The new international airport in Pokhara is almost always empty. Its soaring, glass-panelled terminal was meant to welcome tourists to the Annapurna region in droves. Rather it has become a monument to anticipation. Officially opened in January 2023, with a $216m loan from China’s Export-Import Bank, the airport has only one international flight per day. If that. But though the passengers are few, the symbolism is weighty. Pokhara’s runway may see little traffic, but it has already delivered what matters most to Beijing: a strategic foothold.
Nepal, wedged uncomfortably between two giants, has become a petri dish for China’s quiet campaign of economic entrenchment. Since the Belt and Road Initiative (BRI) was extended to Nepal in 2017, Beijing has pledged support for a slew of transport and energy projects. Few have materialised, but the point is not completion. It is presence. In a country with weak institutions, fractured coalitions and perennial budget shortfalls, China’s most powerful export is not railways or hydropower, but convenience. Loans come faster than legislation. Conditions are minimal. Influence is maximised.
This playbook is now eerily familiar across the developing world. Infrastructure is the bait, debt the hook. The terms, wrapped in technical obscurity and often not released to the public, are framed as “commercial”—a euphemism for loans that appear concessional but carry risks better hidden than avoided. The Pokhara airport loan has an interest rate of 2%, a grace period of seven years, and must be repaid over 20. That sounds generous until one considers our anaemic revenue base and the airport’s dismal usage. Kathmandu has asked Beijing to cancel the debt.
China insists Pokhara is a flagship BRI project. Nepal does not. The semantic squabble hides the real dispute: who benefits? Critics warn of a slide into debt dependency and loss of policy autonomy. But the incentives to accept Chinese finance are high. Western donors, such as the World Bank or Japan’s JICA, insist on social safeguards, environmental assessments and democratic oversight. China requires none of those niceties. It builds fast, employs its own firms, imports its own materials and leaves host governments to shoulder the fallout.
The contrast with India and America is instructive. India, our traditional partner and occasional bully, lost goodwill with its 2015 border blockade, a protest against a constitutional process it deemed exclusionary. America, whose Millennium Challenge Corporation (MCC) grant provides $500m in road and energy upgrades, demands parliamentary ratification and strict governance benchmarks. Such conditionality offends nationalist sensitivities and breeds conspiracy. Chinese loans do not provoke parliamentary debates. They elicit ribbon-cuttings.
Our ruling elite has proven strikingly bipartisan in its embrace of Beijing. Maoist leaders see China as a counterweight to Indian hegemony. Centrists prize ribbon-cuttings over regulatory scrutiny. Parliament rarely sees the full text of loan agreements. Public accounts committees probing Chinese-funded projects are dismissed as parroting “Western propaganda.” Even civil society, once robust, has retreated. Investigative journalism is muffled by stringent defamation laws and media houses reliant on government or Chinese advertising.
Procurement rules disappear in favour of direct awards to Chinese firms. Take, for example, the Budhi Gandaki hydropower project, handed to a Chinese firm without competitive bidding. Such projects promise energy security and export revenue. But they also saddle Nepal with liabilities. Should economic conditions sour, repayment difficulties could force renegotiations—or worse, asset transfers. Sri Lanka’s 99-year lease of Hambantota port after default is a warning with Himalayan alerts.
To call China a predatory lender, however, is to underestimate demand. Nepal needs infrastructure. It also needs financing. Western institutions tend to hesitate where political or ecological sensitivities loom. Chinese capital steps in where multilateral caution stays out. The outcomes: roads, bridges, terminals—and a creeping realignment of allegiance. Nepal’s abstentions on United Nations resolutions concerning Xinjiang and Hong Kong are unlikely to be coincidences
The consequences stretch beyond economics. Nepal’s brief flirtation with joint military exercises with China signalled a willingness to test new alignments. Though such drills have not resumed, Beijing’s charm offensive continues—through scholarships, media training, diplomacy-by-construction, among others. The Trans-Himalayan railway, proposed to link Lhasa to Kathmandu, remains a fantasy. But its political utility, like much of the BRI, is in promise rather than progress.
A reckoning is overdue. Pokhara’s empty halls suggest that infrastructure without economic rationale is a poor investment, even for geopolitical ends. Domestic debt has climbed above 40% of GDP, and servicing obligations will soon jump. If Chinese-funded projects fail to produce returns, future governments will be left juggling repayment with budgetary shortfalls.
The remedy is less about rejecting China than recalibrating its role. Parliament should insist on transparent loan disclosure. Procurement must become competitive. Environmental and social assessments should be non-negotiable. And Kathmandu would do well to court a wider pool of financiers, combining grants, concessional loans and public-private partnerships that dilute dependency.
China’s cranes may fill the skyline, but it is leverage, not concrete, that is its chief export. Our leaders might someday discover that the true cost of infrastructure is not measured in dollars but in decisions foreclosed.
The planes may be missing for now—but the point has already landed.
