BRI and trans-Himalayan connectivity

When Chinese social media posted photographs last month of engineers surveying the extension of the Tibet Railway, one of the images showed Mt Everest to the south looming over the plateau from the proposed route of the tracks.

Suddenly, a promise that Mao Zedong had made to King Birendra back in 1973 to build a railway from Lhasa to Kathmandu looked like it was finally going to happen.

Reports suggest the Chinese want to finish the Xiagtse Gyirong (Kerung) extension of the Tibet Railway by 2025 -- although its further extension across the Himalaya to Kathmandu is going to be a much more technically and financially challenging prospect.

The railway project was brought up again in 2008, and got a push after the Indian Blockade of 2015 forced the Nepal government to plan alternative trade routes. The trans-Himalayan train was discussed between Prime Minister K P Oli and President Xi Jinping in two meetings in Beijing and Kathmandu last year.

In 2017, Nepal also signed a framework agreement on the Belt Road Initiative (BRI) of which the railway project is a part. A feasibility study for the train link from Kerung via Rasuwa to Kathmandu and onward to Pokhara and Lumbini was completed in 2018. But not much else has happened since – largely because of the COVID-19 crisis and political uncertainty in Kathmandu.

Most observers agree that despite the lackadaisical attitude on the Nepal side, the Chinese are forging ahead with their BRI strategy in general, and the plan to extend the railway line from Xigatse to Gyirong with the survey of the route.

When the first Belt and Road Forum was held in Beijing in May 2017 amidst much fanfare, the much-anticipated conference attracted more than 60 countries which wanted to partner with China on upgrading infrastructure and connectivity.

Three years later, more than $70 billion worth of project have been completed, while other projects to the tune of $100 billion are ongoing across the world. Despite criticism about lack of transparency, environmental impact and a Chinese ‘debt trap’, for Nepal the attraction is that projects like the trans-Himalayan railway could be an economic and geopolitical game-changer.

Initiated by President Xi in 2013 and enshrined in China Constitution in 2017, the BRI is seen as a strategy to diversify China’s infrastructure investment abroad, and to expand its geostrategic space.

The focus of the BRI has itself changed over the past four years to encompass not just infrastructure but also a ‘Digital Silk Road’ of connectivity. As more and more Chinese investors and tourists travel abroad, the Digital Silk Road is already functioning as a new payment gateway involving Chinese digital giants like WeChat and Alipay. By not making grand promotions and sticking to its domestic consumers, these companies have simply followed Chinese travelers wherever they go (see map).

Nepal initially banned Chinese digital payment giants WeChat and Alipay after loss of revenue from the increasing influx of Chinese visitors into the country.

But the government decision to legalise both payment systems to benefit entrepreneurs and facilitate remittances from Nepalis shows China’s growing financial clout. As Nepal aims to lure more Chinese tourists in future, it is clear that Digital Silk Road will become an important artery for e-commerce.

The ‘Health Silk Road’ is another rhetorical extension of the BRI, and a response to the COVID-19 crisis to also boost China’s leadership in bio-technology and medicine. China has used this concept to rebrand the existing BRI by becoming a frontier in health technologies like using 5G drones to deliver medical assistance in Beijing, and emergency COVID-19 assistance all over the world.

China recently held a joint conference between Nepal, Pakistan and Afghanistan to combat COVID-19 together by building a new health network involving advanced digital connectivity and promoting it under the umbrella of the overall BRI mandate.

Although in 2017, there was a flurry of activities in Chinese universities and think-tanks to discuss BRI initiatives, interest in it appears to have become somewhat subdued of late. Partly, it is the fallout of the pandemic, but even before the crisis hit BRI faced criticism in partner countries like Malaysia and Sri Lanka about risky, expensive projects that could be a ‘debt trap’. Large state-owned enterprises and banks started reconsidering how they viewed risks overseas, and advised a slowdown in investment promotion.

In China itself, many netizens were not happy with their country’s eagerness to lend billions of dollars overseas when China itself has not fully lifted its own people from poverty. Managing public opinion in China is a sensitive topic for the leadership, and this could be another reason for large BRI projects not getting as much public exposure as before.

However, even though within China the government may be keeping BRI in low profile for now, its activities and projects are up and running, though delayed somewhat this year by the global pandemic. The ongoing survey of the Xigatse-Gyirong railway is an example.

In Nepal, the public discourse on BRI has largely been associated with its geo-political risk, particularly because the MCC is seen as a countervailing American initiative in the global great game between the two world powers.

China uses the BRI brand to project not just its strategic need for connectivity, but also as an extension of its soft power. However, in Nepal, the public perception of the BRI will be determined largely by its geopolitical content. For now, the BRI is equated almost solely as being synonymous with a future Gyirong-Kathmandu railway, and there is widespread public support for what many see as a catalyst for Nepal’s future development.

But Nepalis may soon realise that the trans-Himalayan train may take decades to materialise, and in the meantime the BRI and its other initiatives are here to stay.

Raunab Singh Khatri is a graduate student in Economics at the Yenching Academy of Peking University, Beijing.