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China and the USA are competing for influence over Nepal. The reality is that Nepal is China’s neighbour while the US is located thousands of miles away.

By S.G. Jilanee | February 2020


Friendly relations between China and Nepal are only natural. With a 1,414 kilometre common border, it could not be otherwise. China is the largest source of Foreign Direct Investment in Nepal. It is also the second largest source of foreign tourists coming to Nepal.

Nonetheless, Chinese President Xi Jinping‘s recent visit to Nepal - the first visit by a Chinese president to the country in more than two decades - underscores Beijing’s increasing interest in South Asia as a strategic hub for defence and transit projects.

During the visit, China and Nepal signed twenty agreements on subjects ranging from connectivity to security. Most of the agreements, including Nepal’s support to the Belt and Road Initiative (BRI) and rail and road connectivity between China and Nepal, would further reinforce mutual ties. Through these agreements, Beijing promised around $500 million in economic grants to Nepal. Furthermore, China reaffirmed its commitment to build the Trans-Himalayan Multi-Dimensional Connectivity Network, which includes linking China to Kathmandu through the Himalayan railway.

Under these agreements, Beijing promised around $500 million in economic grants to Nepal. Moreover, China reaffirmed its commitment to build the Trans-Himalayan Multi-Dimensional Connectivity Network, which includes linking China to Kathmandu through the Himalayan railways.

However, the growing intimacy between the two Asian neighbours has caused gripes to the United States, half the world away. It therefore agreed to take its seven-decade long bilateral ties with Nepal, to the next level during a meeting between visiting Foreign Minister Pradeep Kumar Gyawali and US Secretary of State Michael R. Pompeo at the State Department.

In the meeting, Foreign Minister Gyawali highlighted the priorities of the Government of Nepal in line with its goal to graduate from Least Developed Country (LDC) status at an early date and become a middle-income country by 2030.

The two sides exchanged views on enhancing political relationship through exchange of visits and the ways and means for promoting economic cooperation between the two countries, with particular focus on trade, investment and development assistance .

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The writer is a senior political analyst and former editor of SouthAsia. He can be reached at
ghulamjil@outlook.com

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