Breaking Boundaries – The Trilateral Economic Corridor Proposal Between India, China, and Nepal

  13-Jun-2018 12:48:39

China India Nepal

China in early April this year proposed the idea of an India-Nepal-China economic corridor, which seeks to improve connectivity through the Himalayas, but will the deal actually go through?

China is fervent on investing in big connectivity projects in the developing nation of Nepal, allowing them to further expand their influence through South East Asia. India sees this as a threat as Nepal has historically been strongly within their sphere of influence, hence Indian officials aren’t quick to jump the guns on signing any deals. Footwork for trilateral cooperation started during the BRICS summit in Goa in November 2016, where there was an unplanned meeting between the leaders of the three nations. However, when the meeting was publicized, the Indian Ministry of External Affairs was very quick to affirm that this was not a trilateral meeting, showing their disinterest in the agreement right from the get-go.

The relationships between the three nations are complex and dynamic ones. China’s Foreign Minister Wang Yi has said that China, India, and Nepal are natural friends and partners. Stating how they are neighbours connected by rivers and mountains. There’s a lot more to that however and the real dynamic is filled with ups and downs of tension and amity. Though Nepal and India are on good terms currently, ties were at a low during Prime Minister K.P. Sharma Oli’s previous government in 2015. After an official visit to India this April 6-8, the PM claims that the relationship is back on track, and ‘misunderstandings’ have been cleared, however, one can only speculate as to whether they are currently as strong as they’ve been historically, especially considering Nepal’s interest in strengthening ties with China.

Nepal and China both can benefit from strong cooperation with each other. Oli intends to diversify the areas for and scope engagement with China. In doing this, they lessen their political and economic dependence on India, giving them more security and the opportunity for economic growth. This process for less dependency started in Oli’s visit to China in March of 2016, where the PM signed ‘historical agreements’ such as a trade and transit agreement which in principal ends India’s monopoly over Nepal’s supply system. It will take much further time and deals to completely free Nepal of Indian dependency, but with Nepal’s current government strongly committed to implementing agreements and exploring new avenues of cooperation, it is certainly a future possibility.

Though the corridor would benefit Nepal and China, the two governments are currently fixed upon this trade and transmit agreement. Talks for roads and railway links have already started and Wang Yi has called for negotiations to intensify. India countered with their own new railway link between Kathmandu and Raxual. We may not end up seeing a trilateral corridor, however, we will definitely see a string of investments happening within the three countries. Chinese investment in various sectors, such as the Pokhara International Airport and the Kathmandu Ring Road, is increasing, pushing India to increase the amount of its assistance to Nepal in its 2018-2019 budget and work to speed up projects in Nepal. Nepal may end up as a rope in a tug-of-war between the two Asian giants, but with immense economic benefits as a side-effect.