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International relations

New Delhi wary of Beijing's India-Nepal-China corridor plan

India likely to object to China's one-way trans-Himalayan export traffic

With a big trade deficit between China and India, New Delhi is uncomfortable about Beijing using Nepal as a corridor to funnel more cheap goods in its direction. (Getty Images)

NEW DELHI -- China is expected to propose to India the construction of a trans-Himalayan trilateral economic corridor, an ambitious plan that seeks to connect the two countries and Nepal. However, the idea is likely to have a lukewarm response from New Delhi which has already voiced concerns about its sovereignty in regards to Beijing's expansive infrastructure projects.

"We should build a three-dimensional connectivity network across the Himalayas. China and Nepal have reached consensus on the co-construction of the Belt and Road [Initiative], for which connectivity is one of the top priorities," Chinese Foreign Minister Wang Yi said in Beijing on Wednesday after a meeting with his Nepalese counterpart Pradeep Kumar Gyawali.

Pointing out that China and Nepal were willing to gradually promote cooperation in the areas of railways, highways, aviation, electricity and telecommunications, he added that "this will create conditions and provide convenience for the trilateral economic corridor of China, Nepal and India, which is likely to be built in the future."

Wang's remarks come ahead of a four-day visit to China by India's External Affairs Minister Sushma Swaraj, which begins on Saturday. Apart from holding talks with Wang, she will attend the foreign ministers' meeting of the Shanghai Cooperation Organisation which convenes in Beijing on April 24.

During the visit, the two countries are set to discuss ways to take forward their relations, which were bruised by a tense border standoff on the Doklam plateau last year over the contruction of roads in the area. The standoff lasted for more than two months -- the longest such confrontation between the two countries in decades. China is also expected to bring up the issue of the trilateral economic corridor in meetings with Swaraj.

"China will try to convince India [on the trilateral link] but will not succeed," said Prashant Kumar Singh, an associate fellow at the Institute of Defence Studies and Analyses in New Delhi, speaking to the Nikkei Asian Review.

A worker waters concrete during China-supported bridge expansion work at Balkhu, Kathmandu, Nepal.   © Reuters

For India to accept such a project, there would need to be an overall environment of trust and transparency, which, in the case of China, is lacking, he said. New Delhi is already at loggerheads with Beijing over the China-Pakistan Economic Corridor (CPEC), part of the ambitious BRI, Singh pointed out.

The $60 billion CPEC passes through disputed territory between India and Pakistan. New Delhi opposes the project saying it challenges India's sovereignty.

On Apr. 5, the Indian External Affairs Ministry reiterated its position on the BRI, in response to media reports that mentioned India's possible cooperation with China on the BRI. India's position "is clear and there is no change," it said.

"The so-called 'China-Pakistan Economic Corridor' violates India's sovereignty and territorial integrity. No country can accept a project that ignores its core concerns on sovereignty and territorial integrity," it added.

The ministry said that connectivity initiatives must be based on "universally recognized international norms, good governance, rule of law, openness, transparency and equality, and must be pursued in a manner that respects sovereignty and territorial integrity."

China, meanwhile, sees the trilateral corridor with Nepal and India as a way to expand exports of cheap goods.

With regard to trade, India has a relatively free border with its traditional ally Nepal, while it has become more stringent on products of Chinese origin, said Pankaj Jha, a professor of defense and strategic studies at the O.P. Jindal Global University at Sonipat, near New Delhi, and former research director of the Indian Council of World Affairs.

China, he pointed out, has already been using countries such as Thailand, Sri Lanka and Bangladesh to dump their products in India, and there is a huge bilateral trade deficit between China and India.

According to data from Chinese customs, India-China trade in 2016 decreased by 0.67% year-on-year to $71.18 billion. "The Indian trade deficit with China further increased by 6.28% year-on-year to $47.68 billion," the Indian External Affairs Ministry said.

"Now they [China] want to create this trilateral corridor [in which] Nepal will become a transit country for a high volume of trade between India and China. India is not keen on this, especially because of a lack of structures in terms of customs and other clearances on border areas," Jha said.

He also pointed out that while China wants to use third country routes to supply its products to India, it does not allow Indian services or certain other products access to its own market.

"China can easily directly do trade with India but they want to use Nepal so as to create another CPEC-like corridor. Already nearly $60 billion have been committed under CPEC, and if you just [invest] one-sixth of that amount [in the new link], it will completely change Nepal's political and economic landscape," Jha said.

"India feels that if it exposes Nepal to China, its whole Hindi hinterland [in the north] will be exposed, and the Chinese will come very close to the border [from the Nepalese side]," he added.

India and China, two nuclear-armed countries which have long been fractious neighbors, share a 3,500km border and in 1962 fought a war over it. The regional giants are vying for influence over their smaller neighbors and other countries, with India pursuing its own connectivity projects, including the ambitious trilateral highway that would link India, Myanmar and Thailand, to boost ties with Southeast Asian nations.

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