Caught Between Giants: How China's Strategic Embrace Is Complicating Nepal's Balancing Act

Nepal’s foreign policy has a name for itself, ‘equidistance,’ and the doctrine holds that a country wedged between India and China should maintain functional, balanced relations with both, without drifting into the orbit of either.

It is a sensible doctrine for a small, landlocked state with a difficult history on both borders and has also become increasingly difficult to practice.

China’s engagement with Nepal over the past decade has moved well beyond infrastructure. Beijing has deepened defence cooperation, expanded its diplomatic presence in Kathmandu, and pursued engagement with Nepal’s political parties at an institutional level that has been only partially disclosed publicly.

The CCP’s International Liaison Department now maintains active relationships across Nepal’s entire political spectrum, not just with communist-aligned parties, but with the Nepali Congress and newer parties such as the Rastriya Swatantra Party.

The approach is designed to ensure continuity of influence regardless of electoral outcomes. The Chinese embassy in Kathmandu is, by most accounts of observers who track South Asian diplomacy, one of Beijing’s more active diplomatic missions in the region.

Nepal and China have conducted joint military exercises under the banner of Sagarmatha Friendship since 2017. The exercises began at platoon level and have progressively expanded in scope.

Following Xi Jinping’s 2019 state visit to Kathmandu, the two sides elevated their bilateral relationship to a “strategic partnership of cooperation” and agreed to strengthen exchanges in military training, joint exercises and disaster response.

Separately, in the same year, Nepal’s then-unified Nepal Communist Party signed an agreement with the CCP that included provisions for China’s People’s Armed Police to provide training to Nepali counterparts.

India had long provided the bulk of Nepal’s external military training, its annual Surya Kiran exercises with the Nepal Army run at battalion level and have continued for nearly two decades, and viewed that relationship as a cornerstone of bilateral ties. The moves in 2019 were not a rupture, but they were a signal that Kathmandu’s defence calculus was being renegotiated.

Geography complicates Nepal’s position in ways that cannot be wished away by doctrine. India is not simply a neighbour. It is the country through which Nepal’s fuel, medicine, and most of its third-country imports arrive.

The 2015 blockade, which India officially denied orchestrating, attributing the supply disruption to protests by Madhesi communities along the border, though most independent analysts concluded Indian administrative pressure was a significant contributing factor, demonstrated with brutal clarity how much leverage geography gives New Delhi.

The Madhesi communities had real domestic grievances about the new constitution; the blockade nonetheless became, in the perception of most Nepalis, a demonstration of Indian coercive power. China’s road and rail corridors into Nepal are partly valuable because they promise, eventually, to break that dependency.

But the corridors are not finished. The high-altitude railway from Shigatse to Kathmandu remains at feasibility-study stage, a 42-month study that began in late 2022, not on the ground.

Until the alternative transit routes are operational, Nepal cannot credibly balance between its two neighbours because the stakes of antagonising India are immediate and material, while the benefits of Chinese connectivity remain prospective.

This is the bind. Nepal needs Chinese investment to reduce Indian leverage. It needs Indian goodwill to manage the period before Chinese connectivity arrives. Managing both simultaneously requires a deftness that Kathmandu’s coalition governments have not consistently demonstrated.