Nepal’s Oli signs Belt and Road deal with China amid debt fears and India tensions

While Oli secured a framework agreement and cash help, his coalition government grapples with debt fears and balancing ties with both China and India

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Nepal’s Prime Minister K.P. Sharma Oli (left), shakes hands with Chinese President Xi Jinping at the Great Hall of the People in Beijing on December 3. Photo: Xinhua/AP

Published: 8:18pm, 5 Dec 2024

Nepal’s Prime Minister K.P. Sharma Oli’s visit to China has set the stage for a renewed infrastructure cooperation push under the Belt and Road Initiative, a move seen as pivotal for Nepal’s economic goals but fraught with government coalition tensions over debt fears and risk of political fallout with its traditional ally, India.

During his four-day trip to Beijing, Oli met with Chinese President Xi Jinping, signed a framework deal under China’s Belt and Road Initiative, and secured 300 million yuan (US$41 million) in financial assistance.

China and Nepal initially signed a belt and road deal in 2017, but no projects have been planned or implemented since. Analysts say the new agreement will reinvigorate projects, which could include road upgrades and transport corridors.

Oli also met with Premier Li Qiang and signed nine deals, including Beijing’s support for the construction of a tunnel between Kathmandu and the Chinese border, according to Nepal’s foreign ministry.

Chinese Premier Li Qiang holds talks to Prime Minister of Nepal KP Sharma Oli at the Great Hall of the People in Beijing on December 3. Photo: Xinhua

This was Oli’s first foreign trip after being sworn in for his fourth term as prime minister in July. Traditionally, Nepalese leaders visit New Delhi first; however, this trip marks a departure from that norm.