China once tried to pit Nepal against India. Gave him a lot of money. After not succeeding in his move, he has now stopped the fund. About nine years ago, he promised to announce an economic and technical package for Nepal. However, not getting money, now the Nepal government has decided to move forward with its own money. Nepal was supposed to get this fund for Aranico Highway, which has not been received. Now the government is using its own resources to build it.
Chinese President Xi Jinping announced an aid package of RMB 900 million (over Rs. 16 billion) during their meeting at the Boao Forum in Hainan Province on March 28, 2015, when then President Ram Baran Yadav was visiting China. The aid was to help update and develop transport infrastructure on the 115-km-long Araniko Highway connecting Nepal to China.
This special assistance to China was renewed every year by the International Economic Cooperation Coordination Division of the Ministry of Finance, but despite several calls, requests and meetings, the funds were not received. Since the Chinese government is not releasing this amount, Nepal has to spend Rs. 3.6 billion was earmarked for maintenance of a 26-km stretch of the highway and for managing landslides based on a detailed project report prepared by the road department.
The Chinese government built the Kodri highway
A large part of the Aranico Highway, also known as the Kodari Highway, was built by the Chinese government in the 1960s. The April 2015 earthquake badly damaged many parts of the highway. Pushpa Kamal Dahl called Chinese President Xi Jinping twice, but the money was not given. After concluding that Chinese assistance was not forthcoming, money was sought from the government, with 3.6 billion rupees allocated to build a 26-kilometer stretch of highway.
Also, post the Covid pandemic, the use of automation loaders and machinery by four major Chinese companies operating in Nepal has led to the loss of Nepali jobs to a large extent. At the same time, China has tightened border controls for Nepali goods and people, and it mainly uses the border to export Chinese goods to Nepal.
There is also nothing special about the BRI agreement
Nearly seven years after signing the Belt and Road Initiative with Nepal, China has nothing to show in the way of actual projects. Nepal and China signed an MoU on One Belt One Road (later known as BRI) on May 12, 2017, a major initiative of Chinese President Xi Jinping. It will be updated every three years. Beijing makes BRI a top foreign policy priority but there has been no concrete discussion from Nepal since the formation of the Pushpa Kamal Dahal government in Kathmandu.
Even seven years after the signing of the agreement, there are concerns about the lack of momentum of the BRI in Nepal, which aims to facilitate the development of transportation through joint studies and development of railways, roads, logistics, transport network security and related infrastructure. Cross-border projects including civil aviation, power grid, information and communication were to be promoted.
The BRI issue will come up again in 2021
The MoU also states that the two sides will complete a joint feasibility study of a China-Nepal Free Trade Agreement within 2017. If possible, we will begin negotiations on a Free Trade Agreement (FTA) to further open markets and expand two-way trade.
After Sher Bahadur Deuba became Prime Minister in July 2021, the BRI issue came up again. During the visit of East China Foreign Minister and State Councilor Wang Yi in March 2022, the Nepalese side made it clear that it prefers grants and aid rather than loans for the BRI project. The Nepalese side clarified during the talks and meetings with the Chinese officials that due to Nepal's own limitations and dire economic situation, it is not able to take loans at high interest rates.
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