Chinese money on hold, Nepal says 'thank you, will self-fund' highway upgrade

The Nepali government has decided to decline a long-awaited economic and technical package from the Chinese government, originally promised nine years ago, aimed at upgrading the Araniko Highway.

Instead, Nepal will utilise its own resources for the project, citing delays in the disbursement of funds.

During a recent event organised by the Centre for Social Inclusion and Federalism in Kathmandu, Madhav Sapkota, a lawmaker from Sindhupalchok district, expressed frustration over the prolonged wait for the promised aid. “Since the Chinese government won’t release the amount in the foreseeable future, we have allocated Rs3.6 billion from our own budget to carry out maintenance along a 26-km section of the highway and manage landslides…”

The aid package, amounting to 900 million RMB, was initially announced by Chinese President Xi Jinping during a meeting with then-President Ram Baran Yadav in 2015. It was intended to upgrade the 115 km Araniko Highway, a critical route linking Nepal with China, and to enhance transport infrastructure in the region.

Sapkota highlighted efforts made to secure the funds, including appeals to Chinese authorities and engagements with Nepal’s Ministry of Finance and the Chinese Embassy, all of which yielded no progress.

Despite starting the Long-Term Maintenance Project for the highway following damage caused by the 2015 earthquakes, the comprehensive upgrade promised by China did not arrive in time, prompting Nepal to proceed independently.

Sapkota stressed on the strategic significance of the Tatopani border point and its potential to facilitate trade, once infrastructure challenges are addressed. He also noted concerns over job losses among Nepalis due to automation by Chinese companies operating in Nepal.

The CESIF-hosted seminar focused on Nepal’s borderland issues within its foreign policy discourse. Anish Tiwari highlighted the stark difference between bustling trade on China’s side of the Tatopani border and the quieter situation on Nepal’s side. He specifically highlighted China’s tightened restrictions on Nepali goods and people, attributing this to suspicions related to followers of the Dalai Lama.

During the panel discussion, experts underscored the need for more parliamentary attention to borderland issues, which involve complex people-to-people relations beyond state interactions.

Raj Kishor Yadav highlighted a “fear psychosis” among Nepali representatives, who face labels of being anti-national or pro-India when raising genuine concerns.

Another resident, Liladevi Boikhim Limbu spoke about operational challenges at northern border points between Nepal and Tibet, urging concerted efforts by stakeholders to restore cross-border movement and trade.

Chanda Chaudhary stressed the need for Nepali policymakers to comprehend the intricate cross-border relations with India, emphasising their deep-rooted complexity.