Nepal and China had signed BRI agreement in 2017 but very few things on it have moved forward, especially the antithesis. There has been a debate whether Nepal should adopt China’s initiative – as a very low percentage loan or only accept it as a grant – leaving the decision in limbo. Whatever be the case, we are losing our development opportunity every day in a situation where both of our immediate neighbors –China and India have been able to harness their development potential to a maximum and have achieved unprecedented success in human history. This article tries to argue on the prospects of BRI and our strategy to, at least, begin our development journey before it is too late.
Connectivity – Lessons from the History
The connectivity between Tibet (Xizang) and Nepal is not new. There has been an age-old trade connectivity between these two, even when there were no roads and vehicular transport in the past. With the advancement of modern science and technology the situation is much different now, making everything possible as we dream of.
More recently, with the visionary concept of President Xi Jinping, the relevance of BRI has accentuated the prospects of connectivity, infrastructure development, financial integration, technology transfer, and shared mutual benefits among many others. Nepal had substantial trade in the ancient times. By learning from the history we must prioritize addressing the “infrastructure gap” to accelerate potential economic activities in the New Nepal.
In modern times, China and Nepal have agreed to build the Trans-Himalayan Multi-Dimensional Connectivity network which can create massive developmental opportunities on both ends. The envisaged network involves the building of railways and communication networks all over to transform the living standard of the people positively. During a landmark visit by Chinese President Xi Jinping to Nepal in 2019, China and Nepal elevated their relationship to a “strategic partnership”.
In the future, once the all-weather railway and road link is established between Xizang and Nepal it can create unprecedented economic advantages for many of the South Asian countries. For instance, given our road link improved the recently opened four-lane highway Shigatse-Lhasa is primarily beneficial for both countries, but its not limited to these. Bordering Nepal, Bhutan, and India, Shigatse is an important gateway for China to South Asian countries. Every investment in this amazing road connectivity from Keyorong to Kathmandu will be compensated with great dividends.
Cross border Industrial Cluster
The concept of cross border industrial cluster can be a new concept that Nepal and China may conceptualize for our development goal after having an efficient connectivity.
Nepal shares 1440 Km border with China. The cross border industrial park comes in our mind. Nepal’s proximity to SW province of PRC that is rapidly developing provides us an added advantage to imitate their development model at these parks. One important aspect of our mutual interest could be the industry cluster theory which has gained prominence in Xizang. A commonly stated aspect of industry clusters is the fact that they are bound only by the links that exist among the various actors and, as such, are not limited by political boundaries. Nepal and Xizang have the full potential of creating industrial clusters across each border.
Industrial clusters are geographic concentrations of interconnected companies and institutions in a particular field: suppliers of specialized inputs, providers of specialized infrastructure, channels, and customers, manufacturers of complementary products, companies in related industries by skills, technologies, or common inputs, universities, think tanks, vocational training providers, trade associations, etc. (Michael E. Porter, Clusters and the New Economics of Competition, Harvard Business Review, 1998). Porter posits geographic, cultural, and institutional proximity provides companies with special access, closer relationships, better information, powerful incentives, and other advantages that are difficult to tap from a distance
China’s regional government officially has approved the establishment of the Shigatse Economic Development Area aiming to create an important platform for the BRI and cooperation between China and South Asia. To my knowledge, the economic development area will be located in the southern part of the city of Shigatse, about 50 km away from Shigatse Airport. Sources say – it covers over 34 square kilometers, and a total of 60 billion yuan (8.57 billion U.S. dollars) is being invested into the construction of the area, of which 30 billion RMB will be invested in infrastructure. Industries in the area will include logistics, organic agriculture, science and technology manufacturing, ethnic handicrafts, financial services, trade, and exhibitions.
In 2023 Xizang’s total trade with Nepal, as its largest trading partner, has now totaled 2.77 billion yuan ($389.53 million), up 77.2 percent year and is ever increasing. China has given tax-free export privileges to many Nepalese goods and commodities which has opened more opportunities for Nepalese traders. It is reported that Nepalese commodities are much in demand in Keyorong and beyond.
Enhanced Cooperation Areas
Trade. Cross border Industrial cluster will give out the opportunity of technology transfer. Nepal’s trade potential will rise due to the proximity to Chinese industrial cluster, especially in the rapidly developing Xizang. As the landscape of Nepal’s northern region and the Xizang frontier are similar, the entire region needs to augment infrastructures to bring out innovative ‘Cross border business co-operation’.
( Photo : Nepal showing border crossings with China)
Although there are fourteen border crossing points, the PRC has officially opened six border points with Nepal for bilateral trade via land routes. These include Kodari-Nyalam (Tatopani-Khasa), Rasuwa-Kerung, Yari (Humla)-Purang, Olangchunggola-Riwu, Kimathanka- Riwu and Nechung (Mustang)-Lizi. Out of these the Rasuwagadhi and Tatopani corridors are quite operational for commercial trading. To facilitate bilateral trade, China has promised Nepal to construct dry ports in all six land-based trading points. Nepal and China plan to develop cross-border roads through Simikot-Hilsa (85 km), Jomsom-Korala (80 km), and Khandbari-Kimanthanka (80 km) in the Nepal-Tibet border region. Once the Economic zone at Sigatse is realized, North-South corridors across Nepal’s border points will act as linchpin for trade advancement.
Tourism. Although various cooperation areas between Xizang and Nepal can be chalked out, the most imminent one is the tourism sector. This is the largest and most promising industry given the fact that the Tibetan tourism industry is booming, and on the other hand Nepal’s tourism is also gradually developing. The enhanced connectivity will lead to diverse cooperation initiatives, create an unprecedented development process and benefit many South Asian countries too. For instance, innovative ideas of trans-regional tourism circuits along India’s Sikkim, Nepal’s Lumbini, Bhutan’s Paro, and China’s Tibetan Plateau can be highly reunited Buddhist circuits. We are optimistic that the projects on BRI will be a new driving force of international tourism in the region.
It is very crucial to develop border areas infrastructure development between Nepal’s Far-Western region and south western region of Xizang. As an example, Hilsa in far western region is the main place where national and international tourists gather to cross into China to visit the holy Mansarovar Lake and Kailash Mountain and is the closest crossing point. Another important crossing point is at Korala and Rasuwa.
Access to South Asian markets
Nepal’s location in one of the important frontiers of China significantly allows several entry points for two way trade. South Asian markets are important for the flow of both raw materials and the supply of manufactured products for China. China’s strategic interest should emphasize linking itself with South Asia practically using Nepal’s corridors.
As of now, Nepal plans to build two cross-border economic zones on the border with India and two on the northern border with China as part of the effort to develop economic corridors that will link up with the two immediate neighbors.
Preliminary work has started for the construction of economic zones at Dodhara-Chandani in Kanchanpur and Jogbani in Morang that will connect with the economic corridors in India. On the northern border with China, the special economic zones will be located in Kimathanka in Sankhuwasabha and Korala in Mustang. ( Source: the Ministry of Industry, Commerce and Supplies).
In March 2022, the flagship BRI project in Nepal conceptualized the Trans-Himalayan Multi-Dimensional Connectivity Network (THMCN), which includes a cross-border railway connecting China’s Xizang with Kathmandu, and the China-Nepal Friendship Industrial Park (also known as Damak Clean Industrial Park) in Jhapa.
Future prospects
In the millennia, leaving aside some technical issues and that can duly be addressed; the envisaged railway connectivity will be the major game changer for the promotion of trade and act as a gateway to South Asia. The construction of Trans Himalaya railway link will display China’s ability in development projects.
Nepal China trade has been growing at other traditional sites in counties such as Zhongba, Saga, Gyirong, and Nyalam , which carry strategic significance.
Border Security Mechanism
Border security is crucial for any country’s overall security. On either side of our IB, the roads are limited and the villages are scattered with a very thin population density. There exists very few demarcated roads, or tracks are being used, with limited crossing points, unlike Nepal’s border with India. This is due to the Himalayan range and the snowcapped high-altitude passes that impede free movements from everywhere.
Nepal is concerned about the security of its northern border. Nepal will never allow any foreign elements to use its soil against China. That is to say, to keep the China – Nepal border safe, there are four layers of security agencies. The local district headquarters of adjoining districts are quite concerned about the border security. Nepal Police personnel guard the access route at several border crossing points and in other possible places. APF deployment has been gradually increased to guard northern border.
It is quite interesting to note here that although Nepal Army does not have deployment in Nepal’s Himalayan frontiers, it has adequately deployed its troops in the security of various national parks and nature conservation areas that are adjacent to the Xizang border. The military units have many security check posts that are effective for intelligence collection and even for keeping vigilance against intruders. The above is beefed up by the intelligence agency.
Conclusion
An increase in the investment in infrastructure development projects such as industrial clusters and the greater connectivity at the Trans Himalayan corridor between Xizang and Nepal will be a cornerstone of Nepal’s economy. We should not delay in realizing these.
Sharma is a Former spokesperson and retired Brig General of Nepal Army.
