Oct 12, 2015- Professor Hu Shisheng, Director of the Institute of South and Southeast Asian and Oceanian Studies at China Institutes of Contemporary International Relations, keeps a close eye on Nepal issues. Hu seemed particularly worried about the recent polarisation in Nepal which also has a communal dimension to it unlike the previous conflicts—between the Maoist and the mainstream parliamentary parties until 2005 and between the political parties and the monarchy thereafter. Speaking to Akhilesh Upadhyay and Sudheer Sharma last month in Beijing, Hu argued that if Nepal is to make a smooth transition towards a stable democracy, the onus now rests on the three major parties—Nepali Congress, CPN-UML and UCPN (Maoist)—that lead the political process. China, Hu said, is anxious to see a stable neighbourhood and to share its new prosperity which in turn will make its ‘periphery’ stable and prosperous. China, he said, sees Nepal as the most viable bridge between China and South Asia as the two countries share a stable border.
Nepal has reached a critical stage in its political transition, how do you read the situation?
The current situation in Nepal is very different to that in 2008 after the end of the monarchy or even before, in 2006. Recent events in Nepal indicate an ethnic conflict. And because communal tension is mingled with party conflict, it further complicates the situation. The only way to resolve the ongoing conflict is through political dialogue between the major parties and the ethnic groups/parties. The major parties should also encourage ethnic leaders and members of their party from various ethnic communities to promote unity among their communities because only unity can lead Nepal to prosperity. If the current crisis turns into a communal conflict then the three major political parties will be responsible for it. But, as of now, the three parties have displayed wisdom. They should continue to use this wisdom in the future to find political solutions.
What could the road ahead be for Nepal amid all this polarisation?
Due to political uncertainties, Nepal has not seen much economic or social development in recent years; political differences have only pushed the country backwards despite Nepal’s abundant resources. Further, Nepal lies between two major economies but has not been able to utilise this strategic location. This is the result of political fragility. The situation could get worse with communal confrontation. So, political parties need to find a political solution at the earliest for the current crisis as it can have dreadful consequences if not controlled soon. Moreover, conflict in Nepal can have a spillover effect on other countries as well.
As a member of an influential think tank in China, how does China view the ongoing political developments in Nepal?
China, of course, wants to see a united and stable Nepal. We want this now more than ever because China wants to connect with South Asia through Nepal. As India and China have border disputes, which is not going to be resolved any time soon, and because China does not have any diplomatic relations with Bhutan yet, practically, only Nepal can provide the physical connectivity to South Asia. In August, the first Trans-Himalaya Development Forum was held in Yunnan province, and we are planning to organise it every year. This shows that we are very much interested in developing the trans-Himalayan region. But all these developments cannot be realised if Nepal continues to remain unstable. China not only wants physical connectivity with South Asia but also wants to achieve institutional interface along with people-to-people diplomacy, and Nepal can be that bridge. But we would want that bridge to be strong. However, the situation in Nepal seems to be getting worse, not better. We are very concerned.
In case of a natural disaster like the April earthquake, China can provide any help, and we did. But when it comes to political struggles and ethnic confrontations our hands are tied because it is your internal matter. It is very difficult for China to get involved. So we hope that your political leaders can resolve this crisis as soon as possible so that the pending reconstruction work of the earthquake can begin soon. The reconstruction work on the Chinese side, in Tibet, is moving forward very smoothly. We have linked Shigatse through railways, and we have been saying that it should further stretch to the Nepal-China border. We are ready, but Nepal also needs to be ready for it.
What should Nepal do to strengthen its bilateral ties with China in the short, medium and long-term?
The current relationship between China and Nepal is absolutely fine.  There is a good working relation between the Nepali and Chinese government departments, ministries and security forces. But we would still like to see a more stable political system in Nepal. Recently, there has been this new concern regarding the Lipulekh area, but I do not think the Chinese side was aware of this issue. China will not want to purposely stir the feelings of the Nepali people. Maybe it does not realise the consequences it can draw from such actions. I think China needs to further explain this matter to its Nepali friends. Chinese government appreciates the Nepali government ministries, departments and especially the border security forces for helping us with the Tibetan issue. Even after the earthquake, China not only helped Nepal but also coordinated with India. So, China would also like to take the reconstruction in Nepal as an opportunity to take China, Nepal and India relations forward to facilitate physical connectivity.
Of late, in Nepal, the issue of trilateral diplomacy between China, Nepal and India is frequently discussed. How does China see the prospects of trilateral relations?
China is open to this agenda. Even when the Indian leader [Indian Prime Minister Narendra Modi] had visited China recently, Chinese leaders had openly spoken about this. Both the countries can achieve far more if they cooperate. India and China should coordinate with one another in South Asia just as they worked together and achieved success in Myanmar and Iran. China is willing to work with India even in Sri Lanka although India might be a bit suspicious. The Nepal earthquake has also given us an  opportunity to work together. And this way, we can facilitate and promote connectivity across the Himalayas.
So you see China and India playing a complimentary, rather than competitive, role in Nepal and South Asia?
China does not want to compete with India in South Asia because the smaller countries bordering India will be put in an awkward position by having to choose a side. It does not want small countries in the region to suffer because of Sino-Indian relations. Sri Lanka is one of the examples of such a situation.
Can you explain the situation in Sri Lanka from the Chinese perspective?
Although the new government in Sri Lanka has emphasised that it wants to maintain cordial relations with both India and China, it seems  to be more inclined towards India. It was also asserted by an Indian scholar that, fearing the Chinese presence, India did make an effort
at facilitating the government change in Sri Lanka. Now, the new government is planning to restrict the continuation of Chinese projects that have already been agreed upon and work has already started in several of these projects. If this happens then it will send a very negative message to potential Chinese investors. Times are changing quickly and if a country loses an opportunity for development then it might be difficult for it to catch up later. And in the past few years, Sri Lanka has been developing very quickly and Chinese investors are keen on doing business with the island nation. But things have changed now.
Even in the Maldives, India has expressed concern over the Chinese presence. But after the experience in Sri Lanka, China is not eager to get involved. The Maldives is allowing foreign investors to develop its islands but I have not seen any Chinese investors rushing to grab those opportunities.
There have been talks about the peaceful rise of China, and China’s desire to help its neighbours to develop further. Can you explain the idea and the strategic vision?
You must be familiar with the ‘One belt, one road’ initiative which China is trying to achieve by reviving the ancient Silk trade route connecting Asia and Europe. We basically want to facilitate development in our inland regions because in contrast to our coastal regions, the inland regions are backward. We also want to promote development in the neighbouring states surrounding that region; and the main purpose is to carve out new markets and create new production bases.
In the last 30 years, China became prosperous because of the economic cycle between the coastal region and the Western markets. But after the financial crisis in 2009, this economic cycle has not been functioning well. The price of the Chinese labour market has increased and so has the value of land. There are new environmental pressures as well and at the same time, the development market is being more protected. Due to this, many companies have shifted from the Chinese coastal region. So to sustain its economic growth, China needs to cultivate a new economic cycle by exploring options in its backyard. We are hoping that this new cycle can further develop China in the coming 30 years. But at the same time, China also wants its neighbours to develop through this cycle and create a win-win situation for the entire region. This serves China’s interest but also fulfils the development requirement of other developing countries. If you look at the Silk trade route, it connects the economic highlands—the Chinese coastal zone and Europe. So the countries within the route can highly benefit from this arrangement.
Is this concept of ‘one belt one road’ also related to China’s policy towards Nepal? How does it help Nepal?
Of course, there are 60 countries that will be connected through this project and Nepal is definitely one of them. It will be connected through roads from the trans-Himalayan region. But people-to-people diplomacy will be given as much importance as physical connectivity. This is why China is now more interested than before to see political stability and unity in Nepal.
We hear, in Beijing, that China’s ambitious railway network that has now been extended to Shigatse in Tibet will now be reaching Nepal. Is this proposal under consideration?
This proposal has already been accepted and planning has already started. However, due to the topography, especially on the Nepali side, it might be more feasible to connect the railway to and through Kerung. The road connection to Kodari is not that good. Travelling from Kathmandu to Kerung is far easier.
So you see highways and railways as hardware of the connection in the larger Chinese roadmap in South Asia and Nepal?
Yes. And the software connections are institutional such as economic policies, investment policies, customs, quota system, educational exchanges, people-to-people diplomacy through tourism and pilgrimage, and it may be the free flow of labour in the future. Chinese production houses have been spreading around the region. For instance, a lot of Chinese factories are shifting to Vietnam now. So if there is connectivity then why not open production bases in Nepal as well. But the only precondition is political stability and a workable environment. Nepal can easily develop as it has abundant natural resources and its population is in control.
Is the Tibetan railway being extended to the Indian state of Sikkim as well?
Yes, there have been plans regarding this extension, but I am not sure if it will materialise. Nepal-China rail connectivity seems much more likely. Maybe, China can first connect to Nepal then it can explore its options with India. However, we are aware that India is suspicious of Nepal-China connectivity. But as in the past, when we built two China-Nepal highways, if the two countries decide to build the project, then India will have to accept it. And we will make it beneficial for India as well. In Nathula Pass [Sikkim, India], the China-India border trade had nearly come to halt because of restrictions from the Indian side. Now, the things have become better and even pilgrims travel through Nathula Pass, but it is too far. It would have been much closer if China had a direct route from Shigatse to Kathmandu.
So how do you balance India’s perceived security concerns on the one hand, and the China’s desire to build strong ties with South Asia on the other?
In my opinion, a few incidents such as the sighting of Chinese submarines in the Colombo port have alarmed India. But China is a huge country and different departments have different concerns. Personally, I think that China’s relations with all the neighbouring states of India will only be focused on economic and social development. China wants to connect with all the South Asian countries so that there is more interdependence in the region, reducing the security concerns. This will also reduce security expenditure. Security apprehension or geostrategic concerns have hijacked the socio-economic interaction and also the mutual development between China and South Asian countries for so many years. But now, it is time for China and South Asia to come together and take up the agenda of common development. This is also one of the objectives of the ‘one belt, one road’ initiative.
So where does Nepal fit into this Chinese strategic vision for South Asia and beyond?
Nepal is a bridge for China to enter South Asia. Even Pakistan cannot serve this purpose because of its history with India. But with Nepal, there are no such issues. We have divided South Asia in two parts, West South Asia: Afghanistan, Pakistan and East South Asia which has India at the centre. So we would like to view Nepal as a bridge to enter East South Asia.
Do you think India, and mainly the Indian defence establishment, will be open to China’s engagement in South Asia?
In terms of defence, each country has its own interest. The security budget and annual budget are all the internal matter of the state. But over 30 percent of the population is living below the poverty line in India. So why not put more resources and energy into development. I think even the Modi government realises the importance of social and economic development, which is good.
How do you think China-India relations have developed after the Modi government came into office?
We are both becoming more pragmatic.  Both the countries currently have strong leaders. And both the strong governments are now focusing on internal reforms for steady development. So there are more commonalities. That is why last September when the Chinese President Xi visited India, both the leaders made a joint statement that they were focusing on a closer partnership for development. Similarly, this year during Modi’s visit to China, the leaders of both the countries again emphasised on closer development partnership. This is pragmatic. In the past, we emphasised on strategic partnership, but India sometimes did not agree with it because, in many areas, we are not really strategic or as strategic as we could possibly be. So we are focusing on stronger developmental partnership as both the countries want the same thing—development. And as the global economic recession is still not over, there is need for both the giants to cooperate more. I think if these two giants focus on development, all countries will benefit from it.
In Nepal, sections of the intelligentsia believe that if Sino-Indian relations become stronger it could pose new dangers to Nepal’s sovereignty. How do you view Nepal’s insecurity for survival as a small country sandwiched between two giants?
I think Sino-Indian cooperation is mostly focused on development and connectivity because big countries have to contribute to regional development. In contrast, do you think the smaller countries will feel safer if the two big countries are fighting? They will suffer. So as China and India have agreed to forge closer partnership for development, all other adjacent countries will benefit in terms of regional development. For instance, if India became a new production base and the connectivity between China and India improved greatly, then the whole region would greatly benefit just as the Sino-US economic relation has benefited the world.
But China and America are geographically thousands of miles apart.
Smaller countries will suffer if big countries compete with one another. Look at China and Russia’s relationship. When China and Russia were competing with each other and were suspicious of one another, the Central Asian countries were frightened or lost and did not know what to do. But now in Putin’s time, China-Russia relations have become more and more comprehensive. As a result, one can see that Central Asian countries also feel much more relaxed.
But the Russian economy has lost steam and China is a big economic powerhouse.
The reality is that they now cooperate more closely than ever before. So in the future, if China and India not only became a huge market but also a production base, their smaller neighbours will definitely benefit. If India’s middle-class gets richer, then they have to spend money, travel and some might want to trek to the Himalayas. As a result, benefits will trickle down in the region. If you look at China, it is similar. Last year, 100 million Chinese people travelled as tourists globally. Now all the countries are welcoming Chinese tourists. So if China and India cooperate, some of China’s manufacturers could shift to Nepal because they already have some kind of a production chain—upper ridge, middle ridge, lower ridge. They are mapping the whole labour force distribution in the region. Generally speaking, this is a good thing for the entire neighbourhood. Why should Nepalis be afraid? If the Chinese and Indians get rich, then Nepal will definitely benefit. For instance, in case of pilgrimage, rich Indian pilgrims will travel through Nepal and get in to Tibet, while the rich Chinese Buddhists will travel across the Himalayas to the southern part of Nepal and northern part of India for their
pilgrimage.
You spoke of about the issue of Tibetan refugees earlier. Is the refugee issue more stable now or is it still volatile?
Since 2012, the situation in the Tibetan region has become more stable. I think things have been pretty stable in the past three years. This year, we just completed the sixth round of the central government conference on Tibet which has put forward many new policies towards developing it. It was held in Beijing on August 24 and 25, 2015. However, with regards to communication with Dalai Lama, there has been no progress.
So does the issue of Tibetan refugees still remain a major factor in China’s policy towards Nepal?
In the past, this was a major factor. But now the ‘one road, one belt’ approach also places more importance on Nepal. The Tibetan issue is of course there and will be there even in the future. However, there is no critical concern about Tibet at the moment. Tibet will be a factor in China-Nepal relations because it is to do with the trans-Himalayan culture, social structure and protecting the Himalayas.

This interview has been published in The Kathmandu Post on 12 Oct 2015.