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Updated August 10th, 2022 at 23:41 IST

China aiding Nepal to live luxuriously on loan is another dept trap in the making: Experts

China has been working hard to increase its influence in Nepal despite concerns that it wants to trap the Himalayan nation in an endless cycle of debt: Experts

Reported by: Mihir Merchant
China
IMAGE: AP/PIXABAY | Image:self
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China, led by Xi Jinping and his Communist party, has been working hard to increase its influence in Nepal despite concerns that it wants to ensnare the Himalayan nation in an endless cycle of debt, as it did to some areas of Sri Lanka, as per analysts.

Under the direction of the then-prime minister of Nepal, Pushpa Kamal Dahal, Nepal and China signed a Memorandum of Understanding on the Belt and Road Initiative (or BRI) in May 2017. However, five years have gone since the signing, and not a single project has been completed, mostly because, according to sources, it is customary to keep all agreements with China confidential.

Sarjor Mishra writing for Khabar Hub told ANI that for doing business with China, Nepal have have to understand the conditions China puts on the borrowing nations. Citing comparisions with Sri Lanka Mishra said, "Whether the huge Hambantota port built by the country on loan was necessary or not for the country should have been determined by an objective analysis of the future benefits of the project."

Mishra also added that learning from the island nation of Lanka the Nepali people should exercise their right and ask questions as one mistake from the government's end could impact the future generations of Nepal.

Foreign investments in Nepal

Talking about a few investmnents from China in Nepal that could leave a serious dent on Nepal's economy Mishar added, "Finally, in 2016, CAMC Engineering got the construction contract for 217 million dollars, including 216 million concessional loans from China Exim Bank, 25 per cent loans at no interest, and 75 per cent loans with two per cent interest.The same company also became a contractor here!Speaking of the returns and financial feasibility of this project, the annual interest of a 25 billion loan comes to 37.5 million every year."

"Another project in Nepal, the Nagdhunga Tunnel Marg is being built with loan assistance from the Japanese government and has an interest rate of 0.01 per cent. But the interest rates on Chinese loans are 150 times higher than on Japanese loans. The interest that should be paid to China in two and a half days is enough to be paid to the Japanese in one year, " Mishra added.

"China’s aim may be to trap Nepal in a spiral of irrevocable debt without helping Nepal and use this land in its monopoly way. That is why China encourages Nepal to ‘live luxuriously’ with it ‘on loan’," Mishra further added while noting that the signs are there and Nepal needs to consider them before doing business with Nepal.

China rigorously investing in Nepal's tourism industry 'illegally': Report

China has been involved in illegal investments in neighbouring Nepal's tourism and infrastructure, Khabar Hub reported. This comes despite the Himalayan nation being heavily impacted by the COVID-19 pandemic.

Beijing's investors and traders have spent on more than 50 restaurants and other businesses in Pokhara, as well as many other cities of Nepal. China has been rigorously expanding its footprint in the country, and Nepal's ruling party has gotten wary of China's ambitious Belt and Road Initiative that has mounted more worries as Sri Lanka's economy and financial framework completely collapsed. 

The recent economic crisis in Sri Lanka and failure to repay the debt have also made Nepal cautious in its financial dealings with Beijing. 

(with inputs from ANI)

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Published August 10th, 2022 at 23:41 IST

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