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An Entrepôt of Opportunity
Nepali Ambassador to China shared his views on the opportunities that the Belt and Road Initiative will bring to his country and China-Nepal cooperation
 NO. 49 DECEMBER 7, 2017
Situated in a unique geographical position with respect to the China-proposed Belt and Road Initiative, Nepal expects to gain momentum for its development by taking part in the regional development blueprint. In a speech given at the Symposium on Nepal-China Cooperation and Peace and Prosperity of South Asia, held in Beijing on November 14 by the Charhar Institute, a renowned Chinese think tank, Nepali Ambassador to China Leela Mani Paudyal shared his views on the opportunities that the Belt and Road Initiative will bring to his country and the future potential for China-Nepal cooperation. The following is an edited version of his speech:

In the six-plus decades of their diplomatic relations, Nepal and China have laid solid foundations for maintaining and further accelerating their good neighborly relations. Now the time has come to elevate our unique and exemplary relations one step higher to a strategic partnership for economic growth and development. Nepal's economic history shows that the country thrived and prospered socially and economically during periods in which its trans-Himalayan trade boomed and flourished.

A new era for cooperation

Nepal and China have concluded many bilateral agreements and have in place several bilateral mechanisms between them for fostering mutual cooperation in areas such as trade, culture, transport, investment and tourism. Earlier this year, the Government of Nepal and the Government of the People's Republic of China signed their Memorandum of Understanding (MoU) on Cooperation under the Belt and Road Initiative in Kathmandu. The MoU lays emphasis on promoting mutually beneficial cooperation between Nepal and China in various fields of mutual interest such as economy, energy, environment, technology and culture.

The agreement on the Belt and Road Initiative is of historical importance to both countries. Nepal is confident that the Belt and Road Initiative will help build critical infrastructure in the Himalayan region and remove the barriers for seamless movement of people, goods and services across the Nepal-China boundary, benefiting not only Nepal, but also the other countries in the region. Moreover, the improvement in transportation and connectivity will help all the countries in the region to integrate their markets and reap the benefits of expanded trade and commerce. Indeed, the MoU on Cooperation under the Belt and Road Initiative will be a starting point in that new voyage.

In the 62-year journey of our diplomatic relations, we take pride in the remarkable achievements we have made in various fields of cooperation. More recently, the avenues for bilateral relations between Nepal and China have widened further. The two countries have witnessed remarkable growth in the volume of trade, number of tourists and flow of investment between the two countries over the years. Yet we still have tremendous hidden potential to further expand cooperation for mutual benefits. The volume of trade between the two sides increased by 10 fold in the last 11 years, the flow of tourists from China to Nepal increased by 12 fold in the last 15 years, and investment from China also increased many fold over the same period, placing China as the main source of FDI in Nepal in 2016. One area of concern, though, is the alarming trade deficit, which needs to be corrected with due priority by focusing on the development of infrastructure, improvement of physical connectivity, trade, investment and tourism. Let me take this opportunity to highlight that one of the most important aspirations of the Nepali people is the construction of railways linking Nepal's major cities with China. I believe this is a doable project and can be fulfilled with Chinese resources and the nation's state-of-the-art technology. Happily, top leaders in both countries have committed to working toward this end.

Opportunity for Nepal

Nepal cannot afford to languish in poverty while our neighbors make rapid progress in every sphere of human endeavor. Therefore, our focus should be on economic development. No doubt, the edifice of a peaceful and stable country can be erected only on the strong foundations of economic development and prosperity. Economic vulnerability remains at the core of political instability. A peaceful, stable and prosperous Nepal will be in the interest of our neighbors as well.

We have various avenues for mutual partnership and collaboration. In recent years, we have concluded important instruments to deepen and expand our cooperative relations. We have committed to fully implementing the agreements and understandings reached in the past, and ensuring solid deliverables for the benefits of our people. And, most importantly, our bilateral engagements and business linkages are major platforms to transform the prospects for growth and prosperity into reality.

Nepal is poised to transform the transnational connectivity between South Asia and China in the near future. Geographically, Nepal falls on the shortest commercial route from China to South Asia, mainly through the Rasuwagadhi, Tatopani and Kimathanka corridors. A study conducted by a Singaporean university indicates that the current geographical distances between different inland cities of China and South Asia can be reduced by at least half to two thirds. Direct inland connectivity, most conveniently via Nepal, would not only bring enormous direct benefits in terms of reduced transaction costs and increased tourist flows, but also trigger innovations and entrepreneurship through interactions between the 3 billion people on both sides of the Himalayas.

With the help of transport infrastructure under the Belt and Road Initiative, Western, Central and Eastern Nepal will be able to link South Asia, particularly its northeastern quadrant including Bangladesh, with transport networks, energy grids, services and seamless commerce. Similarly, Nepal will also connect to Europe via land-routes, just as Kerung connects South Asia to Trans-Asian railways. Indeed, the delivery of goods via freight train from the north will be faster than by ocean shipping, and the whole of South Asia, not just Nepal, can take ample advantage of this evolving scenario, where railways emerge as a fast, reliable and cost-effective medium of freight transport. As Nepal connects to the vast Chinese railway network, all-weather transport via Nepal will be able to link South Asia with China and beyond.

All these initiatives will no doubt usher in an era of economic development and social justice along the entire Himalayan belt and benefit all the countries in the region.

The Himalayas serve as the eternal link that not only connects our two countries, but also intersects our ancient civilizations. The first and foremost priority of the Belt and Road Initiative [in South Asia] is to enhance networks of connectivity across the Himalayas. Connectivity initiatives alone can lay solid foundations for realizing the tremendous potential in China and South Asia by revitalizing the civilizational linkages.

Moreover, the idea of creating infrastructure that enables connectivity across the Himalayas fits nicely into the purpose and principle of the Belt and Road Initiative put forward by President Xi Jinping. The projects under the Belt and Road Initiative that encompass cross-border roads, railways, oil pipelines, information highways and energy grids and transmission highways should aim at optimizing the rich natural, cultural, human, technological and financial resources in both regions with the aim of improving the quality of life of peoples in those areas and beyond. Thus, the Himalayas serving as an organic, dynamic and centripetal link between our two countries will be the most important pillar in Nepal-China relations in the days to come.

Innovative approach for development

Nepal and China should pursue an innovative approach to tackling development problems. In the light of contemporary development experience across the world, it is imperative to pursue a more robust and sustainable alternative method of economic development cooperation while providing development assistance. Under the Belt and Road Initiative principle, development methods and cooperation projects are selected by the host country independently, ensuring joint development of projects and sharing of benefits by both sides.

The Asian Infrastructure Investment Bank (AIIB) has taken praiseworthy initiatives for finding innovative solutions to development problems. At present, the AIIB is working with the Government of Nepal in implementing a few small projects, and I hope they will have more significant projects in the near future with a substantial impact on reducing poverty.

Nepal and China should cooperate and collaborate with each other for enhancing productive capacities and encourage the transfer of technology not only to stimulate economic growth, but also to contribute to socio-economic transformation in Nepal. The physical infrastructure we create in the region will require proper planning for economic activities that support and sustain their optimum use. For example, promotion of tourist sites where the infrastructure is built, establishment of industrial zones near the big hydropower plants so that the power produced can be used [locally], and building up a manufacturing base along the railway lines are required. In short, we should enhance productive capacities along with infrastructural development. Otherwise, the infrastructure created would not be utilized to the optimum level, and projects would not be able to pay back the investment. Agriculture development, mining, development of cross-border economic zones, promotion of cultural linkages and recovery and preservation of historic sites are also required, along with the development of physical, legal and service infrastructure. This is what the think tank forum can work on.

Nepal and China should work together to create cross-border transport, power and communication infrastructure and set up manufacturing bases for some of the products with regional demand to optimize the infrastructure thus created. They can promote tourism and other forms of people-to-people contact so that both peoples better understand each other, explore opportunities, develop and realize such opportunities, and share the benefits derived from such developments. When the Nepali and Chinese societies set examples by creating win-win collaborations across the Himalayas, societies beyond the Himalayas will definitely follow suit. The establishment of production bases across the border [that fit into] global value chains will create jobs for people in the region, and they will be able to lead better lives. Such economic interaction will create understanding and harmony across the Himalayas. The region is one of those in the world with the most potential for tourism development and also the only place for expensive, high-altitude medicinal herbs. Nepal and China can work together in creating value chains to their mutual advantage. China's enormous manufacturing base and its huge domestic markets together with Nepal's rich natural, geographical and locational resources will create the right mix for value chain development and industrial promotion. Nepal and China should therefore work in tandem to enhance the industrialization of Nepal's economy for durable peace and prosperity along the Himalayas.

Nepal and China can work together to leverage Nepal's geographical location for connecting the vast landmass of South Asia with that of China and beyond. The recently concluded 19th National Congress of the Communist Party of China came up with Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era to build China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful by the middle of the century, which along with China's neighborhood diplomatic policy provides an opportunity for a country like Nepal. China is truly a global economic powerhouse, which gives it an important role to play in promoting world peace, development and stability. Nepal will be happy to work together with China in promoting peace, development and stability in the trans-Himalayan region and beyond.

Copyedited by Chris Surtees

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