Before arriving in China, Foreign Minister Shishir Khanal said he had repeatedly heard speculations that Beijing remained uncertain about Nepal's new political leadership.
The rise of the Rastriya Swatantra Party (RSP), the emergence of a new government following last year's political changes, and continuing debates over Nepal's foreign policy orientation had fueled questions about how China's leadership viewed Kathmandu's new political landscape.
However, Khanal said his experience in Beijing was markedly different from what he had expected. “I kept hearing that the Chinese side had doubts about RSP and the new government," he said during a conversation with Nepalkhabar in Beijing. "But when I arrived here, I received a very earnest welcome."
Even in meetings with senior Chinese leaders, Khanal said he felt a strong sense of goodwill toward Nepal.
"I saw a lot of respect and affection for Nepal from the Chinese side," he said. "That was something I felt very positively about."
The foreign minister's remarks came during a visit that carried significance beyond routine diplomatic protocol. Arriving in Beijing shortly after an official trip to India, Khanal found himself at the center of discussions about how Nepal intends to navigate relations with its two giant neighbors at a time of shifting regional dynamics.
Over the course of a lengthy conversation, Khanal discussed Beijing's concerns about security issues, the future of Belt and Road Initiative (BRI) projects, China's growing interest in Nepal's tourism and investment sectors, the new government’s China policy, and the long-standing debate over Nepal’s disputed territories.
Running through much of the discussion was a broader question: what kind of relationship does Nepal's new leadership want to build with China?
Understanding a new political landscape
According to Khanal, one objective of the visit was to begin a new cycle of high-level engagement following the formation of Nepal's new government.
Chinese officials, he said, were interested in understanding the priorities of the current leadership and hearing directly from Kathmandu about its foreign policy approach.
Amid speculation that Beijing may have viewed Nepal’s new political actors with some skepticism, Khanal said there was likely initial curiosity on both sides, but that discussions throughout the visit remained respectful and grounded in mutual interest. Part of that may be because communication channels already existed. Before becoming foreign minister, Khanal led the RSP's foreign affairs department and had engaged with Chinese counterparts through party-to-party exchanges. "We were not entirely new to them," he said.
His visit included meetings with officials from the Communist Party of China (CPC), including the head of the International Department of the CPC where both the sides reflected on a deepening channel of party-to-party communication between RSP and CPC, alongside formal government-to-government diplomacy.
The relationship is notable because the two parties come from very different ideological traditions. The RSP emerged as a reform-oriented political force promising governance reforms and institutional change, while the CPC remains one of the world's most influential communist parties.
Khanal, however, said ideological differences do not prevent meaningful engagement. According to him, the Chinese side has consistently expressed a desire to maintain relationships with all major political forces in Nepal, particularly those involved in governing the country.
For the RSP, he said, the objective is not ideological alignment but learning from China's development experience. "We are interested in understanding how China achieved its economic transformation," he said, pointing to areas such as technology, innovation, governance, and economic development.
China’s emphasis on security concerns
While discussions covered a broad range of issues, China's security concerns remained a recurring theme. During Khanal’s meeting with Chinese foreign minister Wang Yi, there were concerns raised over external actors potentially using Nepal in ways that harm Chinese interests. “The Chinese side have concerns that some forces could use Nepal to cause harm to China, and Nepal should be cautious of that, “he said.
The conversation with his counterpart Wang Yi also touched on several issues that have long generated concern in Beijing, including the Millennium Challenge Corporation (MCC), the State Partnership Program (SPP), and activities involving Tibetan communities in Nepal.
On MCC, Khanal reiterated Nepal's position that the American-funded compact serves Nepal's development needs and focuses primarily on infrastructure. At the same time, he said he made clear that Nepal's broader foreign policy remains rooted in non-alignment. "We do not sit under any security umbrella," he said. "Our constitution clearly states that Nepal follows a non-aligned foreign policy."
The issue of Tibet also surfaced during discussions. According to Khanal, Chinese officials continue to monitor activities they perceive as potentially harmful to China's interests. He responded by reiterating Nepal's longstanding commitment not to allow its territory to be used against any neighboring country.
"We have maintained the same position," he said. "We will not allow activities on Nepali soil that harm China."
Territorial disputes
The issue of Lipulekh, Limpiyadhura, and Kalapani was also featured in discussions.
Khanal said Nepal reiterated its longstanding position that the disputed territory belongs to Nepal and reminded Chinese officials that Kathmandu had already conveyed its concerns through diplomatic channels.
China's response, however, remained consistent with its previous position. According to Khanal, Chinese officials said they understood Nepal's concerns but viewed the dispute primarily as a matter between Nepal and India.
Nepal's position remains that agreements involving disputed territory inevitably affect Nepal's interests and therefore cannot be treated solely as a bilateral issue between its two neighbors.
The challenge of understanding China
One of the most revealing moments of the discussion came when Khanal was asked whether Nepal possesses sufficient institutional capacity to understand China.
Long before entering government, he had publicly argued that Nepal lacks adequate expertise on China. Asked whether his experience as foreign minister had changed that assessment, he said the challenge remains very real. Nepal's geography, history, and social development have naturally produced much deeper connections with India than with China, he explained.
Most of Nepal's population, economy, and cultural life are concentrated toward the south. The Himalayas have historically limited interaction with China, while language, education, media, migration, and trade have created much stronger familiarity with India. "Except for some Himalayan communities, most parts of Nepal have very little direct exposure to China," Khanal said.
As a result, Nepal has developed a far deeper institutional understanding of India than China. "Our culture, the things we grow up learning, are naturally closer to India," he said. "When it comes to China, we do not have the same depth of understanding."
For Khanal, this gap has implications far beyond diplomacy. As China becomes increasingly important to Nepal's economy, infrastructure development, technology sector, and tourism industry, Nepal will need to invest much more heavily in understanding Chinese society, institutions, and policymaking processes.
"We need intentional efforts to understand China better," he said. "And that understanding has to be built institutionally." He pointed to language training, academic exchanges, policy research, and stronger government expertise as areas requiring long-term attention.
Why projects struggle to move forward
The same institutional challenges, Khanal suggested, help explain why many Nepal-China projects have struggled to advance.
Nearly a decade after Nepal joined the Belt and Road Initiative, progress on many proposed projects remains slow. Public debates often focus on financing arrangements, geopolitical considerations, or disagreements over loans and grants.
Khanal did not dismiss those factors entirely. But he argued that Nepal's own administrative weaknesses are often overlooked.
Preparing for the visit involved reviewing years of agreements, memorandums of understanding, and project announcements between the two countries. According to Khanal, that review revealed a recurring pattern. In many cases, commitments were made at the political level, but follow-up never occurred.
Sometimes project proposals were not submitted. In other cases, administrative turnover disrupted continuity. Officials responsible for agreements were transferred, institutional memory was lost, and momentum disappeared. "A commitment is made, but then we do not even send the proposal that is supposed to follow," he said.
Political instability has compounded the problem. "Even with political instability if only we had administrative stability, perhaps things would have moved forward," Khanal observed.
Looking beyond BRI
While BRI remains the most visible symbol of Nepal-China cooperation, Khanal suggested the government's focus is increasingly on practical outcomes rather than labels. The key question, he argued, is whether projects generate meaningful economic returns for Nepal. Connectivity remains a major priority.
Despite sharing a border with one of the world's largest economies, Nepal continues to face significant logistical challenges. Improving transport links, trade corridors, and infrastructure connections featured prominently in discussions with Chinese officials.
Rather than approaching BRI as a single package, Khanal suggested future decisions should be guided by the merits of individual projects.
Trade imbalance, tourism, and untapped potential
Trade imbalance remains one of the most persistent structural issues in Nepal–China economic relations. Despite years of agreements on market access and connectivity, Nepal continues to import far more from China than it exports, with the trade deficit estimated at over USD 2 billion annually.
Khanal suggested the imbalance is not primarily the result of limited market access, but of deeper structural constraints within Nepal's own production ecosystem. While China has granted duty-free access to thousands of Nepali products, exporters often struggle to meet the scale, consistency, and quality standards required in the Chinese market, where supply chains are highly industrialized and demand operates at large volume.
In response, Khanal said Nepal is exploring cooperation in areas such as laboratory infrastructure, accreditation systems, and technical training to improve product standardization and export readiness. The imbalance, he suggested, is therefore not simply a matter of trade policy, but of long-term economic capacity building.
Tourism was another major topic. Although Nepal wants to attract more Chinese tourists, the major issue right now is visibility.
Nepal remains largely absent from many Chinese-language digital platforms and social media networks. According to Khanal, this has limited Nepal's ability to market itself to Chinese travelers and has created challenges in reaching the millions who know very little about the country in the first place.
Chinese investors want clarity
The same issue surfaced in discussions with Chinese investors.
While many companies expressed interest in tourism, technology, manufacturing, artificial intelligence, and smart-city projects, they often struggled to navigate Nepal's investment environment.
According to Khanal, one question repeatedly surfaced during meetings. “Who do we talk to?" investors asked.
The concern reflects a broader challenge for Nepal's investment promotion efforts. Interest exists, but the systems needed to translate interest into actual investment often remain weak.
Khanal also pointed to financial connectivity as another area requiring improvement, including stronger banking links between the two countries.
Looking Ahead: RSP’S long term vision for Nepal-China’s relations
Khanal said the Rastriya Swatantra Party views Nepal–China relations through an increasingly economic lens, with a long-term goal of converting traditional diplomatic ties into measurable development outcomes. Rather than treating the relationship as symbolic or purely political, he said the focus should shift toward practical cooperation in sectors such as connectivity, trade facilitation, tourism, and investment.
He also pointed to China’s rapid economic rise in recent decades as a key reference point, saying Nepal should be more deliberate in drawing lessons from that experience. According to him, the aim is not imitation, but adaptation, using exposure to China’s development model to strengthen Nepal’s own institutional capacity and economic planning.
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