On July 29, China’s Ambassador to Nepal Chen Song publicly mocked Nepal’s efforts to locate two missing buses and their passengers following a landslide at Simaltal on the Narayanghat-Mugling road. His comments specifically targeted the Indian assistance to local rescue and search teams, ridiculing Nepal’s tendency to seek support from its southern neighbor. 

The ambassador’s remarks drew widespread criticism in Nepal, both in the media and among parliamentarians, who condemned his insensitivity toward the grieving families and his unnecessary intrusion into a domestic matter. 

This incident is part of a broader pattern of interference b Chen in Nepal’s internal affairs, often resulting in diplomatic blunders. In the previous year, he had similarly mocked Nepal’s electricity trade and other economic relations with India, attracting similar condemnation. In May 2024, he engaged in a contentious exchange on social media with a local journalist over a report on China’s loan to Nepal for Pokhara International Airport.

Ambassadors generally adhere to established diplomatic norms, refraining from involvement in local political matters except in situations of significant national or international concern. However, China’s ambassador to Nepal has recently diverged from this tradition. Chen’s actions suggest a continuation of the “wolf warrior” diplomacy that Chinese envoys have employed in recent years, especially in smaller states. This behavior reflects Beijing’s growing exasperation with its setbacks in Nepal and signifies a shift toward a more assertive Chinese stance with Nepal over recent years.

The Equidistance Policy’s Ramifications

China’s frustration stems from its lack of progress in Nepal across multiple areas: political alignment, foreign policy, major economic projects, and military affairs. China experienced a loss of face when it failed to block the ratification of the U.S. Millennium Challenge Corporation (MCC) Nepal Compact. In addition, China could not counter India’s renewed proximity in Nepal’s political and military circles, or achieve substantial gains in Nepal’s polity, economy, and military. 

China has encountered challenges with Nepal’s equidistance policy, a strategy that Beijing itself once promoted to recalibrate Kathmandu’s approach, particularly concerning India. This policy advocates for Nepal to maintain balanced relations with India and China across political, economic, and military domains. However, if taken to its logical conclusion, the equidistance policy does not preclude Nepal from enhancing its bilateral relations with Western nations, including the United States. Consequently, the emphasis on equidistance has transformed Nepal into a zone of competition in South Asia, exacerbated by worsening China-U.S. and China-India relations.

Beijing’s efforts to pivot Kathmandu’s foreign policy predominantly toward China and away from Western countries suffered a significant setback during the controversy over the MCC Compact, which would see the United States issue a $500 million grant to Nepal for improvements to electricity and road infrastructure. 

In an unsuccessful attempt to block ratification of the agreement, Beijing employed scaremongering tactics, encouraging China-funded groups to propagate a narrative that the MCC would allow the U.S. to deploy troops in Nepal. Pro-China MPs and leaders prolonged the issue for nearly five years, but the momentum eventually waned. Following this, China openly opposed the compact. Despite China’s covert and overt opposition, the MCC Compact was ratified in 2022, a development that dealt a considerable blow to Beijing’s ambitions in Nepal.

A major concern for China in Nepal has always been the security of its southern Tibetan border. Beijing is particularly sensitive to Tibetan refugees in Nepal and their history of anti-China activities. China believes recent U.S. actions regarding Tibet, including the passage of the Promoting a Resolution to the Tibet-China Conflict Act and a U.S. congressional delegation’s meeting with the Dalai Lama in India, have emboldened these refugees. A porous Tibetan border further troubles China and therefore, it has sought greater cooperation with Nepal’s army and border security forces while looking askance at the partnership between Nepal and the United States.

Political Complexities 

Nepal’s political situation reveals China’s next failure. Beijing has struggled to make significant progress due to frequent government changes, leaving China uncertain about its next steps. Although former communist allies of China have periodically returned to power, they have grown increasingly pragmatic over time, seeking a balanced diplomatic approach.

Pushpa Kumar Dahal, also known as Prachanda, of the Communist Party of Nepal-Maoist Center, fostered deep ties with China during his first term as prime minister from 2008 to 2009. However, during his most recent term from 2022 to 2024, he maintained a balanced approach, adopting India-friendly policies. Similarly, Prime Minister K.P. Sharma Oli of the Communist Party of Nepal-Unified Marxist-Leninist (CPN-UML) has lately shifted toward more equidistant policies. 

As expected, Oli is grappling with internal party factionalism, indirectly fueled by China, with leaders such as Narayan Kaji Shrestha, Bishnu Rizal, and former President Vidya Devi Bhandari challenging his authority. Bhandari has rejoined the CPN-UML, and China plans to support her candidacy in the 2027 general elections to unify all communist factions, a goal that Oli and Dahal have been unable to achieve. In the past, China has successfully unified the communist parties, notably through its former flamboyant Ambassador Hou Yanqi, who brokered a working arrangement between Oli and Dahal in 2020. However, this mediation proved short-lived, as Oli and Dahal frequently undermined each other. 

As the widow of the late Madan Bhandari, a founding member of Nepal’s Communist Party, Vidya Devi Bhandari commands decent respect across all communist factions. China aims to cash in on her status in the upcoming elections. However, both Dahal and Oli remain roadblocks, resisting China’s interference in their politics. Notably, Oli has declined to allow Bhandari to visit China on a Chinese invitation. 

Unable to forge a strong relationship with the Nepali Congress Party due to its perceived pro-India stance and facing fragmented and indecisive Madhesi parties, Beijing finds itself with limited options in Kathmandu, primarily restricted to engaging with communist factions. 

Consequently, the ongoing rivalry between Oli and Dahal significantly impedes China’s political objectives in Nepal. China’s failure to resolve this complex issue, partly due to its inexperience with democratic compromise, has left it feeling increasingly nervous and defensive.

Economic Doldrums

China has substantially invested in Nepal, focusing on expanding economic links across numerous sectors. Beijing has encouraged Chinese infrastructure companies to engage in projects such as road construction, tunnel development, hydropower, and communication facilities in Nepal. However, this approach faces challenges. Nepal, with its relatively small economy, can only absorb a limited amount of Chinese investment.

China initially anticipated that its economic initiatives in Nepal would facilitate trade routes to India’s northern regions, capitalizing on the potential for lucrative trade. However, these expectations have not materialized. The deterioration in China-India relations has led India to discourage Chinese trade through Kathmandu and prevent Chinese hydropower companies from exporting electricity to India. This policy has dampened the enthusiasm of Chinese energy developers in Nepal.

In another example, Pokhara International Airport, developed with substantial Chinese investment, has failed to receive Indian clearance for overflights, leading to its isolation and diminished returns on investment. The significant Chinese financial involvement and high interest rates have led Nepal to formally request that China convert the airport loan into a grant. This lobbying, however, has run into criticism in China, which perceives it as a hostile attempt by Nepali leaders to undermine Chinese investments. (The high interest rate on the airport loan was the subject of the previously referenced dispute between Chinese Ambassador Chen Song and a Nepali journalist.)

China’s ambitions to advance its infrastructure projects under the Belt and Road Initiative (BRI) have also faltered. None of the BRI projects in Nepal has progressed, as Kathmandu prefers grants over Chinese loans and remains cautious about entering into any China-sponsored infrastructure project with sovereign-guaranteed loans. Consequently, the lack of progress in the economic sphere has heightened China’s frustration.

Military Proximity 

China has always sought close cooperation with the Nepali armed forces, hoping to moderate its pro-India leanings. Beijing found an opportunity in 2005 when the former king suspended Nepali democracy. Consequently, when its traditional suppliers – namely, India, the U.S., and the U.K. – refused to provide arms, Nepal began sourcing arms from China. This trend escalated after the communists came to power in Kathmandu in 2008. Bilateral visits, military grants, and aid increased annually, reaching nearly $32 million by 2019.

China’s military diplomacy extended to capacity-building efforts for the Nepali Army in disaster management, military medical facilities, and infrastructure development, in addition to arms supplies. However, as Chinese weaponry came under global scrutiny for quality, performance, and support services, Nepal could not ignore persistent issues with Chinese arms. For instance, China-supplied armored vehicles for Nepal’s peacekeeping troops have encountered significant problems, and imported Chinese transport aircraft became costly white elephants. As a result, despite China’s existing arms supply relationships, an Indian company SSS Defence secured the contract to supply ammunition to the Nepal Army in an open competition in 2022.

For better military-to-military links, China encouraged a wide range of Nepali military officials, from junior to senior ranks, to opt for professional military education programs at People’s Liberation Army (PLA)-run institutions. To date, about 44 senior Nepali military officials have opted to study in the Defense and Strategic Studies Course at the PLA’s National Defense University (NDU)’s College of Defense Studies. Many of these China-trained officers have risen to high ranks within Nepal’s Armed Forces, including the current army chief, Gen. Ashok Raj Sigdel. In May of this year, the Chinese Embassy in Nepal hosted a reception for these PLA NDU alumni to strengthen international connections and promote deeper China-Nepal relations. However, the effectiveness of these efforts has been mixed. 

The China-Nepal military relationship briefly gained momentum following the unofficial blockade in 2015 of the India-Nepal border; however, it faltered during China’s own COVID-related undeclared blockade of the Nepali border from 2020 to 2023 . During this period, China blocked all border trading routes, and Nepali traders and communities near the Tibetan border suffered significantly. Since mid-2023, China has attempted to rekindle its ties and restart the Sagarmatha joint military exercises.

China has moreover, failed to weaken India’s proximity and strong military ties with Nepal, rooted in longstanding institutional and veteran relationships. India has gradually worked to reduce suspicions with Nepal, leading to significant agreements in power purchase, petroleum pipelines, and infrastructure projects. This has fostered greater understanding between political and military institutions in both countries. Consequently, China’s original objective of disrupting the close bilateral relationship between India and Nepal appears to be unraveling.

Beijing’s Exasperation

China’s ongoing struggle to deepen its connections with Nepali institutions across political, economic, and military sectors has led to noticeable exasperation among Chinese officials. This frustration began to build in 2019 when China’s President Xi Jinping failed to secure an extradition treaty with Nepal, leading to the final two years of Ambassador Hou Yanqi’s tenure ending in disappointment. The current ambassador’s controversial statements, along with his defensive, quarrelsome, and undiplomatic behavior, starkly reflect China’s overall disillusionment in Nepal.

Despite Beijing’s efforts to quietly maneuver and improve its position and undercut the United States’ and India’s prospects in Nepal, the existing regional dynamics, security architecture, and tough competition from New Delhi and Washington offer Nepal multiple options, complicating China’s ambitions. As a result, Beijing faces a challenging situation in Nepal, resulting in China’s growing exasperation.

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This article is prepared by Mr. Atul Kumar for https://thediplomat.com, and it is subject to copyright.

China In Nepal