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Putting Money on the Line

While China and Nepal reaffirmed their political will to push forward construction of a cross-border railway, cost and technical difficulties threaten to derail the project

By Yu Xiaodong , Zhao Yue , Chen Shulian Updated Nov.1

A panoramic view of Jilong (Gyirong) County, Tibet Autonomous Region, 2018

In a meeting on August 10 between Chinese Foreign Minister Wang Yi and his Nepalese counterpart Narayan Khadka in Qingdao, China, it was announced that China will fund the feasibility study for a cross-border railway that would run across the Himalayas from Southwest China’s Tibet Autonomous Region to Nepali capital Kathmandu, and that Chinese experts will be dispatched within the year. 

Analysts regard the move as major progress on the much-discussed, although stalled project, since the two countries agreed to cooperate on railway connectivity in 2018.

Longer History
While it was only in 2019 during a visit by Chinese President Xi Jinping to Nepal when the two countries agreed to the construction of a cross-border railway, the idea of building a trans-Himalayan railway goes back almost half a century. 

The idea first surfaced during a visit by King of Nepal Birendra Bir Bickram Shah Dev to Beijing in 1973. Threatened by India’s expansionist policy at the time, the Nepalese king sought to establish a strong relationship with Beijing to hedge against New Delhi. In his meeting with Chinese leader Mao Zedong, the king was told that China would extend its railway network to Tibet, and then extend to Kathmandu. 

But given China’s political turmoil and weak economy at the time, not to mention the daunting technological challenges posed by the project, a cross-border railway appeared a distant possibility, if not a fantasy. 

Just two years later in 1975, India annexed Sikkim, a Himalayan kingdom neighboring Nepal. In the meantime, Nepal and Bhutan, the two remaining independent kingdoms in the Himalayas, were firmly in the orbit of New Delhi. 

Across the Himalayas, it took China several decades to have the financial resources and technological capabilities to extend its railway network to the Tibetan Plateau. In July 2006, China completed construction of the Qinghai-Tibet Railway, linking Xining, capital of Qinghai Province to Lhasa, the Tibetan capital. 

The high-altitude project immediately drew attention from Nepal. In a visit to Tibet in August 2006, then deputy prime minister of Nepal KP Sharma Oli said Nepal hoped that China would extend the railway to the border. Chinese authorities reaffirmed the railway line would extend to Xigaze (Shigatse), Tibet’s second-largest city 250 kilometers from Lhasa, with a later extension to China’s border with Nepal. 

Eight years later in 2014, the line to Xigaze was completed. During a visit by Nepalese President Ram Baran Yadav to Tibet in April 2015, the Chinese government announced it would extend the railway line another 540 kilometers to reach Jilong (Gyirong) County on the border of China and Nepal, a plan Yadav applauded. 

The extension was included in the medium- and long-term railway network plan released by the National Development and Reform Commission (NDRC), China’s top economic planner. Along with a newly planned railway connecting Xinjiang Uygur Autonomous Region and Tibet, the NDRC said the railways would significantly boost connectivity in the border region. 

In 2019, China began a feasibility study for the border extension, which was then included in China’s 14th Five-Year Plan (2021-2025). China is currently building facilities along the line, and experts estimate it could be completed by 2030. 

Under China’s ambitious Belt and Road Initiative (BRI) launched in 2013, which aims to strengthen China’s connectivity with the world and boost regional integration, the China-Nepal railway is key to building a South Asian Economic Corridor, one of six main economic corridors under the BRI.

Nepalese trucks wait for customs clearance at Jilong (Gyirong) Port, 2018

Chinese and Nepalese police patrol Jilong (Gyirong) Port, November 23, 2019

A Tibetan woman carries her grandson to look at the trains at the Lhasa-Xigaze (Shigatse) Railway, July 22, 2014, an extension of the Qinghai-Tibet Railway finished in August 2014

Strategic Factor
After India-Nepal land routes were blocked due to strikes and protests in southern Nepal in response to constitutional changes in September 2015, which India was suspected of assisting according to media reports, the cross-border rail project gained new momentum in Nepal. As Nepal relies solely on India for fuel products and depends heavily on India for food, medicine, and other key commodities, the blockade caused a severe medicine and fuel crisis. 

Although the “undeclared Indian blockade” was lifted in January 2016, when Nepal bowed to the pressure and changed its constitutional amendment bill, Nepal took more seriously the prospect of securing an alternative supply route. The only other choice for Nepal, a landlocked nation sandwiched between China and India, is a land route via Tibet. 

During the blockade, China came to Nepal’s aid by agreeing to provide more than 1,000 tons of fuel as a grant and signed a deal with Kathmandu to export fuel products to the country. 

In 2016, the two countries signed a trade and transit agreement, which granted Nepal access to seven Chinese ports, including four sea ports and three land ports, where Nepal can import goods for transshipment through a tariff-free agreement with China.
But without a railway that offers affordable and reliable transportation, these deals have done little to expand Nepal’s connectivity to the outside world. 

In May 2017, Nepal joined the BRI, signing a Memorandum of Understanding (MoU) on bilateral cooperation. In June 2018, KP Sharma Oli, who became Nepal’s prime minister in 2015 and was re-elected in 2018, made an official visit to China, during which the two sides signed agreements including on cooperation on railway connectivity. 

In October 2019, Chinese President Xi Jinping visited Nepal. Forging a “strategic partnership,” the two sides agreed on a feasibility study on the trans-Himalayan railway. 

But only two months later, the Covid-19 pandemic erupted, disrupting bilateral traffic and putting the project on hold. 

In May 2021, Oli, a major advocate of closer ties with China, was ousted from power by Nepal’s Supreme Court and was replaced with Prime Minister Sher Bahadur Deuba. From a different party, Deuba favors closer ties with India and the West. 

Under the Deuba government, the Nepali congress ratified the Millennium Challenge Corporation (MCC) agreement on February 27. Involving the MCC, a major US development agency, the agreement includes a US$500 million grant to improve Nepal’s infrastructure, mostly energy transmission lines. 

But the controversial agreement immediately sparked protests and riots on the streets of Kathmandu, with critics arguing that some of its clauses, including exempting US MCC officials from prosecution under Nepali law, creating a new US-controlled entity that would bypass Nepali authorities, and requiring Nepal to export hydropower to a monopsony market in India, undermine the country’s sovereignty. Others deem the deal as the soft arm of Washington’s Indo-Pacific strategy aimed at containing China. 

In March, Chinese Foreign Minister Wang Yi traveled to Kathmandu to reassure that China would provide the development assistance President Xi committed in his Nepal October 2019 visit. The two sides signed nine agreements, including one on a feasibility study for the cross-border railway. Other agreements included those on economic and technological cooperation, power grid interconnection, trade and Covid-19 vaccines. 

After China agreed to fund the feasibility study, there is finally some concrete progress. But given the complexity of the rail project, it will still take years, if not decades, to realize. According to a report in the Kathmandu Post in March, Chinese officials told their Nepali counterparts that the feasibility study alone will take at least 42 months to complete.

Geological Challenges
With 10 of the world’s 14 peaks above 8,000 meters in the Himalayas, building a railway across the roof of the world is daunting. While the straight-line distance between Jilong on the Nepal-China border and Kathmandu is only about 100 kilometers, it runs across complex and unstable geological terrain with a drastic drop in altitude from about 4,000 meters on the Tibet Plateau to about 1,400 meters in the Kathmandu Valley. 

China had already conducted a pre-feasibility report on the railway in 2016. According to the Kathmandu Post, the unpublished report concluded that tunnels and bridges would form 98 percent of the railway on the Nepalese side. 

According to Cui Peng, vice director of the Institute of Mountain Hazards and Environment (IMHE) at the Chinese Academy of Sciences (CAS), who has conducted geological surveys in the region since 2015, construction of the cross-border line is far more difficult than the Qinghai- Tibet Railway. 

Cui said there are more than 1,000 debris-flow points along the line, and in areas around Jilong County, the proposed entry point of the railway into Nepal, there are debris-flow points every kilometer. 

Li Haibing, a geologist with the Key Laboratory of Deep-Earth Dynamics of the Ministry of Natural Resources of China, who specializes in geological disaster prevention in the Himalayas, told NewsChina that another major risk is that the railway has to go through the Himalayan Main Central Thrust zone, the long plate boundary which extends for thousands of kilometers along the border of the Himalayan foothills and the Indo-Gangetic plane. 

As the Himalayan plate continues to thrust northward under the Eurasian plate, large earthquakes, associated landslides and other geological phenomena are frequent. 

From 1897 to 1952, there were 14 major earthquakes (with a magnitude of 7.5 and above), including five great earthquakes (with a magnitude of 8 and above). After 1952, the region experienced a period of relative seismic calm, but a great earthquake with a magnitude of 8.1 struck again in April 2015. Li said that to minimize the risk posed by earthquakes, the railway needs to be designed so the track is not parallel with the seismic zone, as much as it is possible to do so. 

Despite these challenges, Cui believes that China is well equipped to build the railway based on its extensive experience in building railways in complex terrains, including not only the Qinghai-Tibet Railway but also the Sichuan-Tibet Railway, currently under construction, which runs through mountainous regions with high levels of seismic activity. “From the technological and engineering perspectives, there are no major problems,” Cui said. 

But even if the geological difficulties can be overcome, financing the line will be hard. According to media reports, the 2016 pre-feasibility report shows that construction of the railway will take nine years and cost 30.15 billion yuan (US$4.4b), equal to Nepal’s total government revenue in 2018. Although around one-third of the line’s 170-kilometer length from Jilong to Kathmandu is on the Nepal side, it would account for half the cost, media reported. 

With a population of about 30 million and a per capita GDP of a mere US$1,200, Nepal is one of the poorest countries in the world. How the railway will be funded will remain a major focal point for the project’s feasibility. 

As the political, geopolitical, technological and financial issues surrounding the ambitious project continue to evolve, whether the highest cross-border railway in the world can turn from fantasy into reality remains uncertain.