Kathmandu, Nepal – China has granted Nepalaccess to its land and seaports, top officials of the two countries announced earlier this month, ending the landlocked Himalayan nation’s dependence on India for trading routes.
Nepal can use four seaports in Tianjin, Shenzhen, Lianyungang and Zhanjiang and three dry ports in Lanzhou, Lhasa and Xigatse in China, according to the protocol on transport and transit agreements finalised on September 6 in Kathmandu.
“Nepal and China have agreed on transit protocol. Now Nepal can use border points and routes as per our needs. This is a matter of exceptional happiness for us,” Nepalese Prime Minister Khadga Prasad Sharma Oli tweeted on September 8.
Under Oli’s previous stint as prime minister, Nepal, which conducts two-thirds of its trade with India, turned to China following the months-long border blockade imposed by New Delhi in late 2015.
Capitalising on anti-India sentiment that deepened in the wake of the blockade, Oli visited Beijing in March 2016, where Kathmandu signed the historic trade and transit treaty, hailed as a “turning point” in bilateral relations between the two neighbours.
While Nepal faces challenges in upgrading its infrastructure along the Chinese border, which lies in some of the most difficult terrains in the world, analysts say the deal could be transformative, helping advance Nepal’s international trade.
‘A huge deal’
“This is a huge deal not only for Nepal but also for China. The Chinese wanted to move ahead with the protocol not just to expand their businesses, but also out for their security concerns in the Tibetan region,” said Purna Basnet, chief editor of Nepal Khabar website.
“Nepal also wanted to send a message to India that it has an alternative. The deal has boosted the confidence of Nepal’s ruling class,” he told Al Jazeera.
Critics, however, raised concerns regarding the long distances Nepal-bound cargo trucks have to cover from the Chinese ports, with the nearest one located 2,600km away. In comparison, Haldia port near the eastern Indian city of Kolkata, which Nepal uses for most of its imports, is located 800km south of Kathmandu.
Bachhu Paudel, president of Nepal Trans Himalaya Border Commerce Association, a trade group, said the lack of an all-weather road connecting China is a major constraint.
“We have urged the government to re-open Tatopani border post [northeast of Kathmandu, which was severely damaged in the 2015 earthquake], but there hasn’t been any progress. The road hasn’t been repaired. After the earthquake, it had been hit by floods and landslides,” he told Al Jazeera.
“On the Chinese side, they have built impressive infrastructure, but our side suffers from neglect. Our customs office operates under a shed.”
‘Additional expenses’
Hari Bhakta Sharma, president of the Confederation of Nepalese Industries, said because of the higher cost on trade with third countries, Chinese ports may be cheaper in the long run.
“The cost of cargo between Kolkata and Kathmandu is three times compared to the cost of cargo between Hamburg in Germany and Kolkata. In addition to that, traders also face trouble at the Indian ports,” he told Al Jazeera.
“Normally, customs clearance for imports from third countries should take place at the customs of destination countries, but we are forced to do that at the Indian ports,” Sharma said.
“Though it’s only transit, we are required to submit documents including invoices to the port authority. It delays the shipment. The process takes at least two weeks, which incurs us additional expenses,” he said.
Sharma said the Electric Cargo Tracking System recently introduced in Visakhapatnam port, another Indian port that Nepal uses, had somewhat eased the process. “As a landlocked country, Nepal is entitled to the transit rights, but we have been denied that,” he said.
Successive Nepalese prime ministers have faced the challenge of managing Nepal’s tricky relations with its neighbouring giants – China and India.
Striking a balance
Since taking over as prime minister in February in a landslide victory, Oli has tried to strike a balance between India and China.
Winning the elections on a platform of prosperity and self-reliance, in which attracting Chinese investments figured prominently, the Nepalese leader has a major challenge ahead to fix the country’s crippling infrastructure, boost cross-border connectivity, and diversify trade routes.
Wary of China’s growing influence in Nepal, Indian Prime Minister Narendra Modilaunched a charm offensive, sending External Affairs Minister Sushma Swaraj to Kathmandu even before Oli was sworn in.