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Oli-led Governmnet-27

Issue March 2016

Nepal-China Joint Statement

Siddhi B Ranjitkar


Unlike his failure in issuing a Nepal-India joint statement primarily because of Indian Prime Minister Nanrendra Modi’s stand on not supporting the Nepalese constitution without meeting the demand of the Madheshi leaders that had been protesting against the constitution that had been less progressive than the Interim Constitution of 2007, Prime Minister KP Oli succeeded in having a 15-point joint statement with China, and getting the constitution endorsed by Chinese leaders.


While in India, Prime Minister Oli managed to get the support of Indian Foreign Minister Sushma Swaraj for the Nepalese constitution but he failed in persuading Indian Prime Minister Modi to bolster the constitution, as Modi insisted on making the constitution inclusive meeting the demand of the Madheshi leaders. Nepal had partially met the demands of the Madheshi leaders.


While in Nepal during his first visit addressing the parliament, Prime Minister Modi had said that the constitution could be amended at any time; so, parliamentarians should not squabble over the issues, accept the constitution voted by the two-thirds majority of the constituent assembly members. Now, Prime Minister Modi contradicted his own speech unwilling to support the constitution passed by more than 90% of the constituent assembly members.


Obviously, Oli had successfully persuaded the Chinese leaders to fully support the Nepalese constitution. Probably, Chinese leaders did not think to interfere in the internal affairs of Nepal as Indian leaders had been doing.


China stated in the statement, “The Chinese side welcomed the promulgation of the constitution in Nepal and regarded it as historic progress in the political transition of Nepal. The Chinese side sincerely hoped that Nepal could take this opportunity to realize its political stability and economic development.” (Source:


Indian leaders had gone too far in intervening in the Nepalese business even going to the extent of making Nepal choked on the blockade Indian Prime Minister Modi unofficially imposed. How much 30-million Nepalese had suffered only Nepalese could comprehend not Modi.


The support of China for the constitution had been another blow to the Madheshi leaders that went to the Chinese embassy and urged the Chinese diplomat not to support the Nepalese constitution, as it had not met their demands, yet. They also requested the Chinese diplomat for the support for their protest movement.


Being unable to mobilize the Nepalese people to support them for their demands meet, Madheshi leaders had gone to the neighboring leaders for their support for their demands to be met. The failure of the Madheshi leaders clearly in getting their demands met with the support of foreign leaders particularly the Indian leaders indicated that the political leaders rejected by the voters in the general elections had no chance of gaining the political advantage launching any protest movement. So, they needed to go back to the voters and persuade them to support them for making the constitution inclusive following the constitution.


Chinese Prime Minister Li Keqiang has said that China firmly supports Nepal's efforts on safeguarding sovereignty, independence and territorial integrity as well as the Nepali people's choice of development path, and will not interfere in Nepal's internal affairs. Li has also said that China stands ready to enhance political trust, expand cooperation and increase coordination in international and regional affairs with Nepal. He pledged that China would boost practical cooperation in "key" areas including connectivity, industrial capacity, oil and gas, trade, tourism and law enforcement, with Nepal. (Source:


Prime Minister KP Oli in turn said that the traditional Nepal-China friendship would not be affected by any external factor. It has served an example for relationship between countries of different sizes and different political systems; Nepal firmly stands on the one-China policy and will not allow any activity on its territory that will impair the China's interest; Nepal looks forward to benefiting from the China's peaceful development and will actively participate in the China's "Belt and Road" initiative; Nepal hopes to expand cooperation with China on infrastructure, energy, agriculture, finance, trans-border trade, tourism and education to advance the bilateral relationship in a sustained way. (Source: reported, “Hailing China's support for Nepal's independence and development as well as the neighborhood diplomacy featuring amity, sincerity, mutual benefit and inclusiveness, Oli said his country looks forward to benefiting from China's peaceful development and will actively participate in China's "Belt and Road" (one belt one road) initiative.”


Now, in the 15-point joint statement both Nepal and Nepal signed off and made public, China had included some of the main points Nepal wanted but excluded in the 10-point agreement China-Nepal had signed off on Monday, March 21, 2016.


The third point of the statement says that Nepal “does not allow any forces to use Nepalese territory for any anti-China or separatist activities.” Nepal had successfully clamped down on the Tibetan dissidents in Kathmandu going against the sovereign rights of Tibetans to fight for self-rule that China not only denied it but also even the autonomous rule Dalai Lama had advocated for.


The fifth point of the statement stated, “both sides agreed to synergize each other’s development planning, formulate appropriate bilateral cooperation programs and to carry out major projects under the framework of the Belt and Road Initiative.” Thus, Nepal was for going along with the Chinese path of development. It also stated, “The Chinese side agreed to accelerate the feasibility study on the Araniko Highway Repair.”


Probably, Chinese were not sure of running the bilateral business by the Araniko Highway through the Tatopani-Khasa entry. It might be due to the geological conditions of the area through which the road runs or it might be even possible that the Chinese were suspicious of the local people that had run the business of the Tibetans trafficking back and forth between Tibet and India. That had made the Chinese very uncomfortable to open up the Tatopani-Khasa entry for the regular business even after almost one year of the quake that devastated both sides of this entry, and remained closed until now.


The sixth point of the statement was that “The Chinese side will implement the three billion RMB grant assistance from 2016 to 2018 to support the post disaster reconstruction of Nepal, to carry out 25 key projects in areas covering infrastructure construction, recovery of people’s livelihood in quake-stricken areas of northern Nepal, repair of cultural and historic sites, capacity building in disaster prevention and control as well as medical and public health cooperation.”


It was the amount China had already committed to when the previous government led by Prime Minister Sushil Koirala held a donors’ meeting for mobilizing resources for the reconstruction and rehabilitation of the quake-damaged infrastructures, public buildings, cultural and historic heritage. At that time China had stated the amount in the American dollars this time in Chinese currency.


The seventh point of the statement had it that “The two sides agreed to start the joint feasibility study on the China-Nepal Free Trade Agreement and conclude the study at an early date.” What was the “Free Trade Agreement” the statement did not elaborate. It was surely the slogan of Chinese President Xi Jinping. So, I did not know how Nepal could benefit from it. Anyway it was only the feasibility study both side would conduct. Free trade might be a little too much even for the market economists.


The eighth point of the statement was the one that Nepalese had been so interested in. It stated, “Both sides agreed to conclude a commercial deal on the supply of petroleum products from China to Nepal. In this context, they encouraged companies to speed up negotiations and concerned agencies to study providing supporting policies on issues of pricing, taxation, transportation, quality control and customs and frontier formalities. The Chinese side agreed to build oil storage facilities for Nepal.”


Following this joint statement, both sides would try to find out the policy barriers and then the ways and means of its removable to make flow the petroleum products from China to Nepal possible. Minister for Supplies Ganeshman Pun had been nervously waiting for this statement. However, it might need a lot of efforts of the negotiators of both sides actually on making the flow of the petroleum products from the north to Nepal.


The twelfth point was “Both sides agreed to support each other’s tourism promotion activities in their respective countries to enhance people-to-people contacts. To support the recovery of tourism in Nepal, the Chinese side is willing to provide Chinese language training in Nepal for 200 Nepalese tourism professionals in the coming five years, and encourage Chinese enterprises to invest in Nepal’s tourism facilities.”


Nepal needed to seize the opportunity of bringing Chinese visitors in not hundreds of thousands but in millions so that the trade balance of Nepal with China would be not so unfavorable to Nepal as of now. One report has said that 50 millions Chinese go to elsewhere in the world for pleasure visits every year. They spend more than any visitor of any country. Tourism is one of the most important industries for the Nepalese.


Finally, the fourteenth point stated, “In order to facilitate trade, tourism and investment between the two countries, the Chinese side supports Chinese-funded banks to open branches in Nepal in accordance with relevant policies and regulations.”


Chinese were willing to open up their bank branches in Nepal apparently for boasting the business deals but actually for using the Chinese currency for the business. The Chinese currency had been included in the internationally traded currency basket. Both Nepal and China would not need to use the third country currency for bilateral trade once China and Nepal make the currencies of both the countries freely tradable in the currency market. China could buy Nepalese currency for its projects in Nepal, and Nepal could buy the Chinese currency for the purchase of the Chinese machineries and goods as required.


Concerning the soft loan China had committed to provide Nepal with for the construction of the international regional airport in Pokhara, 25% of the loan would be with the zero percent interest, and the rest of the loan would be with two percent interest rate, according to the news in the State-run newspaper ‘gorkhapatra’. Practically, the whole amount would come with the interest rate of 1.5%, which is not so high compared to the two percent.


Clearly, China wanted to help Nepal at the same time make some money out of it. India also had done so floating one billion dollars in loan for Nepal to borrow for its development but Nepal had not dared to touch the money so far.


This time, China had mainly focused on the feasibility studies on the development projects rather than contributing to building the capital projects. China had seen that Nepal had liquidated the China-made projects such as a) a trolley bus running between Kathmandu and Bhaktapur, b) Bansbari leather factory, and c) Harisiddhi bricks and tile factory to mention a few. China did all those projects in the grant-in-aid.


This time, China had provided Nepal with the soft loan for building an international regional airport in Pokhara because it could generate revenue that Nepal could use for repaying the loan to China. Other infrastructures such as ring roads, railroads and so on that would not directly produce revenues for the State, on those projects China had simply provided Nepal with only the feasibility studies.


Nepal had probably hundreds of projects on which feasibility studies had been done with the gratis funding from the donor agencies but most of them had remained idle. Feasibility studies would be done only when the country had the funding for implementing the projects if found viable. However, Nepal did not care about it but allowed to conduct feasibility studies on the projects the donors thought would be useful for Nepal.


Nepal needed to assist the private companies to build infrastructures and any other projects because private companies do business with the minimum bureaucracy.


Nepalese could be proud of the private companies building so many high standard medical schools elsewhere in Nepal for producing a large number of medical graduates and for providing health services to the common folks. Similarly, a large number of nursing schools, and technical and engineering schools had been built and run by the private companies. Anybody could see the private malls called ‘bhat bhatteni’: a retailer chain developed so fast in the private.


The Nepalese government no matter of the NC or of the CPN-UML or jointly of these two parties had been rather for choking the private companies than helping them to flourish. For example, a private company had dared to undertake the Kathmandu-Hetauda fast track highway at the cost of Rs 50 billions but it could not take off because the government instead of easing the company to have the loans and sales of shares had undermined it. This highway is highly lucrative project. Any company could make a huge profit out of it collecting turnpike tolls in hundreds of thousands of rupees everyday provided a company could mobilize Rs 50 billions, and build it smartly. Any private company could do it provided the government wanted so.


The Nepalese government preferred to go begging for any project rather than enabling the locals to build any project of any size. Hundreds of financial companies and thousands of credit unions have been in business in Nepal. Private companies could use these financial institutions for their businesses. So, Nepalese common folks were not the beggars despite their poverty but the government had been the beggar that enjoyed begging for anything in the name of the poor people but not using for their benefits.


Most of the ministers including the prime ministers of the past and even the current government would do nothing if they were not to benefit from doing it. They sought rents from the project people, donor agencies, and private companies even doing their regular official duty.


In the past, large private companies for doing a big businesses in Nepal had to provide shares in their companies gratis to the people in the palace otherwise they would not be able to do business. Currently, Prime Minister and his ministers had been doing similar things.


China had demonstrated it was for doing a real business with Nepal unlike in the past not providing Nepal with the philanthropic assistance for the economic development. Nothing coming free, everything had the price tag in the different forms be it in the name of free trade or in the loans or in the name of opening bank branches and so on.


Prime Minister Oli also wanted to do the real business with China saying, “The global economy itself is well integrated with Chinese economy, then, how can we remain aloof or afford of being de-linked from these opportunities? We would surely like to reap benefit by integrating our economy in the most beneficial way.” (Source:


March 26, 2016

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