Economic and trade relations between China and Nepal saw continued development in 2018 as China remained the country’s largest source of foreign direct investment and was its second-largest trading partner.
The two countries signed a memorandum of understanding (MOU) on the Belt and Road Initiative (BRI) in May 2017 to enhance connectivity in ports, roads, railways, aviation and communications.
The BRI projects have progressed steadily and benefited local economic growth. Given its special geographical location, the Himalayan country plays a vital role in connecting China with South Asian countries such as India.
Recently, at the Chinese Embassy in Nepal, reporters Huang Ge and Hu Yuwei interviewed Chinese Ambassador to Nepal Hou Yanqi, seeking her opinion on how China-Nepal economic and trade cooperation under the BRI can drive regional development and future cooperation among China, Nepal and India.
Q: China proposed the BRI in 2013 to map out new territories for international cooperation with the support of more than 60 countries. Nepal signed an MOU with China on the initiative in 2017. How does Nepal perceive cooperation under the initiative?
Hou: Nepal is our closest neighbour to the southwest. When the BRI was introduced in 2013, the Nepali government welcomed it at once. Before representatives of the Nepali government attended the Belt and Road Forum for International Cooperation in 2017, it signed an MOU with China. In the process of our interactions with Nepali leaders, every time they praised the opportunities the initiative could bring to developing countries.
Local leaders attach great importance to the BRI as it promotes regional connectivity that can link Nepal with the outside world. Political leaders have expressed many times that the country hopes to benefit from the BRI and become an active participant and builder of the BRI.
Q: In which sectors can China and Nepal achieve cooperation under the BRI at the current stage and in the future? What are the areas of focus?
Hou: Since Nepal is a landlocked country, many industries are waiting to be developed, including transportation infrastructure, energy, electricity and tourism.
In addition, China and Nepal live side by side on the Himalayas, and that natural geographical barrier has brought great inconvenience to exchanges between the two peoples. Connectivity and interconnection between the two countries is also a key area of cooperation. For instance, the connection between ports and roads, cross-border economic zones, the railroad which is being planned, inter-city highways and the construction of airports are the focus of cooperation under the BRI.
Q: Foreign media reports claim that BRI projects will heap debt on countries. What is your reply to them?
Hou: So far, no country in the world has been trapped by debt because of cooperation with China under the BRI. Many countries we seek cooperation with are developing countries, which are at different development stages and face various difficulties. Their weak economic environment can be affected by factors including instability in the global financial system as well as protectionism adopted by some Western countries. It is very non-objective to impose such claims on the China-proposed initiative.
I don’t think there is any debt trap problem. Some countries are using such a concept to drive a wedge between China’s cooperation with countries and regions along the BRI. And I believe that as time goes on, many countries will feel the sincerity from China and obtain the benefits from Chinese funds.
The construction of transportation infrastructure attracts large investment but it takes a while for profits to show. But these projects can harvest benefits in the long run. When cooperation under the BRI achieves more outcomes in the future, these so-called debt trap claims will vanish.
Q: Do you think China and Nepal can further drive the regional economy through cooperation under the BRI in the future?
Hou: Although Nepal is a landlocked country, it connects the large populations of China, India and other South Asian countries. The current population of South Asia stands at more than 1.73 billion, which is a huge market. But from another perspective, the region lacks development but it is heavily populated compared with other regions in Asia. Its potential for development is still very large.
We welcome all countries in South Asia to join the BRI and acquire shared benefits through consultation and contribution. If Nepal can fully utilise its advantage as an important location connecting China and South Asia, cooperation between the two countries can also drive comprehensive cooperation in South Asia.
We hope to bring together two fast-growing economies, China and South Asia, and the two largest populated areas in the world, to achieve common development. We hope China’s growth can advance tie-ups in South Asia and also enable countries in the region to catch up with the trend of regional cooperation.
Q: According to media reports, when Chinese Foreign Minister Wang Yi met with visiting Nepali Foreign Minister Pradeep Kumar Gyawali in Beijing in April 2018, he suggested an economic corridor connecting China, Nepal and India. What kind of role will the corridor play in economic development among the three countries? What’s your evaluation of the corridor?
Hou: Nepal is a country with a very special geographical location. The country itself says it is like a yam sandwiched between two huge stones, so if the two stones squeeze each other, then Nepal will be broken. But in turn, Nepal is also like a blade of grass between two huge stones. It has always been able to survive tenaciously and has a very strong vitality.
So when we were in talks with the Nepali Foreign Minister, Wang suggested that Nepal’s own geographical position should be turned into a geographical advantage. The advantage lies in that Nepal connects the two fastest growing economies in the world, with each having more than 1 billion people and trying to achieve rapid development and national revitalisation. This should be a favourable factor for Nepal, rather than something be afraid of.
Based on the concept of inclusive and mutually beneficial growth and building a harmonious world and a community of shared future for mankind, China proposed that Nepal should play to its own advantages and play a role as a bridge between China and India. If it is possible, we can also carry out some tripartite cooperation between China, India and Nepal.
In recent years, the relationship between China and India has developed in a sound direction. Mutual trust between the two countries is constantly increasing and the two countries are expected to strengthen cooperation.
The corridor is a concept at this moment, but if China, India and Nepal could pursue tripartite cooperation or broader cooperation, it will signify huge progress, which will be conducive to the development of the three countries, as well as the region. The concept does not say anything substantial now, but it is a very good vision. It will be realized one day.
Q: How should China and Nepal balance their relations with India in economic and trade cooperation?
Hou: When China seeks cooperation with Nepal in politics, economy, trade, culture, national defence and security, there are people who always have suspicions that China-Nepal relations must be influenced by India.
I think this is understandable if some people have such thinking, but this kind of thought is zero-sum thinking, which is outdated and should not be advocated in the new era.
The two countries’ pursuit in economic and trade cooperation meet each other’s demand out of common interests. We also hope to enhance economic and trade cooperation with India and connect our market with theirs.
India is currently Nepal’s largest trading partner. We respect enormously the traditional relationship between the two countries in religion, culture and people exchanges, and also respect India’s other interests in Nepal. The cooperation we want to seek between China and Nepal is that one plus one should be greater than two, and the same with China-India cooperation.
We do not think that China-Nepal economic and trade cooperation will make India feel uncomfortable. Instead, we welcome a series of sound bilateral relations to achieve rapid development of the entire region.
Globalisation is already a general trend in this century. I think cooperation should be open and inclusive instead of being exclusive.
Q: What is the significance of China strengthening cooperation with Nepal?
Hou: After 40 years of reform and opening-up, China has made remarkable achievements in economic and social development. But we are still faced with problems such as imbalanced growth.
Chinese provinces in the western regions, such as Southwest China’s Tibet Autonomous Region, Sichuan, Guizhou and Yunnan provinces are relatively underdeveloped compared with eastern regions. We need to further seek balanced growth and opening-up to drive the development of these provinces.
Some of the provinces in China’s western region have the advantage of ports, which enables them to interact with foreign markets. The northern part of Nepal is bordered by Tibet and Nepal is located at a vital place along the BRI.
So it is an important direction for Tibet to participate in the construction of the BRI to the West through interaction with Nepal. The Himalayan country will play a role as a channel to connect China’s provinces in the western regions with the world.