Nepal, China Sign Transit Treaty Establishing a Rail Link

March 22, 2016International Tradeby EW News Desk Team

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On Monday, China agreed to Nepal’s proposal to build a strategic rail link between the two nations through Tibet. The new line will reduce Nepal’s dependence on India for shipping. The agreement was proposed and brokered by Nepal’s Prime Minister, K P Oli.

Oli has sought to open his country to greater interaction with the outside world via trade. Adding this new transit route through China will serve as a huge step in realizing that ambition. Nepal just overcame a crippling, six-month long blockade imposed by India, underscoring how important alternative trade routes truly are for its economic future.

“The two sides exchanged substantive views on further strengthening and consolidating mutual trust and understanding as well as promoting mutually beneficial cooperation in various fields,” the Nepalese Foreign Ministry said in a statement, referencing the recent talks between Oli and Chinese Premiere Li Keqiang and President Xi Jinping.

In addition to the transit treaty, the two nations’ representatives also reached ten other agreements. Many of these hold important economic impacts for Nepal. Topics included were trade diversification, connectivity and infrastructure development across the Nepal / China border, tourism, education, finance, cultural sharing, and others.

According to a statement by the Chinese Foreign Ministry, the initial transit treaty would create two rail lines. The plan would add on to an existing slate of rail expansion in China. The addition would run from Shigatse in Tibet to Gyirong near the Nepal border.

Nepal and China also reached an agreement on conducting feasibility studies pertaining to a free trade agreement. They made plans to research a jointly developed airport and border bridge. Other agreements included an economic and technical cooperation treaty, and another feasibility study related to exploring Nepal’s oil and gas resources.

Through the new agreements, Nepal will be able to use Chinese ports to ship its goods around the world. This removes Nepal's complete dependence on India, a nation with which it has not always had the warmest of relations. Still, the Nepalese government expressed its interest in strengthening ties with both nations.

Speaking on behalf of all involved, Chinese Foreign Ministry spokesperson, Jua Chunying, said, “China, India, and Nepal form a community of shared destiny. Our work there can help to work for common development. Stable development in Nepal serves both China and India. We hope we can have positive interactions in this field to achieve win-win results.”