http://www.dailypioneer.com/columnists/oped/nepal-china-trade-point-deal-a-himalayan-blunder.html
Saturday, 09 April 2016 | Hari Bansh Jha |
The ruling elites of Nepal should not put the vital interest of the country at risk by overlooking the geo-economic and political realities of the regions. Situation might not remain the same if Lakshman Rekha is crossed. Euphoria created by the media might not last long as Nepal and its peace loving people have not achieved anything tangible from the new deal. Moreover, if India feels that its sensitivities have been ignored, it could think of re-evaluating its relations with Nepal on the basis of merit and not on emotions, which would be detrimental to Nepal’s health
Recently, Nepal and China signed ten agreements, including on trade and transit, transportation, energy, and supply of oil from China to Nepal. The country’s ruling elites have hailed the agreements as a major breakthrough in Nepal-China relations. But the people on the ground are highly sceptical and are apprehensive about its unwanted impact on socio-economic and security situation of the country. At the time of political instability, the growing controversies over the issue are a matter of concern for the common Nepalese people.
By signing trade and transit agreement with China, Nepal has got right to access to the Chinese sea port in Guangzhou. With this development, the country will now be able to trade with third countries through this port. Hitherto, Nepal had to rely solely on Kolkata port of India for the purpose.
However, the distance between Nepal and Guangzhou port is over 3,000 kilometres, which is more than three times the distance between Nepal and Kolkata port. It is, therefore, likely that the time and transport cost of carrying goods between Nepal and Guangzhou would be exorbitant. Hence, it is doubtful if any sensible business persons would ever think of doing trade with China or with third countries via the Guangzhou port when they have every option available to do the same via Kolkata port.
Moreover, Kolkata port is already connected with Birgunj Dry Port of Nepal through the Indian Railway network, while the Chinese port of Guangzhou does not have proper roadways to connect to Nepal. This is one of the major factors why bulk of Nepal’s trade even with China is not carried out through the land route between Nepal and Tibet but through the Kolkata port.
Additionally, none of the trade points between Nepal and Tibet at present is in operation. The Tatopani-Khasa trade point has been closed for a year. Road connecting this place with Kathmandu was severely damaged during the deadly earthquake of April 25 last year in Nepal, and it is yet to be re-constructed. Another trade point of Kerung-Rashuwagadhi is in bad condition. It is full of risk to ply transport services on it.
A few months back, the drivers of the oil tankers complained of the risk to their life while they were transporting oil from Kerung-Rasuwagadhi trade point to Kathmandu. Such a pathetic picture of the trade routes between Nepal and Tibet is an indication of apathy of the two Governments for the resumption of the roads between the two countries, which limits the scope of trade through the Chinese territory.
On top of this, there is a feeling that the Chinese Government might not be in favour of greater movement of people through the Nepal-Tibet border in view of the free-Tibet movement activities in Nepal and other parts of the world. Even in the normal situation, the border between Nepal and Tibet is kept closed off and on. At times this creates insurmountable problems to the border inhabitants of the two countries who depend heavily on each other’s market for meeting the daily requirements. In such a situation, there is no guarantee of smooth supply of goods from one side of the Nepal-Tibet border to the other for trade with third countries through the Guangzhou port as the prospect of movement of people between the two countries is most likely to grow with the growth in trade.
In the existing situation, Nepal will not be in a position to benefit from the agreement for the import of oil from China if the condition of the roads between Nepal and Tibet is not improved. Moreover, it is well known that China produces only a minimal portion of oil that it consumes. It also has to depend on third countries to meet its requirements for oil. As such, even if China supplies oil to Nepal, it will prove costlier than importing from India on account of the geographical factor. During the time of recent economic blockade, Nepal tried to import oil through China. But it failed to do so because the deal was not economically viable.
Now with regard to Chinese plan to extend its train from the Nepal-Tibet border point to Kathmandu, Pokhara and further to Lumbini in the Terai region of the country, China has agreed to conduct feasibility study. Extension of the Chinese railway to the Nepalese territory is possible only after 2020 when the Chinese train reaches closer to Nepal-Tibet border at Kerung.
There is very little for Nepal to cheer from the railway project even if it is constructed. Prospects for Nepal to export goods to China are bleak. So it will be only the Chinese goods that could flood Nepal. With the growing imports and shrinking exports, the gap in balance of trade between the two countries could worsen further. But the goods imported from China to Nepal could be smuggled to India to the great embarrassment of Indian authorities.
Moreover, experts believe that China has its own limitations in undertaking mega projects like the construction of railways in Nepal as it demands heavy investment in the hilly terrain of the country. Presently, China is in grip of major economic recession, which is not likely to be revived any time soon. It is on this account that it is keeping its hands off from investment in mega projects, especially in foreign countries.
There is a lot of hue and cry within the country against heavy investment abroad. In such a situation, Chinese railway project in Nepal might be in limbo.
But given China’s growing ambitions in its neighbourhood, it cannot give up its plan to extend its railways deep inside the Nepalese territory so easily. Once the economy in the country revives, China might like to make its inroads into the Nepalese territory through the railways because it provides a great strategic advantage to it over both Nepal and India.
In due course of time, thousands of Chinese workers, engineers and people related to other wings would be engaged in the railway construction project. Those people are bound to make deep rooted impact on social, religious, economic and political structure of the country as they have been doing so in Africa and other regions of the world. Possibility of Nepalese politicians to get easily influenced by those people is high. Experience shows that the Chinese working in Africa and other countries have not returned to their country and so there is tremendous growth in the number of China towns.
Most significantly, it is not known if Nepal has considered Indian sensitivities at all while making agreements with China. India seems to have taken this issue seriously, which is quite clear from the statement made by the spokesperson of India’s Ministry of External Affairs. India might not be comfortable if China starts working in different projects in Nepal, particularly in its backyard in Terai. Even in the past, it was under the Indian pressure that Nepal had to cancel the agreement with China for the construction of 22 bridges of the East-West Highway in the western Terai region. In case India feels that its sensitivities have been ignored through the Nepal-China agreements, it could think of re-evaluating its relations with Nepal. Today there is entirely a new breed of people in Indian establishment who might deal its neighbours like Nepal on the basis of merit and not on emotions as it used to happen in the past.
Therefore, the ruling elites of Nepal should not put the vital interest of the country at risk by overlooking the geo-economic and political realities of the regions. Situation might not remain the same if Lakshman Rekha is crossed. Euphoria created by the media might not last long as Nepal and its peace loving people have not achieved anything tangible from the new deal.
(The writer is Executive Director of Centre for Economic and Technical Studies, Kathmandu, Nepal)
Saturday, 09 April 2016 | Hari Bansh Jha |
The ruling elites of Nepal should not put the vital interest of the country at risk by overlooking the geo-economic and political realities of the regions. Situation might not remain the same if Lakshman Rekha is crossed. Euphoria created by the media might not last long as Nepal and its peace loving people have not achieved anything tangible from the new deal. Moreover, if India feels that its sensitivities have been ignored, it could think of re-evaluating its relations with Nepal on the basis of merit and not on emotions, which would be detrimental to Nepal’s health
Recently, Nepal and China signed ten agreements, including on trade and transit, transportation, energy, and supply of oil from China to Nepal. The country’s ruling elites have hailed the agreements as a major breakthrough in Nepal-China relations. But the people on the ground are highly sceptical and are apprehensive about its unwanted impact on socio-economic and security situation of the country. At the time of political instability, the growing controversies over the issue are a matter of concern for the common Nepalese people.
By signing trade and transit agreement with China, Nepal has got right to access to the Chinese sea port in Guangzhou. With this development, the country will now be able to trade with third countries through this port. Hitherto, Nepal had to rely solely on Kolkata port of India for the purpose.
However, the distance between Nepal and Guangzhou port is over 3,000 kilometres, which is more than three times the distance between Nepal and Kolkata port. It is, therefore, likely that the time and transport cost of carrying goods between Nepal and Guangzhou would be exorbitant. Hence, it is doubtful if any sensible business persons would ever think of doing trade with China or with third countries via the Guangzhou port when they have every option available to do the same via Kolkata port.
Moreover, Kolkata port is already connected with Birgunj Dry Port of Nepal through the Indian Railway network, while the Chinese port of Guangzhou does not have proper roadways to connect to Nepal. This is one of the major factors why bulk of Nepal’s trade even with China is not carried out through the land route between Nepal and Tibet but through the Kolkata port.
Additionally, none of the trade points between Nepal and Tibet at present is in operation. The Tatopani-Khasa trade point has been closed for a year. Road connecting this place with Kathmandu was severely damaged during the deadly earthquake of April 25 last year in Nepal, and it is yet to be re-constructed. Another trade point of Kerung-Rashuwagadhi is in bad condition. It is full of risk to ply transport services on it.
A few months back, the drivers of the oil tankers complained of the risk to their life while they were transporting oil from Kerung-Rasuwagadhi trade point to Kathmandu. Such a pathetic picture of the trade routes between Nepal and Tibet is an indication of apathy of the two Governments for the resumption of the roads between the two countries, which limits the scope of trade through the Chinese territory.
On top of this, there is a feeling that the Chinese Government might not be in favour of greater movement of people through the Nepal-Tibet border in view of the free-Tibet movement activities in Nepal and other parts of the world. Even in the normal situation, the border between Nepal and Tibet is kept closed off and on. At times this creates insurmountable problems to the border inhabitants of the two countries who depend heavily on each other’s market for meeting the daily requirements. In such a situation, there is no guarantee of smooth supply of goods from one side of the Nepal-Tibet border to the other for trade with third countries through the Guangzhou port as the prospect of movement of people between the two countries is most likely to grow with the growth in trade.
In the existing situation, Nepal will not be in a position to benefit from the agreement for the import of oil from China if the condition of the roads between Nepal and Tibet is not improved. Moreover, it is well known that China produces only a minimal portion of oil that it consumes. It also has to depend on third countries to meet its requirements for oil. As such, even if China supplies oil to Nepal, it will prove costlier than importing from India on account of the geographical factor. During the time of recent economic blockade, Nepal tried to import oil through China. But it failed to do so because the deal was not economically viable.
Now with regard to Chinese plan to extend its train from the Nepal-Tibet border point to Kathmandu, Pokhara and further to Lumbini in the Terai region of the country, China has agreed to conduct feasibility study. Extension of the Chinese railway to the Nepalese territory is possible only after 2020 when the Chinese train reaches closer to Nepal-Tibet border at Kerung.
There is very little for Nepal to cheer from the railway project even if it is constructed. Prospects for Nepal to export goods to China are bleak. So it will be only the Chinese goods that could flood Nepal. With the growing imports and shrinking exports, the gap in balance of trade between the two countries could worsen further. But the goods imported from China to Nepal could be smuggled to India to the great embarrassment of Indian authorities.
Moreover, experts believe that China has its own limitations in undertaking mega projects like the construction of railways in Nepal as it demands heavy investment in the hilly terrain of the country. Presently, China is in grip of major economic recession, which is not likely to be revived any time soon. It is on this account that it is keeping its hands off from investment in mega projects, especially in foreign countries.
There is a lot of hue and cry within the country against heavy investment abroad. In such a situation, Chinese railway project in Nepal might be in limbo.
But given China’s growing ambitions in its neighbourhood, it cannot give up its plan to extend its railways deep inside the Nepalese territory so easily. Once the economy in the country revives, China might like to make its inroads into the Nepalese territory through the railways because it provides a great strategic advantage to it over both Nepal and India.
In due course of time, thousands of Chinese workers, engineers and people related to other wings would be engaged in the railway construction project. Those people are bound to make deep rooted impact on social, religious, economic and political structure of the country as they have been doing so in Africa and other regions of the world. Possibility of Nepalese politicians to get easily influenced by those people is high. Experience shows that the Chinese working in Africa and other countries have not returned to their country and so there is tremendous growth in the number of China towns.
Most significantly, it is not known if Nepal has considered Indian sensitivities at all while making agreements with China. India seems to have taken this issue seriously, which is quite clear from the statement made by the spokesperson of India’s Ministry of External Affairs. India might not be comfortable if China starts working in different projects in Nepal, particularly in its backyard in Terai. Even in the past, it was under the Indian pressure that Nepal had to cancel the agreement with China for the construction of 22 bridges of the East-West Highway in the western Terai region. In case India feels that its sensitivities have been ignored through the Nepal-China agreements, it could think of re-evaluating its relations with Nepal. Today there is entirely a new breed of people in Indian establishment who might deal its neighbours like Nepal on the basis of merit and not on emotions as it used to happen in the past.
Therefore, the ruling elites of Nepal should not put the vital interest of the country at risk by overlooking the geo-economic and political realities of the regions. Situation might not remain the same if Lakshman Rekha is crossed. Euphoria created by the media might not last long as Nepal and its peace loving people have not achieved anything tangible from the new deal.
(The writer is Executive Director of Centre for Economic and Technical Studies, Kathmandu, Nepal)
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