Beijing: Nepal’s veteran communist leader K.P. Sharma Oli, now serving his fourth term as prime minister, has turned to China this week to reinvigorate infrastructure development, signaling a shift from Nepal’s traditional reliance on India. Oli arrived in China on Monday for a four-day visit, notably making Beijing his first foreign destination since taking office in July, a departure from the long-standing practice of visiting New Delhi first, given Nepal’s historical ties with India.

While Oli’s visit has been met with familiar promises of cooperation, it has not yet resulted in new investments. The nine agreements signed with China on Tuesday were previously negotiated. During his meeting with President Xi Jinping, the Chinese leader reiterated support for Nepal’s economic transformation, pledging to help the country transition from being landlocked to "land-linked." However, progress on projects under China’s Belt and Road Initiative (BRI), which Nepal joined in 2017, remains stalled, with no initiatives breaking ground despite Nepal’s eagerness to proceed with transportation and infrastructure upgrades.

Oli’s outreach to China reflects a broader effort to diversify Nepal’s economic relationships and reduce dependence on India, which accounts for two-thirds of Nepal’s trade. In contrast, China’s trade share stands at 14%, though Beijing has emerged as Nepal’s larger creditor, extending loans totaling over $310 million—$30 million more than India, according to World Bank data.

Oli’s pivot toward Beijing builds on earlier initiatives, including a petroleum deal with China during his first term in 2016. That agreement followed a six-month oil blockade by India, breaking New Delhi’s monopoly as Nepal’s fuel supplier and opening the door to greater economic ties with China. Beijing has since funded significant projects, such as a $216 million loan to construct an international airport in Pokhara, Nepal’s second-largest city. While operational, the Chinese-built airport faces challenges, including limited international flights due to India’s refusal to allow access to its airspace.

Concerns over debt sustainability have added complexity to Oli’s infrastructure push. The Nepali Congress party, a key ally in his coalition government, opposes projects financed by Chinese loans, emphasizing the risks of unsustainable borrowing. Ahead of Oli’s China visit, coalition leaders, including members of his Communist Party of Nepal (Unified Marxist Leninist), agreed to prioritize grants over loans for BRI projects, mindful of cautionary tales like Sri Lanka, which defaulted on foreign debt in 2022 after taking on heavy Belt and Road-related borrowing.

Oli’s visit underscores Nepal’s balancing act as it seeks to leverage Chinese investment for development while managing debt risks and recalibrating its traditional ties with India.