IMAGE: SHISIR KHANAL/X
IN JULY 2025 China’s then ambassador to Nepal, Chen Song, posted a message on X that captured a decade of diplomatic optimism in eight words: “For every problem in Nepal, there is a Chinese solution.” It is the kind of line ambassadors are paid to produce. It is also, on the evidence of what Chen has said in rooms without cameras, not quite what he believes. In meetings with leaders from Nepal’s main political parties, the same ambassador had reportedly asked a blunter question: why do the same Chinese companies and the same kinds of projects that work perfectly well in other countries fail to work in Nepal? That sounds more like an investor running out of patience than a patron with a solution in his pocket.
And that sums up the story of China’s economic relationship with Nepal. Nepal signed a memorandum of understanding to join the Belt and Road Initiative (BRI) in 2017. Years later, not a single project agreed under that original framework has broken ground. When then-prime minister K.P. Sharma Oli visited Beijing in 2024, the two countries signed a new framework agreement, ostensibly to get things moving. It identified ten priority projects. The original Nepali wishlist had been twelve; two—the Kathmandu-Hetauda tunnel and a transmission line through the Kathmandu valley—were dropped during the negotiation, an admission by both sides that ambition had outrun feasibility. Even as Nepal’s leadership rotated again, leading to foreign minister Shisir Khanal travelling to Beijing this month, the bilateral achievements remain stuck in a loop of diplomatic phrasing—agreeing to “fast-track joint connectivity” rather than actual construction.
China’s frustration is not really about Nepal’s politics, although the country’s revolving door of coalition governments has not helped. It is about a more specific commercial problem: land and geopolitical pushback.
The most consequential illustration is the West Seti hydropower project, a 750-megawatt scheme in western Nepal that a Chinese state-owned firm had been developing for years. The company asked Nepal’s government to let it shrink the project to 600 megawatts, arguing the original scale made commercial sense no more. Nepal agreed and asked for paperwork to proceed. According to a report from Investment Board Nepal, the company never submitted it. The project was eventually handed to an Indian developer instead: not for any economic reason, but because India, Nepal’s only viable electricity export market, refuses to buy power generated by Chinese-built plants. Beijing had been outcompeted on geopolitics it does not control, after years spent on a deal it could not close on terms it could live with.
Even where China has built something, Kathmandu does not always cooperate with the messaging. When Pokhara’s Chinese-financed international airport opened in 2023, Beijing’s state media described it as a Belt and Road achievement. Nepal’s government publicly disagreed, noting that construction had begun years before the BRI framework existed and was, technically, not a BRI project at all. For an initiative that depends partly on perception—on a running tally of completed monuments to Chinese generosity across Asia and Africa—having the host country publicly correct the record is an unusual kind of rebuff.
What Beijing has concluded, reading between Chen’s public solutions and his private questions, is that Nepal is strategically indispensable and commercially exhausting in roughly equal measure. It sits as a buffer beneath Tibet, a wedge in India’s backyard and a market China would like to dominate before Delhi or Washington does. None of that changes the fact that Chinese capital, when it tries to actually deploy in Nepal, runs into land disputes that take a decade to resolve, an electricity buyer next door that will not touch anything China builds, and a government that desperately wants grants rather than loans.
Kathmandu’s fear of debt has been completely validated by the Pokhara airport itself. The facility has now descended into a full-blown crisis. It still has virtually no regular international flights. The civil aviation authority has admitted it cannot afford the 106 million yuan annual loan repayments to China’s Exim Bank. And Nepal’s anti-graft body (CIAA) has filed four separate sweeping corruption charge sheets against former ministers and officials over illegal tax waivers handed to the Chinese contractor. Beijing’s solution to every Nepali problem turns out to require a Nepali partner capable of finishing what it starts cleanly. That, more than financing, is the scarce commodity in Kathmandu. ■
