Are the stalled Nepal-China ties finally getting some momentum? Deputy Prime Minister and Minister for Foreign Affairs Narayan Kaji Shrestha has some ideas on that score.

Shrestha says he has proposed building Nepal-China economic and development corridors with Chinese officials. The objective, he said, is to boost economic growth, trade, tourism, and connectivity between Nepal and three Chinese provinces that oversee and engage in various bilateral activities.

Shrestha, who returned home from China on Monday after a nine-day official visit at the invitation of his Chinese counterpart Wang Yi, said he had positive discussions with Chinese leaders and officials on the development of the corridors with three Chinese provinces—Tibet, Sichuan and Chongqing.

These three provinces have made significant contributions to nurturing relations with Nepal, according to several Nepali politicians who have recently visited China.

Beijing has entrusted these provinces with engaging, promoting and expanding relations with Nepal under China’s “peripheral diplomacy.” Of late Nepal has seen a series of back-to-back high-level visits from these provinces, and when Nepali leaders visit China, their first destinations are Tibet, Sichuan and Chongqing.

“We had very positive discussions on developing economic and development corridors between Nepal and China,” Shrestha said. “The focus of my visit was economic diplomacy. Nepal has been thinking about this new concept [the idea of corridors] after China introduced the Trans Himalayan Multi Dimensional Connectivity Network (THMDCN), which comprises economic and connectivity corridors to be developed under the Belt and Road Initiative.”

The corridor starting from the Nepal-Tibet border will reach Chongqing through Sichuan province, Bishnu Pukar Shrestha, Nepali ambassador to China, told the Post over the phone from Beijing.

“If we can develop such a corridor, that would serve as an economic, trade and developmental vehicle between the two countries and open more vistas of cooperation. The concept is in a nascent phase, and it will take some time to develop its blueprint,” said ambassador Shrestha.

Deputy Prime Minister Shrestha said a major achievement of his visit is the reciprocal visa waiver for Nepali citizens travelling to China.

“The Chinese are positive about it.”

Nepal has been waiving visa fees for Chinese nationals since 2016 and has been looking for similar reciprocal treatment from China.

Although Deputy Prime Minister Shrestha said that China is ready to reopen the 14 traditional border points closed during the Covid pandemic, an official at the foreign ministry, requesting anonymity, said that is unlikely anytime soon.

While four traditional border points have already reopened since 2023, some are encountering difficulties, said officials.

“Reopening the remaining border points will involve technical challenges. But if they are reopened, it will be easier for our citizens living along the Nepal-China border to do business and sustain their livelihoods,” said a member of Shrestha’s delegation.

During the visit, besides holding delegation-level talks with his Chinese counterpart, Deputy Prime Minister Shrestha also called on the chairman of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), Wang Huning; vice minister of the International Department of the CPC Central Committee, Sun Haiyan; secretary of the Chongqing Municipal Party Committee of CPC, Yuan Jiajun; party secretary of CPC Tibet, Wang Junzheng; and Sichuan province governor Huang Qiang, among others.

DPM Shrestha, who is also the vice-chairman of the CPN (Maoist Centre), had an hour-long one-on-one with Wang and other CPC leaders. They discussed Nepal’s political situation, among other things, according to a Nepali official who was part of the visit.

The Chinese leaders wanted to know if the government in Kathmandu would be stable after the entry of the CPN-UML in the ruling coalition, according to the official.

During his meeting with Shrestha, Chinese foreign minister Wang repeatedly emphasised the need for political stability, but Deputy Prime Minister Shrestha explained how Nepali political system is different from the Chinese one, the official said.

“In the Chinese system, one party rules from top to bottom and the decisions made by the leadership are implemented uniformly. But Nepali political system is different, and due to the composition of [hung] Parliament, governments change frequently,” Shrestha told the Chinese leaders, according to the official.

“We have to face opposition parties too. But we are moving ahead with good planning.”

During the visit, the Nepali side proposed elevating the existing foreign secretary-led bilateral mechanism to the foreign minister level in order to discuss various aspects of Nepal-China relations on a regular basis.

Both sides are said to be positive on setting up the joint commission at the foreign minister level, similar to one Nepal has had with India for decades.

“But, while the Nepali side proposed the mechanism, the Chinese side has yet to officially respond,” the official said.

The two sides also discussed finalising the long-due implementation plan for the Belt and Road Initiative. The draft of the plan was first proposed by the Chinese side in late 2019 and both sides have exchanged several comments and amendments.

“One of the main objectives of the visit was to finalise the BRI implementation plan, but that could not happen. We had already agreed on signing the BRI implementation plan during the prime minister’s China visit last September,” said Shrestha. “We revisited the issue.”

“There is also a discussion about whether to take loans or grants under the BRI. Naturally our priority is grants, not loans. Building projects whether with loan or grant comes only in the third stage [following Nepal’s selection of projects and then sharing of their details with China]. So we have to select projects carefully,” Deputy Prime Minister Shrestha told reporters upon landing at the Tribhuvan International Airport in Kathmandu.

Ambassador Shrestha said Nepal will discuss the project financing modality only after signing the BRI implementation plan.

“Once we give final touches to the BRI implementation plan, we will proceed to the signing stage. It will take some time, probably another two-three months,” ambassador Shrestha said

“We have proposed different modalities for the implementation plan including grant and concessional loans. But we are not in a position to accept commercial and costly loans,” added the ambassador.

According to a commentary published on China.com, a Chinese news portal, and widely shared in WeChat, a popular Chinese app, the goal of Shrestha’s trip was to persuade China to convert the loan given to Nepal to build the Pokhara International Airport into a grant.

During his meeting with the Chinese leader, Shrestha said that if China does not transform the Pokhara airport loan into a grant, then Nepal will not be able to entertain high-interest loans from China in the future, according to the commentary.

The commentary also mentions the ongoing investigation by the Commission for Investigation of Abuse of Authority into the Pokhara International Airport construction.

The Chinese commentary has termed Shrestha’s request to convert the loan into grant as ‘unreasonable’.

“Now some people in Nepal are claiming that if China does not agree, they will not consider subsequent high-interest loans. In fact, they are threatening us. If the loans are not converted into grants, Nepal may not continue to cooperate with China on the basis of the Belt and Road Initiative. And why is Nepal so bent on challenging China? Then we have to mention India. You know, when it learned that Nepal decided to strengthen cooperation with China, India put pressure on Nepal many times,” stated the commentary in Mandarin.

The commentary further went to say that with the outbreak of the “India Quit” movement in Bangladesh and the Maldives’ demand for India to withdraw its troops, and the fact that Nepal's pro-Indian Nepali Congress Party was kicked out of the Cabinet not long ago, the People's Liberation Army military delegation also visited the Maldives and Nepal from the beginning to the middle of this month.

“This series of events has intensified the uneasiness of the Modi government, fearing that another South Asian country will seek to escape India’s control. Therefore, it cannot be ruled out that India once again coerced and induced Nepal to achieve the purpose of getting them to withdraw from the Belt and Road Initiative and stay away from China,” stated the commentary. “Nepal used the BRI as a bargaining chip to blackmail us into waiving loans.”

“Perhaps it was because it could not withstand the Modi government's intrusion and finally chose to compromise,” it added.

“At the same time, there is another possibility, that is Nepal feels that China and India are trying hard to compete for influence in South Asia... But once we agree on Nepal’s request, other countries will inevitably follow suit, and won't we be roasted on the fire? Therefore, no matter what motivations Nepal has for wanting to default on China, we refuse to be taken advantage of,” writes the Chinese news site in its commentary on Shrestha’s visit.

During the visit, China committed to an enhanced level of cooperation in different sectors, said a press note issued by the Ministry of Foreign Affairs after the visit. It said the two sides also agreed to expedite the implementation of the past accords and will resume regular meetings of the bilateral mechanisms.

“China is also ready to provide its pasture areas to the Nepali farmers as per the agreement on trans-frontier pasturing by border inhabitants signed in 2012 and agreed for electrification in some rural areas of Nepal-China border. Both sides are also positive to conduct direct bus service between Kathmandu and Lhasa. We have also requested to facilitate the export of cooked buffalo meat, haylage grass, plant-based medicinal products, vegetable fruits and other Nepali products,” reads the press note.

Deputy Prime Minister Shrestha, during his meeting with Chinese leaders and officials, also requested China to set up a multi-functional lab on the Nepal-China border; sought the use of more Chinese capital and technology in Nepal’s agriculture sector; proposed more flights to Kathmandu and Pokhara from different Chinese cities; and asked for greater participation of Chinese investors including high-level Chinese leadership at Nepal’s third investment summit to be held on April 28 and 29 in Kathmandu, according to the press note.

The two sides are ready to work to expand cross-border railway as well as road and air connectivity, and expand the electricity grid so that connectivity between Nepal and China will increase, the note further said. The two countries have also agreed to come up with specific projects in areas like agriculture, tourism, hydropower and infrastructure.