Nepal – China Relations: From Historical Recognition to Contemporary Strategic Partnerships

Author:

Nila Bala @ Small Drops

Balananthini Balasubramaniam

Abstract

Since the turn of the millennium, Nepal’s engagement with China has deepened across trade, infrastructure, and diplomacy, culminating in Kathmandu’s accession to the Belt and Road Initiative (BRI). Yet persistent domestic volatility and contested public sentiment continue to impede effective implementation. This article situates these contemporary developments within a longer historical continuum, beginning with Britain’s recognition of Nepalese sovereignty in the 1923 Treaty of Peace and Friendship. It argues that present-day geopolitics in the Indian Ocean region reflects not a rupture but a continuation of Western vigilance and counter-strategy against China’s maritime rise, with Nepal emerging as an understated yet strategically significant node in this evolving landscape.

I. Introduction

Nepal occupies a pivotal geopolitical position, sandwiched between two Asian giants—India and China. Since 2000, its foreign policy trajectory has reflected a delicate balancing act, increasingly tilting towards Beijing’s growing influence. This article traces the evolution of Nepal–China relations, contextualising them within the longer history of Britain’s formal recognition of Nepalese sovereignty in 1923. It further evaluates the contemporary significance of this relationship against the backdrop of Indian Ocean geopolitics, Western strategic oversight, and internal instability that continues to shape Kathmandu’s external engagements.

II. Historical Prelude: 1923 and British Recognition

Nepal’s status as an independent actor on the international stage was formally consolidated with the 1923 Treaty of Peace and Friendship between Britain and Nepal, signed on 21–22 December and ratified in 1925. This treaty represented the first formal recognition of Nepalese sovereignty by a global power and established Kathmandu as a legitimate actor in regional diplomacy, long before the independence of India or other Indian Ocean nations.

The treaty’s enduring significance lies not only in its affirmation of sovereignty but also in its implicit recognition of Nepal’s strategic importance as a buffer state between imperial and emerging powers. Contemporary scholarship emphasises that this historical moment laid the foundations for Nepal’s capacity to navigate complex regional relationships in the decades that followed.

III. Nepal–China Relations Since 2000

1. 2000: Agreement on Trade Agencies

On 15 November 2000, China and Nepal signed the Agreement on Maintaining Friendly Relations and Cooperation, permitting Nepal to establish trade agencies in Shigatse, Kyerong, and Nyalam. This arrangement marked the first concrete post-millennium expansion of bilateral commercial ties.

2. 2016: Transit and Transport Agreement

During Prime Minister K.P. Sharma Oli’s visit to Beijing in March 2016, Nepal and China formalised a Transit and Transport Agreement, with practical operational protocols finalised in September 2018. The staged implementation reflects the challenges inherent in aligning Nepal’s landlocked infrastructure with cross-border ambitions.

3. 2017: Belt and Road Initiative Memorandum of Understanding (MoU)

On 12 May 2017, Nepal signed a MoU under the BRI framework, enabling Chinese involvement in energy, transport, and cross-border connectivity projects. This marked a strategic deepening of Nepal–China cooperation, moving beyond trade into broader infrastructural and developmental initiatives.

4. 2019: Xi Jinping’s State Visit

On 12–13 October 2019, President Xi Jinping visited Nepal, elevating bilateral relations to a Strategic Partnership of Cooperation. Multiple agreements were signed spanning connectivity, trade, and cultural exchange, signalling Kathmandu’s increasing alignment with Beijing’s regional agenda.

IV. Contemporary Challenges: 2025 Protests and Domestic Instability

In September 2025, the Nepali government’s ban of 26 social media platforms triggered youth-led protests across the nation, resulting in at least 19 reported fatalities (figures subject to revision). These events underscore the fragility of domestic political structures and highlight the practical difficulties of implementing foreign agreements in a volatile environment.

Internal unrest continues to influence public perceptions of foreign engagement. Opposition parties and youth activists frequently frame Nepal’s increasing closeness to China within a discourse of national sovereignty and autonomy, amplifying the complexity of executing strategic projects.

V. Strategic Context: Indian Ocean Geopolitics

Although landlocked, Nepal plays a subtle yet important role in continental-marine connectivity strategies promoted by Beijing. The country’s alignment with China complements broader Chinese ambitions in the Indian Ocean, including maritime corridors and port infrastructure across South Asia.

Western powers, particularly Commonwealth nations and India, continue to monitor Nepal’s strategic orientation closely. This scrutiny reflects a continuity of British-era vigilance over Nepalese affairs, demonstrating how historical patterns of oversight persist in contemporary geopolitical calculus.

VI. Recommendations for Nepal

To safeguard sovereignty, domestic stability, and strategic autonomy, Nepal should consider:

1. Pursuing a balanced foreign policy: Carefully calibrate relations with both China and India, ensuring national interests remain paramount.

2. Strengthening civic awareness and diaspora engagement: Informing the domestic population and Nepali diaspora about foreign policy decisions can promote broader understanding and support.

3. Addressing poverty and systemic corruption: Enhancing transparency and reducing economic vulnerability will improve institutional capacity to implement international agreements.

4. Maintaining constructive engagement with religious leaders: Strategic communication with religious authorities can foster social cohesion while preventing politicisation along sectarian lines.

VII. Conclusion

Since 2000, Nepal–China relations have evolved from basic trade agreements to a strategic partnership under the BRI framework. Yet domestic instability, youth unrest, and governance challenges remain structural constraints. Situated within a longer historical continuum—beginning with Britain’s 1923 recognition of Nepalese sovereignty—Nepal’s alignment with China demonstrates both continuity and innovation in regional diplomacy. Sustainable development will depend upon reconciling internal stability with strategic external engagement, while implementing the above recommendations to reinforce sovereignty, social resilience, and geopolitical prudence.

References

1. Ministry of Foreign Affairs, PRC. (2000). Agreement to Maintain Friendly Relations Between China and Nepal.

2. Ministry of Foreign Affairs, Nepal. (2025). Nepal–China Relations.

3. Xinhua News Agency. (2017). Nepal, China Sign Bilateral Cooperation Agreement under Belt and Road Initiative.

4. The Guardian. (2025). At least 19 killed in 'Gen Z' protests against Nepal's social media ban.

5. Diplomat Nepal. (2025). 70 Years of Nepal–China Relations – A Journey Towards Future.

Copyright Notice

© 2025 Nila Bala @ Small Drops

Balananthini Balasubramaniam

United Kingdom, 08/09/2025, 18:00

All rights reserved. No part of this work may be reproduced, distributed, or transmitted in any form without prior written permission from the author.