China plays 'friends' with Nepal but India checkmates with trade tact

Beijing has been making attempts galore to reduce Nepal's dependence on India. But Nepal cannot distance itself from India because Kathmandu is dependent on Indian ports to facilitate its trade across different parts of the world.

New Delhi, Aug 30: In recent years, China has stepped up activities in Nepal. In the past, Nepal's Tibetan community of 25,000 were China's primary's concerns and today Beijing interferes in Nepal's internal affairs too.

This has, however, been much to the disliking of India. Beijing's envoys have kept close tabs on developments in Nepal especially those relating to India. On July 10, Liu Jianchao, head of the Chinese Communist Party (CCP), Central Committee's (CC), influential International Liaison Department (ILD) visited Nepal and this was just a month after a visit by Prime Minister Narendra Modi to Lumina.

During that visit, PM Modi declared that ties between India and Nepal are unshakeable like the Himalayas. He also emphasised that India and Nepal's ever strengthening friendship would benefit the entire humanity in the emerging global situation.

Jianchao, during his visit, held a 45-minute discussion with Nepal's Prime Minister, Sher Bahadur Deuba during which he stressed on the importance of China-Nepal ties. He also urged CPN (UML) Chairman K P Oli and CPN (MC) leader Pushpa Kumar Dahal, also known as Prachanda, to work in unison to ensure the continuing importance of the communists in the Nepal government.

After seeing the developments in Sri Lanka and Pakistan, Nepal would tread carefully to ensure that it does not fall into a Chinese debt trap like Islamabad and Colombo. An economic survey of 2018-19 clearly shows that Nepal cannot distance itself from New Delhi as India accounts for 64 per cent of Kathmandu's total volume of trade.

Informal trade happens in the Terai region as well and these are mainly for goods produced in UP, Bihar and West Bengal. The intent is to avoid high tariff and other issues such as weak infrastructure and high transportation cost. Nepal in exchange gives goods produced in third countries.

India did face a temporary setback during the regimes of Oli and Prachanda. A senior official explained to OneIndia that ties between India and Nepal may have faced a temporary setback, but better sense appears to have prevailed and the strong historic, cultural and trade ties have put things back on track.

One of the main reasons why Nepal cannot distance itself from India is because Kathmandu is dependent on Indian ports to facilitate its trade across different parts of the world. Statistics show that 60 per cent of the exports and imports are handled by the Haldia and Vishakhpatnam ports and the proximity to Birgunj helps Halide to handle most of Nepal's trade. It would also be interesting to note that the Vishakhpatnam port is Nepal's gateway to China, US, Europe and Southeast Asia.

India has been very aggressive in persuading the negotiations with Nepal to facilitate trade through inland waterways from Haldia to Nepal through the Koshi and Gandak rivers. India, in turn, has agreed to provide Nepal access to the Dharma Port in Odisha and Mundra in Gujarat.

Now coming to the advantage India has over China where the border with Nepal is concerned. India and Nepal share a 1,868 kilometre boundary with 20 entry and exit points for trade. The export items from India include, iron, petroleum products, steel, cement, pharmaceuticals and machinery. The import items would include black cardamom, juices, black tea and jute products.

On the other hand, the 1,415 kilometre border between China and Nepal has its own challenges geographically. The trade deal between China and Nepal allows people living within 30 kilometres on either side of the border to travel freely by only providing residence proof to engage in barter trade.

The two major trade points are Tatopani-Zhangmu and Rasuwagadhi-Kerung. Tatopani-Zhangmu has been the closest trade point with China since the 1960s but it was closed following the massive earthquake in 2015. It only opened last year and the closure impacted trade between the two countries severely.

However, a bulk of Nepal's exports to China are consumed in Tibet and Beijing's attempt is to provide Nepal access to another port through the Kathmandu-Rasuwadadhi Highway.

Beijing has been making attempts galore to reduce Nepal's dependence on India. Both countries had agreed on a transit agreement in 2016 which gave Kathmandu access to many Chinese ports for third country trade.

However, India has continued to up its game to keep Nepal's dependency on China at a bare minimum.

The situation is evolving, the officer cited above said, while adding that the game changer this time is the decision to provide Kathmandu access to the Dharma and Mundra Ports.