s Relations with China Part of Greater Chinese Aid Efforts in the Region
Of course, foregrounding Oli’s visit to China and the railroad agreement itself is China’s push for more involvement in the region. The railway is part of China’s massive Belt and Road Initiative, which is designed to connect infrastructure in China to countries in Central Asia, and ultimately aiming to connect transportation in all of Eurasia.
Yet, this project also marks an ongoing push to increase Nepal’s relations with China itself. Nepal, specifically, sits at the key location between India and China, with both powerful countries aiming to make Nepal an ally. As tensions between India and China escalate, both countries seek the loyalty of their shared neighbor.
China was notably quick to respond to Nepal’s devastating earthquake in 2014, sending both volunteers and supplies to earthquake victims. The recent railway follows this trend in Sino-Nepalese relations, with China hoping to sway Nepal’s support towards it over India.
India’s Aid to Nepal Grows in Response
India’s response to China’s railway with Nepal remains to be seen. It is important to note, however, that Oli has been working with India on a similar railway project connecting Kathmandu to the Indian town of Raxaul, as well as a proposed increase in connections via inland waterways shared by the two countries.
It is also important to note that as Nepal’s relations with China increase, so too does India’s aid to the small country. This is largely a tactical decision to ensure China does not have too much control over the region, but it also means India’s aid budget for Nepal has increased 73 percent in 2018 compared to last year. Nepal’s position between India and China thus allows it to potentially reap the benefits of increased aid from both countries. The trick is—or will be—to make sure a balance is struck to keep the aid flowing, and use these economic opportunities to increase the standard of living in the country.
– William Wilcox