Is China Truly Friendly?: Case of China's "Good Neighbor" Policy

toward Nepal

Grace Natasya and Paween Rungtaweechai

Department of International Relations, Faculty of Social and Political Science, Universitas Airlangga

Keywords: "Good Neighbor" Policy, OBOR, Cultural Diplomacy, Foreign Policy, Regional

Abstract: The purpose of this paper is to examines China's "good neighbor" policy through the use of cultural

diplomacy, economic cooperation, and infrastructure development assistance to Nepal. To explore the topic,

this paper has a qualitative background with descriptive design. Furthermore, the translation of this paper will

describe the influence of China's policy on Nepal as a country that has geographical proximity to China.

China-Nepal's cultural and geographic proximity provides great advantages for long-term cooperation

between the two countries, especially for China's highly ambitious mega project of OBOR (One Belt One

Road). The strategic layout of Nepal enables the expansion of China's trade route wider, so the significance

of the OBOR project to the Chinese economy is growing. However, the problem that arises later is whether

Nepal earns a worthy profit through the implementation of China's "good neighbor" policy? For that reason,

the main argument put forward in this paper is that China is more profitable, more strategic, and dominates

Nepal economically, culturally and politically. This kind of relation produce stratified relationship. So,

China's foreign policy towards Nepal is still very fluid and potentially unfriendly.

1 INTRODUCTION

This paper will explore border issues between China

and Nepal through the implementation of "Good

Neighbor Policy ". Namely the application of China's

foreign policy closely connected with the use of soft

power for the purpose of perpetuating China's mega

project in the form of One Belt One Road (OBOR).

Through this mega-project, China’s obsession to

expanding trade market and the desire to facilitate

labor mobility from China to Nepal looks very clear.

That the geopolitical agenda and China's ambition to

gain the maximum economic profit has encouraged

the use of soft power diplomacy towards South Asia

countries, especially in Nepal.

The form of Chinese soft power diplomacy is to

build large cultural centers along ancient silk roads.

The development is intended to extend the influence

of Chinese culture to the entire region that is now

planned to betraversed by the OBOR project. The

influence of China's soft power utilization has been

expanded from the nearest neighboring countries to

geographically distant countries from mainland

China. Thus, the target of this development will be as

close as Nepal and as far as Turkey.

According to Nye's definition in Liu & Tsai, the

power to assimilate or adjust can come from aspects

of culture, ideology, and international institutions.

Other than that, economic development and

performance of transnational corporations can also be

viewed as a source of strength to the assimilation of

the two sides, in this case, the soft power that is

implemented by the Chinese attempted to elaborate

themselves with economic and geopolitical interests

of Nepal (Liu & Tsai, 2014).

In addition to the cultural spread form, from the

side of infrastructure development, China also

provides a large amount of funds used by the

Nepalese government to build paramilitary forces in

securing its territory from Tibetan refugees. All

facilities within the Nepal Armed Police Academy

building were brought from China, including

classroom furnishings and equipment. Following the

massive and diverse forms of Chinese power in

Nepal, including the provision of hydropower for

cement manufacture in Nepal has been ruled by

Chinese businessmen. In addition, China's influence

has also defeated the Indian monopoly in providing

internet access for Nepal. The existence of China in

Nepal can be seen also from the number of Chinese

tourists who continues to flood Nepal, the center or

the Chinese language institutions are mushrooming in

the neighboring country, as well as more Nepalese

students traveling to China and hundreds of Nepalese

Natasya, G. and Rungtaweechai, P.

Is China Truly Friendly?: Case of China’s "Good Neighbor" Policy toward Nepal.

DOI: 10.5220/0010273000002309

In Proceedings of Airlangga Conference on International Relations (ACIR 2018) - Politics, Economy, and Security in Changing Indo-Paciﬁc Region, pages 55-62

ISBN: 978-989-758-493-0

officials invited to travel to China each year.

Infrastructure development agreement in the form of

the airport in popular tourist town of Pokhara and

effort to continue the railway line from Qinghai-Tibet

to Nepal become a profitable cooperation for both

parties. For Nepal, this railway line can connect its

country with all of South Asia and Central Asia

countries. As for China, the realization of Qinghai-

Nepal rail line construction is an important step to

achieve the main goal of China’s mega projects,

OBOR.

Seeing the execution of China's soft power

towards Nepal not only in terms of culture alone but

rather includes development assistance infrastructure

and business lines, then Nepal can be regarded as one

of the most important country for China. The first

reason for China's OBOR transport strategy proposed

by president Xi Jinping passed the Nepalese route.

Secondly, the geographical position of Nepal is

flanked by two competing industrial nations stricter

between India and China become significant as the

two countries have the same interests. For example

India imposes a very high tax on Nepal for every

Nepalese imported goods passing through India.

Deliberately, India took benefit of its geographic

advantage to attract more tributes from Nepal.

Therefore, India pursues economic interests against

Nepal. Similarly, China is also seeing the growing

and stable economic potential of Nepal, so the Beijing

government continues to work as closely and as much

as possible with Nepal in various aspects that can

bring economic benefits to China.

The presence of China in Nepal as a business

partner and a sprightly neighbor seeing the needs of

its peers, is able to provide significant benefits

through various forms of cooperation. For example,

Nepal's interest in enhancing cross-border railway

connectivity, infrastructure development, trade,

investment and tourism cooperation with China under

the BRI (Belt and Road Initiative) framework is

considered an important development initiative as it

can provide much-needed assistance to Nepal. One of

them China's benefits to Nepal are apparent when

Chinese investment is used to investigate Nepal's

potential energy, especially in exploring water

resources (Nepal Senior Minister in Xinhua News).

The ethnic proximity of the culture and the

population of Nepal is a very large composition in

China’s point of view. This composition can

significantly bring together China's economic

development interest through various cooperative

projects along the neighborhood country. One way to

achieve China's economic development is to open a

railroad that connects neighboring countries directly

adjacent to China, thus facilitating acceleration of

goods, human mobility, and providing a larger market

for Chinese products. Therefore, if the OBOR project

really succeeds, then China will greatly benefit

because the opening of trade routes will provide

access to new markets, then the permanent presence

of China in many countries will give an advantage

over its competitors in the trade sector, so this can

give long-term benefits to the Chinese economy and

help China create economic empires in Asia and

Africa, possibly even to Europe. Therefore, the

opening of China-Nepal's border access as a first step

has opened up little room for the implementation of

OBOR's Chinese mega projects, particularly in South

Asia.

One of China's agenda in pursuing its geopolitical

interests not only targeted Nepal alone, but indirectly

also affected India which refused to cooperate with

China in OBOR project. It is legible from the

relationship between India and China is not so good,

this two countries is seen as a regional foe since 1962

in the struggle dispute zones (Godement, 2014). For

this reason, India continues to raise awareness of

China, especially as China has already begun to

dominate infrastructure projects and increase its

overseas investment in Nepal which is slowly starting

to approach Nepal's once enormous influence on

India. On the other hand, fears of ethnic and cultural

integration of China-Nepal will also have an impact

on India-Nepal border region, so it will encourage

instability populations and capable of triggering a

border conflict. India’s uncomfortable feeling

because of China's presence in Nepal proved that this

neighborhood country is so important and strategic

for China for it can surpass India as its main

competitor.

China's dominance of Nepal is evident from the

implementation of infrastructure development

projects, economic cooperation, learning centers and

FDI. Taking advantage of its cultural diplomacy and

soft power, China outperformed Nepal from various

forms of cooperation that existed between them.

China is leading Nepal in the form of bilateral

cooperation because Nepal's reliance on China's

investment will increase, as a result, Nepal will be

shackled to China. However, it can be tolerated by the

opening of rail routes between China and Nepal. So,

China can open trade gates and be able to export more

of its commodities and manufactured products such

as steel, cement, machinery and others.

Speaking of Nepal, a brief overview of the

country's demographic contours. Nepal is unique, as

a democratic country with a predominantly Hindu

population, the policies taken by government

ACIR 2018 - Airlangga Conference on International Relations

stakeholders should make Hindureligious values a

parameter and the movement of state supremacy. This

country is also among the most multicultural in its

region, so it is suitable to be a case example of

acculturation products of local and foreign cultures.

The disadvantage come from its bustling area, when

the citizen’s more interested in foreign languages than

using the Nepali language. Not only that, community

groups also prefer to interact with foreign tourists,

dressed modern western, and tend to eat food and

homogenous western branded drinks. In fact, local

residents are encouraged to learn a foreign language

for two reasons. First, because the number of foreign

tourists who come on holiday in Nepal is increasing.

Secondly, because of the lack of a language

preservation center in the Nepalese community itself.

Hence, socially and culturally and economically and

politically, Nepal's position is particularly vulnerable

to an identity crisis and possibly intimidated by the

huge debt burden that China provides.

2 METHODS

This paper is a qualitative research and has a

descriptive style, that is to illustrate the implications

of China's foreign policy called "good neighbor

policy" towards Nepal. This article will explain about

the definition of Chinese policy as a good neighbor

for Nepal. The instruments used to collect data are

through international online news media and book

reviews or academic journals.

3 RESULTS

The results section contains information about data

that has been collected from articles, online media,

books, and academic journals. This section will be

divided in two sessions. First, a review of China's

foreign policy towards Nepal. Second, Chinese

diplomacy forms to Nepal.

China's foreign policy is built on cooperative

relations with Nepal. Since 1955 the two countries

have agreed to establish diplomatic relations based on

mutual support, respect for the sovereignty of each

other, and have their own independence and territorial

integrity. Starts with mutual consideration to

maintain international peace by opposing war and

respect for sovereignty and not interfere with internal

relations of each party. Thus, the five principles of

Sino-Nepalese peaceful coexistence agree to

consolidate peaceful and friendly border areas not

only for the two countries but also contribute to the

strengthening of peace in Asia and the world (Peking

Review, 1961). Border issues between China and

Nepal is no longer something that is considered

potentially cause conflicts and threats as both sides

have reached a peaceful coexistence under

Panchasheela agreement. Thus, the focus of the

relationship between the two countries shifts to forms

of technological and economic cooperation (Ministry

of Foreign Affairs of Nepal).

Since the formation of the People's Republic of

China, the government has paid more attention to the

principles of respecting the sovereignty and territorial

integrity of other countries, taking equity and mutual

benefits, and not interfering the internal affairs of

other countries. With this awareness, the Chinese

government adopted a friendly and good-

neighborhood policy that applied to all bordering

countries, ranging from small to big countries, and

regardless of the political orientation and social

system of its neighbors. The birth of Panchasheela's

deal followed by friendly and good-neighborhood

policy shows that China is oriented toward economic

interests by pursuing growth and strengthening its

economic condition. The goodwill of Chinese policy

is illustrated in the closing remarks of a meeting

between Liu Shao-Chi and King Mahendra of Nepal,

that China also hopes economic growth and

prosperity is not only achieved by the Chinese, but the

same achievement must also be felt by its neighbors,

a fast, solid, and stand-alone economy. Seeing that

economic interests can be achieved from various

forms of cooperation with many countries, Liu's

chairman insists that China will embrace all the

countries, both small and large nation-states, weak

and strong states, all should be treated equally and not

may be distinguished by a superior or inferior state

(Peking Review, 1961).

Similarly, China's good-neighborhood policy is

applied in line with China's ambitions in pursuit of

economic interests, China sees that trade and all

economic activity such as investment, foreign

development aid, and foreign lending as a basis for

development and economic improvement (Burles

1970). Thus, friendly policy implementation towards

neighboring countries including Nepal is an

important approach, so that good relations facilitated

by the use of good-neighborhood policies can provide

the greatest economic benefits for China (Reeves,

2013). However, Reeves sees the negative impact of

China's foreign policy on developing countries in

Asia. According to him, economic activities and

exchanges between China and small countries in Asia

result in negative consequences such as

Is China Truly Friendly?: Case of China’s "Good Neighbor" Policy toward Nepal

environmental degradation, natural resource

exploitation, and excessive dependence on Chinese

trade (Reeves, 2013).

Chinese diplomacy forms against Nepal were

executed along with soft power forms such as cultural

diplomacy, foreign policy, and so on. Pang (2007)

mentions that China conducts cultural diplomacy

after economic diplomacy. Implementation of China's

diplomatic or soft power model in pursuit of harmony

in the world and in society. China's idea of pursuing

a harmonious relationship with its neighbors is

supported by other ideas of achieving regional and

global stability. Given the stable and peaceful global

conditions, China takes advantage of these

opportunities for sustainable economic development

(Hsu, 2007). Later China mastered the strategy of soft

power through "harmonious worldview" and "good

neighbor policy" to get to the peace and stability.

Both the basic principles of "harmonious worldview"

and "good neighbor" policies are intended to enhance

good relations with neighboring countries and reduce

threats to national security and contribute to a

favorable environment for China's development (Liu

& Tsai, 2014).

China's soft power model against Nepal is divided

into three categories. First, cooperation or economic

aid. This wave was marked by an "economic

assistance" agreement between China and Nepal in

1956. Subsequently, it followed the promise of the

Chinese government to provide grant aid to the

Nepalese government under a program of economic

cooperation in the mid-1980s. Now the economic

cooperation between China and Nepal has included

three kinds of foreign aid, namely free aid (grant),

interest-free loans, and soft loans. China's financial

aid to Nepal has contributed to infrastructure

development efforts, industrialization processes,

human resource development, education, health,

water resources, sports and similar activities. There

are at least five major projects under way in Nepal

with funds from China, such as power generation

projects and transmission lines. Furthermore, China

grants for food aid or material at 15 border points in

northern Nepal. Subsequently, China also granted

assistance to the Kathmandu roundabout repair

project with the flyover and the Tatopani border

station inpection project. And finally, the Pokhara

International airport project in Nepal that comes from

China's lending funds.

In 2017, Nepal approved bilateral cooperation

with China to improve Nepal's vital infrastructure,

while increasing cross-border connectivity between

China-Nepal under the BRI (Belt and Road Initiative)

program. The main push of the MoU on infrastructure

development in Nepal is one of the efforts to promote

mutual cooperation in various fields such as

economics, environment, technology and culture, and

cooperation in exchange of policies, trade and

community connectivity, and financial integration.

From 2015 to 2018, a wide range of Chinese

spontaneous assistance in search and rescue of

earthquake victims, funding support for the

Syaphrubesi-Rasuwagadhi highway improvement

and upgrading project, to the upgrading and

renovation of Civil Service Hospital and post-disaster

reconstruction projects has been mutually agreed by

both parties.

The second category, cooperation in trade,

tourism and investment. China is Nepal's second

largest trading partner, as evidenced by the total

increase in the export sector to China by 2015/2016.

Likewise in the import sector from China which has

grown 39% per year. There are at least 370 products

that Nepal has exported to China including noodle

products and agro products. For that reason,

economic exhibitions and trade fairs are held

regularly every two years in China. So, this can be an

important media for both parties to improve business

interaction and promote economic cooperation. In

addition, China is also the largest source of foreign

direct investment (FDI) Nepal, which spent 8,3

billion dollars during 2017. From the tourism sector,

China occupies the 2nd position as the largest source

of foreign tourists. More than 100 thousand Chinese

travelers visit Nepal annually. This is possible

because China has set a priority scale to its people to

visit Nepal as the first tourist destination in Asia. In

response to a priority call for tourists from China,

Nepal also frees visa fees for Chinese tourists

effectively enforced since January 1, 2016. In 2017,

both China and Nepal have been promoting Nepal's

tourism sector massively in China and pushing the

China’s company to invest in Nepal's tourism sector

(Nepal's foreign ministry).

The latest cooperation in the education and

cultural sector has provided scholarships to

approximately 100 Nepalese students studying in

China each year. To support the interaction and

fluency of communication between Nepalese and

Chinese, the Chinese provides Chinese language

training for 200 Nepalese tourism entrepreneurs over

the next five years since they are enrolled in the

Chinese language training program. The activities of

the two countries in the tourism sector have been

established since 1999 by promoting human

relationships through regular cultural festivals,

friendly visits from different walks of life,

exhibitions, cultural and film shows, food festivals,

ACIR 2018 - Airlangga Conference on International Relations

and so on. Activities in the cultural sector have

encouraged exchange and cooperation in many areas

such as trade, economy, transportation, culture,

tourism, science and technology, education, sports

and health, and many other cooperative operations

agreed by both parties.

In China and International Harmony, Paradise

reveals that the role of the Confucian institution in

disseminating Chinese language and culture is

significant, especially when the building of Chinese

foreign academic institutions is mushrooming in

many countries. The significance can be on

increasing the influence of soft power in China

building or projecting a good self-image in the public

eye. China really makes use of the agency for cultural

and Chinese language promotional activities in many

countries that cooperate with it to persuade public

opinion, so that China is looked more positively and

greeted among civilians (Paradise, 2014). In Nepal

itself, institutions such as Confucian and Chinese

learning centers are widely distributed and have a

significant influence on citizens' acceptance of

Chinese culture. Such as the procurement of cultural

exhibitions and Chinese New Year celebrations that

have been inaugurated since early 2018. Being

sponsored by the Chinese Ministry of Culture and

governed by China's cultural center in Nepal, China's

festival is recognized by the Nepal government. Thus,

Chinese educational and cultural institutions can be

said to contain political values because of changes in

Nepal's government policies that legitimize Chinese

celebrations in Nepal, which had not previously been

done.

4 DISCUSSION

According to his spirit, good neighbor policy is

created friendly to all countries, both to small and big

countries, so that in the implementation there is no

superior state over other countries that cooperate with

China. The hope for the implementation of this policy

is both parties will gain economic benefits. In the case

of Nepal, from the social and cultural aspect it is seen

that the number of Chinese tourists is rising and

providing economic benefits to Nepal. However, the

promotion of culture, education, and business

opportunities derived from the China-Nepal

cooperation is more strategic and benefited to China

than Nepal.

In line with Paradise's (2014) argument that the

Confucian institution was created to form a good and

gentle Chinese image to its neighbors, the presence of

the institution at the Kathmandu university over the

next few years played its own role. Chinese

educational and cultural institutions such as

Confucian Institutions can be said to contain political

values because of the consequent changes in Nepal's

government policies that legitimize Chinese New

Year celebrations in Nepal, although the event was

unprecedented and not supported by Chinese ethnic

and Buddhist populations. Thus, less critical and less

urgent to be applied. Therefore, the inception of the

event sponsored by the two countries, namely through

cooperation between the Chinese government

represented by the culture ministry and cultural center

of China which is managed by the government of

Nepal aims political and in order to pursue significant

economic interests in the tourism and culture sector,

education, and trade. Forms of strengthening such as

cultural diplomacy and the use of Chinese soft power

in Nepal are tendentious and aimed at achieving

China's national interests, so the definition of "good

neighbor" policy remains very fluid or flexible,

especially in China-Nepal relations.

On the one hand, the approach to this power

models tend to spoil Nepal, not by force through the

use of military force, but with the power of cultural

diplomacy and economic diplomacy (Nye, 2004). All

forms of cultural and economic diplomacy taken by

China are politically charged and intend to persuade

Nepal to participate in the OBOR mega project. Such

as voicing China's ambition to rule Asia through the

opening of railways that will facilitate access to new

markets and create a conducive trading climate

especially for Chinese manufacturing products. On

the other hand, concerns over Nepal's growing

lending are mounting and accumulating as facilitated

by a friendly cooperative model, it is not impossible

that the bondage of debt will ensnare Nepal.

However, it can be tolerated by the opening of the

train service between China and Nepal, that

cooperation will continue in a friendly way under the

policy of "good neighbor" China. On the one hand the

form of cooperation through infrastructure

development is able to complement Nepal's

shortcomings in the sector. However, on the other

hand the acceleration of goods and services facilitated

by the opening of the pathway involved increasing the

risk of the country in which the economic dimension

also will complicate the business climate in Nepal

because of the China’s dominance.

Even before the railway infrastructure that

connects China-Nepal operates, the imbalance has

begun to emerge from foreign trade investment

between the two countries. The absence comes from

the much larger amount of imported Chinese products

to Nepal and benefits the country compared to its

Is China Truly Friendly?: Case of China’s "Good Neighbor" Policy toward Nepal

neighbors. According to a summary that made by the

South Asia Check organization, in the 2014/2015, the

total of import goods from China covered more than

99 billion Rupees, while Nepal's exports to China

were only about two billion Rupees, which means that

Nepal's import / export ratio to China is 48 : 1.

Loans and funding support of major projects

acquired by Nepal from China has led to excessive

dependence, so that the initial goal of China's "good

neighbor" policy to neutralize its neighboring

economies is irrelevant or counterproductive because

it does not match the expected outcomes (Reeves,

2013). One of the bad effects is triggered by Nepal's

reliance on China, this is the main reason for the

stratified relationship between the two countries, that

China gained many advantages more than Nepal.

Despite the growth in Nepal's economy, the presence

of China with all its foreign assistance seemed to trick

Nepal more than embracing and nurturing Nepal.

This is in contrast to Liu Shao Chi's statement during

his meeting with King Mahendra of Nepal, that China

wants a healthy relationship with its neighbors, so that

Nepal (in this case) is able to stand on its own.

There are also border issues to note, though that

China and Nepal have reached a peaceful coexistence

agreement, but the border is still important to

scrutinize as it is closely linked to regional security

issues that may occur on the China-Nepal border. Just

as China's treatment of central Asian republic

countries, China's conduct towards Nepal is a form of

implementation of China's four basic policies with its

neighbors after the cold war. First, China's enormous

ambition for the stability of provincial security at the

border. Second, the desire to improve the economic

development of the interior. Third, energy needs are

increasing. And fourth, China's worries about its

lackluster position in the post-cold war strategic

environment. If linked to soft power practices carried

out by China against Nepal, then the form of cultural

diplomacy and economic diplomacy of China to

Nepal as a self-defense mechanism of the massive

global competition, this mechanism is done in order

to maintain the stability of the national economy

sustainable, especially in the face of unipolar

American in Asia. Thus, the measures taken by China

are intended to minimize the potential for conflict or

instability of the territory adjacent to its territory

(Burles, 1970).

Geographically, Nepal has the potential to

become a land gate for Chinese trade in south Asia.

In an effort to win the attention of Nepal, China's

increasing involvement in the railway projects from

Lhasa (Tibet Autonomous Region) to Khasa

(Nepalese border town) which is very important for

trade and geopolitical both sides (Pokharel, 2013). As

Godement points out that China's long-standing

obsession with strategic culture, the balance of power,

and geopolitical shifts have surfaced. That taking

action based on a geopolitical approach can push

China into a core of regional integration in south

Asia. China is slowly shifting India's important role

in Nepal's trade and reducing Nepal's very close

reliance on India are some of the goals of

implementing the form of China’s force. China is

strategically striving for regional integration efforts,

its approach also aimed at balancing India's strength

in south Asia.

China's diverse interests in Nepal have affected

Nepal's economic, political and military sectors.

Through foreign assistance, tourism, economic

support and Chinese investment in Nepal does help

significant progress and developments in Nepal's

strategic sectors, but on the other hand the relations

between China and Nepal are not the interdependence

but Chinese-dependent relationships, Nepal's projects

are dominated by products and services from China.

Dependence on one party is not a major problem to

be feared, but if economic or political dependence has

consequences on the social stability of society, then it

is worth noting. Nepal as a melting pot which holds

many varied beliefs and ethnicities so vulnerable to

identity crises, moreover its position as a holy country

for Buddhists who regularly travel to the country. Not

to mention the impact of tourism through the

interaction of local residents with foreign tourists

from America, Europe and other continents have

great influence for the social and cultural construction

of Nepalese society.

5 CONCLUSION

The findings indicate that the national interest and the

implementation of the "good neighbor" policy greatly

benefit the Chinese state in terms of economic growth

and geopolitical influence on the southern Asian

border. Encouraged by the spirit to create regional

stability and peace, the implementation of China's

good neighborhood policy towards Nepal is well

stimulated. However, as China-Nepal's borders tend

to be stable and peaceful, economic interests are the

main fuel for the implementation of the policy. When

talking about the importance of economic

development, the projects that China agreed with

Nepal to be very ambitious and profitabel. China's

obsession with pursuing a wider large market for

Chinese goods and services leads to the dominance of

Nepal's strategic sectors through the implementation

ACIR 2018 - Airlangga Conference on International Relations

of soft power diplomacy that tends to be accepted

voluntarily because of its non-coercive and friendly

nature. Thus, China's "good and friendly neighbor"

policy has a small leak on economic and socio-

cultural aspects. That Nepal's reliance on foreign

investment and the export of goods from China

actually reinforces the influence of China, even that

influence also touches on Nepal's social and cultural

aspects.

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ACIR 2018 - Airlangga Conference on International Relations