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Belt and Road

Himalayan railway plan at stake as China's Xi pays rare visit to Nepal

Trip follows lectures to ruling party cadres on Belt and Road champion's 'thought'

Nepal's only railway is a 30-km line that runs from the southeastern city of Janakpur to Jayanagar, across the Indian border. (Photo by Yuji Kuronuma)

KATHMANDU -- Chinese President Xi Jinping is arriving in Nepal over the weekend on a rare trip aimed at consolidating ties with Nepal's communist government, which is keen to deepen its relations with the colossus to the north but also to parlay any ambitions its southern neighbor, India, might be harboring in the region.

Xi's two-day visit, which begins on Saturday, comes with landlocked Nepal realizing its Himalayan location is one of Asia's most desirable neighborhoods, one that the world's two most populated nations are perhaps coveting as a gateway to expanded trade.

No Chinese head of the state has stopped in Nepal since 1996, when President Jiang Zemin did so. Xi's much-awaited visit follows the 2018 installation of a Beijing-friendly communist government in Kathmandu. Nepal signed onto the Belt and Road Initiative in May 2017.

A proposed 72-km railway between Kyirong in Tibet and Kathmandu has captured the Nepalese imagination and is likely to dominate the agenda during Xi's stay. Another topic could be an extradition treaty between the two nations, which China has been pushing for, according to local media reports. A Home Ministry spokesman did not return calls seeking comment.

According to sources familiar with bilateral talks, Nepal has pushed for a Chinese grant to build the railway, but under BRI the Chinese typically offer loan. If it doesn't get a grant for the project, Nepal is likely to request China to provide a soft loan and grant, with Nepal making some investment in the project.

China's infrastructure export spree has sparked concerns in some countries about unmanageable debt loads. Yet, Kathmandu appears eager to realize the railway project to help address its infrastructure gaps and expand trade.

"China has immense resources in terms of technology and money," said Sudheer Sharma, the chief editor of Nepal's best-selling Kantipur newspaper. Nepal's ruling party leaders know people now expect the government to deliver their electoral pledges such as building robust infrastructure and reducing poverty. "That's why they want to cultivate good ties with the Chinese leaders, who, in turn, would help them fulfill these promises."

Nepal's next railway is expected to connect to tracks cutting across the autonomous region of Tibet.

Nepal has one 30-km railway that runs from the southeastern city of Janakpur to Jayanagar, across the Indian border. It was built in the 1930s.

The Chinese have carried out pre-feasibility studies of the planned railway, which passes through the treacherous northern Himalayan region. Though the government's effort to improve connectivity with China has received widespread support, experts worry about the railway project's financial viability.

Sridhar Khatri, former executive director of South Asia Centre for Policy Studies in Kathmandu, said the railway project would likely have mixed results. "It will be an opportunity for us to develop technical expertise to build such projects. I feel that we have to go for it for the sake of learning the high-altitude, high-speed railway technology," Khatri told Nikkei Asian Review. "But given the low volume of exports from Nepal to China, we may face problems."

According to United Nations trade statistics, Nepal in 2017 imported $1.2 billion worth of Chinese goods, with mobile phones accounting for one-fifth of the total. Only $22 million worth of goods went the other way.

India is Nepal's largest trade partner. It sends Nepal $6.5 billion worth of exports and imports $420 million worth of goods from the nation.

Sharma, the chief editor, said that in addition to the Himalayan railway, roads are likely to come up during the high-level meeting in Kathmandu. "I think [the] railway is the long-term project, and roads, transmission lines and hydropower are the short-term projects," he said.

Other infrastructure projects include a 27-km tunnel to ease traffic congestion between Kathmandu and Kyirong, upgrading the Araniko Highway, the first inland route between the two countries, and the opening of the Korala border crossing, near Nepal's Mustang district. "China is building roads and railways as an alternative to [shipping goods via the] South China Sea," Sharma said. "It has already connected with Europe via Central Asia. I think it's trying to do similar projects in South Asia via Nepal."

China's growing stature across Asia has alarmed New Delhi. Even as Chinese Foreign Minister Wang Yi in September was wrapping up a three-day visit to pave the way for Xi's trip, New Delhi persuaded Kathmandu to jointly inaugurate a 78 km cross border oil pipeline along the countries' shared border.

In June 2018, during Prime Minister K.P. Sharma Oli's visit in China, the countries agreed to build the trans-Himalayan railway. Not to be outdone, India said it will also extend a railway connecting Raxaul, a town along the Indian border, to Kathmandu.

Nepali Prime Minister Khadga Prasad Sharma Oli shakes hands with Chinese President Xi Jinping inside the Great Hall of the People in Beijing in March 2016.   © Reuters

Khatri and other foreign policy experts say India is rapidly losing its foothold in the South Asian region. "The problem with India is that it hasn't been able to define its policy in South Asia in this changed scenario," he said. "China has already superseded India in the region. India's policy is still determined by strategic thinking, and India appears to accord [the] least priority to the region."

But Sharma and others see a consensus evolving between the Asian giants. "I think they [India and China] are heading toward some sort of understanding regarding India's smaller neighbors like Nepal," he said. "It's important for them to bring Nepal on board. I don't think India would be hostile toward increasing Chinese engagement in Nepal."

He pointed out that Xi and Indian Prime Minister Narendra Modi will meet on Friday in the South Indian temple city of Mamallapuram.

Sharma also said Nepal can leverage its potential as a gateway to the Indian market, which Beijing has been eyeing in recent years. "Nepal offers the best option for a trade route south of the Himalayas," he said. "India and China share borders along the Himalayas, but the Himalayan passes between China and Nepal have the most potential for trans-Himalayan connectivity." he said.

India is not the only force to have reason to be concerned about what is happening between Chinese and Nepalese communists. Nepal's opposition camp also worries. In late September, a Chinese delegation led by Song Tao, the chief of the International Liaison Department of the Chinese Communist Party, held a two-day symposium to impart Xi Jinping Thought to members of the ruling Nepal Communist Party. The two parties also signed a bilateral agreement cementing their relations.

"If they train ruling party leaders and cadres to be like them, it is not acceptable to us," Bimalendra Nidhi, a leader of the opposition Nepali Congress, told The Kathmandu Post. Sharma, however, said Nepal's government held the event to please Chinese leaders. "Our politicians know that the Chinese want to expand Xi Jinping Thought," he said. "So they allowed it to happen despite opposition."

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