China, Nepal sign framework agreement on Belt and Road Initiative cooperation

One example of China's involvement in Nepal is the Pokhara airport project, funded by a $200 million loan from China. (Image: MOFA of Nepal)

China and Nepal signed a significant agreement on December 4 that paves the way for major Chinese investments and infrastructure projects in the Himalayan country, advancing its participation in the ambitious Belt and Road Initiative (BRI).

Seven years after an initial understanding, the agreement sets the framework for the execution of projects under the BRI, which includes roads, transport corridors, airports, and rail lines connecting China with Asia, Europe, and beyond.

Nepalese Prime Minister KP Sharma Oli, breaking the tradition of visiting New Delhi first after election results, has been in China since Monday to work closely with Chinese President Xi Jinping and finalise the deal. Nepal's foreign office confirmed the signing of the pact, stating that the framework for Belt and Road Cooperation had been established, didn't share further details.

Sources familiar with the agreement told NDTV that the deal outlines how both the countries will plan and coordinate projects, and sets the stage for China to finance them. This move follows Nepal's in-principle agreement in 2017 to join the BRI, but its progress had been stalled due to the absence of a formal execution framework and political disagreements between the two sides. These challenges now appear to have been resolved.

The Government of Nepal and the Government of the Peoples Republic of China signed the Framework for Belt and Road Cooperation today. pic.twitter.com/6oTlDvTzIe
MOFA of Nepal (@MofaNepal) December 4, 2024

Despite its ambitious scope, China's Belt and Road Initiative has faced criticism from several countries due to concerns over Beijing's motives, often accused of using the initiative to extend its influence through "debt diplomacy". This has involved building mega projects in smaller economies, with the loans sometimes leading to debt traps. Critics argue that when countries fail to repay, China may take control of the projects or use them to further its geopolitical goals.

In Nepal, concerns about mounting debt in an already fragile economy have raised an alarm. A strong debate has revved up in Kathmandu, with some factions expressing concerns over the risks posed by Chinese-funded projects. Nepal Congress, a key ally of Prime Minister Oli's party, has been vocal in opposing Chinese loans for infrastructure projects.

One example of China's involvement in Nepal is the Pokhara airport project that was funded by a $200-million loan. While the airport was opened last year, it ran into financial losses, partly due to a lack of international flights and India's refusal to allow planes using its airspace to access it. India raised national security concerns, fearing that China could use the airport for military purposes, as Pokhara is located near the India-Nepal border.